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Former executives from defunct healthcare staffing firm World Health Alternatives have agreed to settle a lawsuit by the U.S. Securities and Exchange Commission, the agency announced on Wednesday.
World Health Alternatives was based in Pittsburgh. It filed for bankruptcy in early 2006 and sold its assets.
The SEC suit alleges that former CEO Richard McDonald, 35, misappropriated $6.4 million for his personal benefit. In addition, McDonald and former Controller Deanna Seruga, 34, falsified accounting records to make the company appear more financially sound and to hide the misappropriation of funds.
The suit also alleges that McDonald signed and certified the filings despite knowing they contained misstatements. Another former CEO, Marc Roup, 36, was also accused of signing and certifying false public filings, according to the SEC.
McDonald and Roup also failed to properly report their personal sales of World Health stock, the agency reported.
As part of his settlement, McDonald agreed to an order barring him from serving as an officer or director of a public company. However, he will not have to pay disgorgement fees of approximately $6.4 million.
"Based on sworn financial statements and other documents and information submitted to the commission, payment of disgorgement and prejudgement interest will be waived and civil penalties not imposed," according to the SEC.
Roup will pay a disgorgement of $5.3 million plus $120,000 in civil penalties, according to the SEC. He will also not be able to serve as an officer or director of a public company.
Seruga was ordered to pay $383,662 in disgorgement plus interest, but that was waived and civil penalties not imposed, according to the SEC.
Joseph Emas, 55, a fourth defendant, was World Health's former outside securities counsel. Emas must pay a disgorgement of $163,083 plus a $15,000 civil penalty, according to the SEC. He will also be suspended from practicing as an attorney before the SEC for two years.
The settlements must still be approved by the court.