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Volt Information Sciences Inc. (OTCBB: VISI) and a former executive agreed to settle a U.S. Securities and Exchange Commission investigation. Separately, the SEC announced that it sued former Volt CFO Jack Egan Jr.
The Volt settlement still needs court approval. The company reported it will not be required to pay any monetary penalty, but the settlement does require the company to comply with federal securities laws. The SEC complaint in the lawsuit reported the probe involved $7.55 million that was improperly recorded as earned revenue in 2007. The investigation was first announced in November 2010.
Also today, the SEC filed suit against Egan claiming he participated in a scheme to materially over state revenue.
Egan signed and filed financial statements reporting $7.55 million in revenue for the fiscal year ended Oct. 28, 2007, that had not been earned and was not recognizable under U.S. Generally Accepted Accounting Principles, according to the SEC. The improper revenue caused Volt’s net income to be materially overstated.
The complaint also alleges that the scheme relied on fabricated paperwork purporting to be a contract selling software to a customer, according to the SEC. Egan knew that any sale of the software was impossible because Volt intended to lease the same software to the same customer the following year, the SEC reported.
The complaint also alleges Egan misled Volt’s external auditors.
The SEC is seeking to have Egan pay a monetary penalty and be prohibited from acting as an officer or director.
Egan’s employment at Volt was terminated in February 2012.
An SEC lawsuit filed against Volt and Debra Hobbs, the former CFO of the Volt division where the alleged fraud took place, was settled, the SEC reported. The company and Hobbs have cooperated with the investigation, although a court must still approve the settlements.
Volt reported it is now in the process of preparing restated financial statements. The company has held off on releasing new 10-K annual financial statements since the probe began, and the company had moved from trading on the New York Stock Exchange to the OTC Markets Group.
“We have cooperated with the SEC throughout this investigation and we have made a significant investment in reviewing and improving our accounting processes and internal controls,” said CEO Ron Kochman. “We are pleased to resolve this matter and move forward with completing our financial restatement and continuing to deliver outstanding services and products to our customers.”
Volt ranks No. 11 on Staffing Industry Analysts’ list of largest U.S. staffing firms.
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