Dive Brief:

• The Securities and Exchange Commission (SEC) on Tuesday charged Tom Simeo, former CEO and executive chairman of Viking Energy Group, with falsifying the existence of a company CFO between November 2014 and July 2016. 

• The CFO, named Guangfang “Cecile” Yang, is a woman believed to be living in Shanghai, China, who the SEC says never worked for the company but provided a digital signature for Simeo to apply to the company’s reports, giving the impression the company’s filings were overseen and approved by her.

• “In reality, Yang did not perform any functions as Viking’s CFO, and the company effectively operated without [one] during that period,” the SEC says in the complaint.

Dive Insight:

Viking was created in 2008 out of a merger between a company Simeo controlled and Sparta Ventures Corp. The merged company, Viking Investments Group, focused on developing startups in China. In 2014, Simeo stepped down as CEO to serve as executive chairman. The company’s name was changed and a new CEO was brought in to focus the company on energy development.

Simeo hired Yang as CFO in 2013 while on a business trip in China, the SEC says. Yang executed a power of attorney in favor of Simeo, authorizing him to affix her signature to any documents. She also gave him a signed letter in which she irrevocably agreed to resign when directed to.

Viking first disclosed Yang as CFO in early 2013 and her signature appeared in 20 annual and quarterly reports. Her resignation was announced in July 2016.

The SEC says there was no communication between Yang and the company during her tenure, outside auditors and consultants never had contact with her, and the CEO who took over in 2014 never had contact with her.

During Yang’s tenure, the company raised approximately $2 million from investors by selling promissory notes that also included common stock as part of the transaction. The company also sold redeemable promissory notes that could be converted to Viking common stock.

Simeo "engaged in a fraud or deceit upon purchasers of securities and upon other persons," the SEC said.

He faces a fine and will be prohibited from serving on a public company board, among other penalties, if the charges are upheld.