SAExploration CEO, CFO accused of accounting fraud

Dive Brief:

The Securities and Exchange Commission (SEC) filed civil charges Thursday against publicly traded company SAExploration Holdings over an alleged "multi-year accounting fraud that falsely inflated the company's revenue and concealed the theft of millions of dollars."
In a complaint filed in the Southern District of New York, the SEC said former Chairman and CEO Jeffrey Hastings, along with former CFO and General Counsel Brent Whiteley, COO Brian Beatty, and Vice President of Operations Michael Scott engaged in an "elaborate, four-year-long fraud."
Of the amount SAExploration recorded in revenue, approximately $100 million was improperly recorded, the complaint alleges.

Dive Insight:

The executives allegedly entered into a series of seismic data acquisition contracts totaling approximately $140 million with a seemingly unrelated Alaska-based company "that was in fact controlled by Hastings and Whiteley," the SEC said.

Hastings, Whiteley, Beatty and Scott allegedly misappropriated almost $6 million from SAE, using the funds for a series of round-trip transactions and taking approximately $6 million for themselves.

Whiteley misappropriated an additional $4 million through a separate "fictitious invoice scheme," the SEC alleges.

In a parallel action, the U.S. Attorney's Office for the Southern District of New York brought criminal charges against Hastings, who was arrested in Anchorage, Alaska last month and subsequently resigned from SAE.

"As alleged in our complaint, SAE's executives designed a multi-faceted fraud that enriched executives at the expense of investors," Jennifer Leete, associate director of the SEC's enforcement division, said. "We will vigorously pursue wrongdoing by individuals and companies who engage in fraud and mislead investors."

The SEC seeks a permanent injunction against SAE and executives, civil penalties, disgorgement of "ill-gotten gains" and office-and-director bars against the executives. Additionally, the SEC demands Hastings, Whiteley, and Beatty reimburse SAE for incentive-based compensation under the Sarbanes-Oxley Act.