Former Soyo CFO ordered to pay $15.6M penalty
WASHINGTON (Legal Newsline) - The Securities and Exchange Commission announced Aug. 10 that Soyo Group former chief financial officer Nancy Shao Wen Chu was ordered to pay $15,600,000 in penalties.
Chu allegedly committed securities fraud. Soyo went bankrupt in 2009. The SEC alleged that between January 2007 and November 2008, Soyo, through the actions of Chu and another defendant, booked more than $47 million in fraudulent sales revenues arising from at least 120 fictitious transactions.
The fraudulent recordkeeping nearly doubled Soyo's net revenues for 2007 from the previous year, the SEC says. The company's share price went from a low of $.28 per share in the first quarter of 2007, to a high of $1.80 per share in the fourth quarter of 2007.
Chu allegedly misled Soyo's investors, its primary lending bank and its auditor regarding a $6 million debt-for-equity transaction Soyo was negotiating with a vendor. She was attempting to obtain additional bank financing for Soyo and keep its existing line of credit from defaulting, the SEC says.
The SEC claims that even though negotiations with the vendor were not finalized and subject to cancelation, Chu signed and caused to be filed a Soyo Form 10-Q for the quarter ended June 30, 2008, reporting that the transaction was complete. This eliminated an outstanding accounts payable of slightly more than $6 million, and reduced Soyo's current liabilities by 14 percent and its accounts payable by 42 percent.
Another defendant, Eric Jon Strasser, a consultant who prepared Soyo's SEC filings, was ordered to pay a penalty of $260,000.
According to the SEC, neither Chu nor Strasser answered the Commission's complaint and both were found to be in default. The Court ordered the maximum third-tier penalty of $130,000 against Chu for each of the 120 alleged fictitious transactions she concocted and against Strasserfor each of the two allegedly fraudulent SEC filings.