WASHINGTON (Legal Newsline) - A Chicago-based consulting firm and two of its former executives will pay $1.3 million to resolve accounting violations charges brought by the Securities and Exchange Commission.
Huron Consulting Group Inc., a financial and operational consultant, did not properly account for sales proceeds of the selling shareholders of four firms acquired by Huron, the SEC says. Those shareholders redistributed the money to the employees of those firms who remained to work at Huron as well as other employees and themselves, the SEC says.
Because the redistributions are contingent on employment, they should have accounted as a compensation expense, the SEC says. Because they were not, Huron's pre-tax income was overstated to the public, the SEC says.
Huron will pay a $1 million penalty. Two executives, Gary L. Burge, CPA, age 58 of Wheaton, Ill., and Wayne E. Lipski, 55 of Naperville, Ill., agreed to pay a total of nearly $300,000 in disgorgement and penalties to settle the charges against them.
Burge joined Huron in November 2002 as CFO and thereafter also became CAO and Treasurer. He resigned from Huron on Dec. 31, 2009. Burge has been a registered Certified Public Accountant in Illinois since 2010.
Lipski joined Huron in October 2003 as Controller, and became its CAO in May 2009. He resigned from Huron on July 31, 2009. Lipski has been a registered CPA in Illinois since 2006.
"Huron's income overstatements obscured the fact that a substantial portion of the money it paid to acquire other consulting firms was being used to retain professional talent at the firm," said Merri Jo Gillette, Director of the SEC's Chicago Regional Office.
"Huron, Burge, and Lipski should have known that their flawed accounting gave investors a misleading impression of the profitability of Huron's acquisitions."