WASHINGTON (Legal Newsline) — The Securities and Exchange Commission (SEC) has announced Weatherford International, an oil services company, will pay $140 million after allegations it inflated earnings through deceptive income tax accounting.
Two senior executives at the company will settle charges that they were behind the alleged scheme.
Weatherford purportedly lowered its year-end provision for income taxes by $100 million to $154 million each year in a fraudulent manner. This scheme allowed it to better align its earnings results with its earlier projections and analysis. James Hudgins, who was the company’s vice president of tax, and Darryl Kitay, a tax manager, allegedly developed the scheme, using fraud to create the misperception that Weatherford’s designed tax structure was far more successful than reality.
“Weatherford denied its investors accurate and reliable financial reporting by allowing two executives to choose their own numbers when the actual financial results fell short of what was previously disclosed to analysts and the public,” said Andrew Ceresney, director of the SEC’s Enforcement Division. “This case is part of our continued focus on financial reporting and disclosure fraud.”
The case is being handled for the SEC by Jim Valentino, Ilana Sultan and Natalie Lentz with assistance from Kevin Lombardi.