U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21202 / September 9, 2009
Accounting and Auditing Enforcement Release No. 3046 / September 9, 2009
Securities and Exchange Commission v. Timothy J. Huff, Case No. 09-61419 (S.D. Fla., filed September 8, 2009)
SEC Charges Former CEO Of Florida Telecommunications Company For Accounting Fraud
On September 8, 2009, the Securities and Exchange Commission ("SEC") filed a civil action against Timothy J. Huff ("Huff"), the former chief executive officer ("CEO") of GlobeTel Communications Corp. ("GlobeTel" or the "company"), a publicly-traded company headquartered in Fort Lauderdale, Florida, now known as Sanswire Corp.
According to the complaint, which was filed in the United States District Court for the Southern District of Florida, Huff participated in a scheme to fraudulently inflate GlobeTel's revenue from approximately May 2002 through October 2004. The complaint alleges that Huff's scheme involved the creation of millions of dollars in fake invoices and call detail records that appeared to reflect transactions between GlobeTel and telecommunications companies in Mexico, Brazil and the Philippines. The complaint further alleges that, as a result of Huff's scheme, GlobeTel issued materially false and misleading periodic reports, registration statements and press releases. Huff allegedly received compensation from the company of about $4.9 million and exercised stock options with a value of more than $1.5 million. The SEC charges Huff with violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a), 13(b)(2)(A) and (B) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 13a-14 and 13b2-2 thereunder and seeks as relief permanent injunctions, civil penalties, disgorgement with prejudgment interest and an officer and director bar.
The SEC previously charged GlobeTel and a number of other former officers in connection with these and other securities law violations. The SEC also charged Huff for violations of Section 5(a) and 5(c) of the Securities Act of 1933. Without admitting or denying the allegations, Huff settled those charges by consenting to an injunction and $30,000 civil penalty. For additional information, see LR-20371 (Nov. 26, 2007) and LR-20550 (May 1, 2008).