The Securities and Exchange Commission and the United States Attorney's Office for the Central District of California announced that on May 20, Peter Bromberg was sentenced to10 months, including five months of incarceration and five months of home detention, for his role in a financial fraud at Motorcar Parts & Accessories, Inc. Bromberg was Motorcar's CFO from 1994 until he resigned in May 1999. Bromberg is a certified public accountant currently living in Wellington, Florida.
Motorcar Parts and Accessories, Inc., now known as Motorcar Parts of America, Inc., is a Torrance, California public company that remanufactures automotive alternators and starters. Motorcar's stock previously traded on Nasdaq and now trades on the over-the-counter market.
In September 2002, the United States Attorney's Office charged that Bromberg knowingly made false and misleading statements about Motorcar's financial condition and performance in its 1997 and 1998 Forms 10-K filed with the SEC. Bromberg pled guilty to these charges. Also in September 2002, the SEC filed civil fraud charges against Motorcar and Bromberg, and both defendants settled the SEC's action without admitting or denying the complaint's allegations. Bromberg consented to the entry of a judgment that ordered payment of $76,275 in disgorgement plus prejudgment interest but waived all but $50,000 of this amount and did not order a civil penalty based on his sworn representations in his Statement of Financial Condition and other documents submitted to the SEC.
In December 2003, the SEC and United States Attorney's Office brought actions against Richard Marks, Motorcar's former President and Chief Operating Officer. Marks agreed to plead guilty to the criminal charges, and will be sentenced on August 9. In settlement of the SEC's civil fraud action, Marks paid over $1.2 million and was permanently barred from serving as an officer or director of a public company.
The SEC's complaint and the Justice Department's criminal charges alleged that the defendants engaged in fraudulent accounting practices and falsified Motorcar's books and records, thereby causing Motorcar to issue false and misleading financial information to the investing public. The Commission's complaint alleged that Motorcar overstated the company's pre-tax earnings for fiscal year 1997 by $3,391,000 (59.8%) and for fiscal year 1998 by $3,576,000 (49.6%), that the overstated earnings figures were reported to the public in Motorcar's annual reports on Form 10-K filed with the SEC for the fiscal years ended March 31, 1997 and 1998, and that Motorcar included its false 1997 financial statements in a registration statement filed with the SEC in October 1997, for an offering that raised $19.8 million.