U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19821 / September 6, 2006
SEC v. Steven J. Ott and Roger Michael Young, Civil Action No. 06-4195 (GEB) (D.N.J.)
SEC Sues Two Former Executives of ITXC Corp. for Violations of the Anti-Bribery Provisions of the Foreign Corrupt Practices Act
On September 6, 2006, the Securities and Exchange Commission filed a civil enforcement action in the U.S. District Court for the District of New Jersey against two former executives of ITXC Corp. (ITXC). Steven J. Ott, the former Vice President for Global Sales, and Roger Michael Young, the former Managing Director for the Middle East and Africa, were charged with violating the anti-bribery provisions of the Foreign Corrupt Practices Act of 1997 (FCPA), as amended, which is codified as Section 30A of the Securities Exchange Act of 1934 (Exchange Act). The complaint also alleges that Ott and Young caused ITXC to record the bribes as legitimate business expenses on its books and records, which violated Exchange Act Section 13(b)(5) and Exchange Act Rule 13b2-1 and aided and abetted ITXC's violations of Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B).
ITXC was a publicly-held international telecommunications carrier based in Princeton, New Jersey that sought to do business in Africa. According to the complaint, Ott and Young approved, and in some cases negotiated, bribes that ITXC paid to senior officials of government-owned telephone companies in Nigeria, Rwanda and Senegal, in order to obtain contracts that were necessary for ITXC to be able to transmit telephone calls to individuals and businesses in those countries. The complaint alleges that Ott and Young were responsible for $267,468.95 in bribes that ITXC paid between August 2001 and May 2004. The complaint further alleges that ITXC made $11,509,733 in net profits from the contracts. In 2004, ITXC merged with Teleglobe International Holdings Ltd., which was subsequently acquired by Videsh Sanchar Nigam Ltd. in 2006.
The Commission is seeking injunctions, disgorgement of all ill-gotten gains derived from the alleged misconduct (with prejudgment interest thereon) and civil penalties against Ott and Young.
The Commission's complaint is related to the previously filed case SEC v. Yaw Osei Amoako, Civ. No. 05-4284 (GEB) (D.N.J.). See Litigation Release No. 19356.
The Commission's investigation is continuing.