U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21660 / September 22, 2010
Accounting and Auditing Release No. 3188 / September 22, 2010
Securities and Exchange Commission v. Delphi Corporation, John Blahnik, et al., 06-cv-14891-AC-SDP (E.D. Mich.) (filed October 30, 2006)
FORMER TREASURER OF DELPHI CORPORATION SETTLES ACCOUNTING FRAUD CASE WITH SEC
The Securities and Exchange Commission today announced settlement of pending charges against John Blahnik, the former Treasurer and Vice President of Treasury, Mergers and Acquisitions of Delphi Corporation. On September 22, 2010, United States District Judge Avern Cohn entered a Final Judgment by consent enjoining Blahnik from future violations of Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 13b2-1 thereunder and Section 17(a) of the Securities Act of 1933 ("Securities Act"), and aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1, and13a-11 thereunder. Blahnik was also ordered to pay disgorgement and prejudgment interest totaling $50,000 and a civil money penalty of $50,000. Finally, the Court prohibited Blahnik from serving as an officer or director of a public company for a period of five (5) years. Blahnik settled the Commission's claims without admitting or denying the Commission's allegations.
The Commission's complaint against Blahnik alleged that as a result of his participation in three fraudulent schemes, Delphi filed materially false and misleading financial statements in the company's Forms 10-K for 2000 and 2002, and Forms 8-K filed in 2001 and 2003-2005. According to the Complaint, Delphi improperly accounted for two round trip transactions as sales rather than as financing transactions, and thereby improperly recognized a material amount in cash flow from operations and materially overstated its reported earnings per share and net income for the fourth quarter of 2000, and, combined with other misstatements, materially overstated its net income for the year 2000. In addition, from 2003 to 2004, Delphi intentionally failed to disclose material sales of accounts receivable (factoring).
The case against the four remaining individual defendants is set for trial in the United States District Court for the Eastern District of Michigan on October 18, 2010.
- Litigation Release Nos. 19891 (October 30, 2006), 20975 (March 27, 2009)
- Accounting and Auditing Release Nos. 2500 (October 30, 2006), 2501 (October 30, 2006), 2502 (October 30, 2006), 2503 (October 30, 2006), 2791 (February 26, 2008), 2792 (February 26, 2008), and 2955 (March 27, 2009)