On June 28, 2018, the Securities and Exchange Commission charged a California-based telecommunications equipment manufacturer, its Chief Financial Officer, Former Chief Executive Officer, and Director of Contract Fulfillment and Sales Operations for inflating reported revenues in the company's Middle East, Africa, and Europe region in the fourth quarter of 2012 and first quarter of 2013.

According to the SEC's complaint, Axesstel, Inc., Chief Financial Officer Patrick J. Gray, and former Chief Executive Officer Harold Clark Hickock III, aided and abetted by Director of Contract Fulfillment and Sales Operations Steven R. Sabin, inflated the company's revenues by prematurely recognizing revenue on sales and by improperly recognizing revenue despite entering into undisclosed side agreements that relieved customers of payment obligations. Additionally according to the complaint, the Defendants inflated unit prices of products to hit revenue targets with the agreement that Axesstel would subsequently repay the inflated amounts to the customer as marketing development fees. The SEC alleges that Axesstel's revenue was overstated by 66% in the fourth quarter of 2012 and 38% in the first quarter of 2013.

The SEC's complaint alleges that Axesstel, Gray and Hickock violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and that Sabin aided and abetted these violations. The complaint also alleges that Gray and Sabin circumvented internal accounting controls and falsified Axesstel's books and records in violation of Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder; that Axesstel violated the reporting provisions of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder, and that Gray, Hickock and Sabin aided and abetted Axesstel's violations of 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 while Gray aided and abetted Axesstel's violations of Rule 13a-11; that Axesstel violated the books and records and internal accounting controls provisions of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and that Gray and Hickock aided and abetted these violations; and that by signing false Sarbanes-Oxley certifications and lying to Axesstel's auditor, Gray and Hickock violated Exchange Act Rules 13a-14 and 13b2-2.

Axesstel, Gray, Hickock and Sabin agreed to settle the charges without admitting or denying the allegations of the Complaint and consented to entry of a final judgment that permanently enjoins them from future violations of the securities laws, and orders Gray, Hickock and Sabin to pay penalties of $40,000, $25,000 and $10,000, respectively. Gray and Hickock also consented to entry of a judgment which permanently bars Hickock from serving as an officer or director of a public company, and bars Gray from serving as an officer or director of a public company for five years. The settlements are subject to court approval.

Gray also consented to the issuance of a Commission Order suspending him from appearing or practicing before the Commission as an accountant, with the right to apply for reinstatement after five years.

The SEC's investigation was conducted by Adam B. Gottlieb and supervised by Amy L. Friedman, with the assistance of trial counsel Suzanne J. Romajas and Christian D. H. Schultz, supervised by Jan M. Folena.