SEC Charges Telecommunications Expense Management Company with Accounting Fraud
Litigation Release No. 24255/ September 4, 2018
Securities and Exchange Commission v. Tangoe, Inc. et. al., Civi, Case No. 3:18-cv-01479 (D.CT) filed September 4, 2018
The Securities and Exchange Commission today charged a telecommunications expense management company for its use of fraudulent accounting practices that artificially boosted company revenues between 2013 and 2015. Four former members of the company's senior management team were also charged for their roles in the alleged misconduct.
As alleged in the complaint, Tangoe, Inc., formerly a public company headquartered in Connecticut, improperly recognized approximately $40 million of revenue out of the total of $566 million reported between 2013 and 2015. In some instances, Tangoe allegedly reported revenue prematurely for work that had not been performed, including service pre-payments, and for transactions that did not produce any revenue at all. The SEC alleges that Donald J. Farias, a Tangoe executive, falsified business records, some of which were provided to Tangoe's external auditors to support revenue recognition decisions.
The SEC's complaint, filed in federal court in Connecticut, charges Tangoe, its former CEO Albert R. Subbloie, former CFO Gary R. Martino, former Vice President of Finance Thomas H. Beach, and former Senior Vice President of Expense Management Operations Donald J. Farias. Each is charged with violating provisions of the federal securities laws. Tangoe, Subbloie, Martino, and Beach have agreed to settle the SEC's charges without admitting or denying the allegations, and to pay civil penalties in the amount of $1.5 million, $100,000, $50,000, and $20,000, respectively. The settlement is subject to court approval.
The SEC's case is being handled by Xinyue Angela Lin, Deena R. Bernstein, Trevor Donelan, and Paul G. Block of the Boston Regional Office.