Litigation Release No. 23657 / September 27, 2016

Securities and Exchange Commission v. Keith Hunter, Civil Action No. 2:16-cv-07246 (C.D. Cal. filed Sept. 27, 2016)

Litigation Release No. 23657 / September 27, 2016

The Securities and Exchange Commission today announced that a former IT executive at the Commonwealth Bank of Australia (CBA) has agreed to settle charges that he participated in a scheme to defraud Computer Sciences Corporation (CSC) of approximately $98 million.

According to the SEC's complaint, filed in federal court in Los Angeles, California, CSC's former Executive Vice President of Cloud Computing (the CSC executive) bribed Hunter to have CBA enter into contracts with CSC in 2013 and 2014 so that the CSC executive could receive an earn-out payment. The alleged purpose of entering into the CBA contracts was to meet a $20 million revenue threshold before a certain date that was required for Service Mesh, Inc. (SMI), a Santa Monica, California cloud computing company, to earn an additional $98 million earn-out payment from CSC's November 2013 acquisition of SMI. The SEC's complaint further alleges that the CSC executive, a majority shareholder of SMI, received over $30 million of the additional $98 million earn-out payment, and funneled at least $630,000 to Hunter for his role in the fraudulent scheme.

To settle the allegations in the SEC's complaint, Hunter consented to the entry of a final judgment permanently enjoining him from violating the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, barring him from serving as an officer or director of any U.S. issuer, and ordering him to pay $651,990 in disgorgement and prejudgment interest with credit for any amounts paid to the Australian and U.S. criminal authorities in connection with their prosecutions of Hunter. The settlement is subject to court approval.

In a parallel criminal action, the U.S. Attorney's Office for the Central District of California today announced criminal charges against Hunter. Hunter has also pleaded guilty to bribery charges in Australia and is currently awaiting sentencing.

The SEC's continuing investigation is being conducted by Catherine W. Brilliant and supervised by Ansu N. Banerjee. John Bulgozdy will serve as trial counsel. The SEC appreciates the assistance of the U.S. Attorney's Office for the Central District of California, the Federal Bureau of Investigation, and the New South Wales Police Force.

SEC Complaint