SEC Charges Former CFO and Coo with Falsifying Books and Records and Circumventing Internal Controls to Misappropriate Funds

Litigation Release No. 25454 / July 27, 2022

Securities and Exchange Commission v. Frank Okunak, No. 1:22-cv-06389 (S.D.N.Y. filed July 27, 2022)

The Securities and Exchange Commission today announced it was charging Frank Okunak, the former Chief Financial Officer and Chief Operating Officer of a subsidiary of a public global advertising and marketing company, with falsifying books and records and circumventing accounting controls to misappropriate more than $16 million for his benefit.

The SEC's complaint, filed in federal court in Manhattan, alleges that Okunak directed the creation of, and in some cases approved for processing and payment, falsified purchase orders and invoices that purported to relate to services being performed for his employer, but in reality did not. As described in the complaint, the purchase orders and invoices were instead used to direct funds to companies in which Okunak had an interest, companies performing services for companies in which he had an interest, and to pay for his personal expenses. For example, Okunak allegedly used falsified purchase orders and invoices to direct $2.5 million to a company he owned, and directed $90,000 to a sports complex operator to pay for his suite license fee. According to the complaint, Okunak circumvented internal controls by submitting false certifications that failed to disclose his conflict of interest and his knowledge of improper payments. We allege that Okunak also circumvented controls related to the onboarding and payment of vendors.

The SEC's complaint charges Okunak with violating Section 13(b)(5) of the Securities Exchange Act of 1934 and Rule 13b2-1 thereunder, and with aiding and abetting violations of Section 13(b)(2)(A) of the Securities Exchange Act of 1934. The complaint seeks permanent injunctive relief including an officer and director bar, disgorgement plus prejudgment interest, and civil penalties. Okunak has consented to the entry of a judgment that enjoins him from violating the charged provisions and from serving as an officer or director of an issuer with securities registered under Section 12, or required to file reports pursuant to Section 15(d), of the Securities Exchange Act of 1934, with monetary relief to be determined by the court at a later date. The settlement is subject to court approval.

In a parallel action concerning the same conduct, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Okunak.

The SEC's investigation was conducted by Brian Kudon, Nicholas Karasimas, Kerri Palen, James Addison, and Sandeep Satwalekar in the New York Regional Office. The litigation will be led by Mr. Kudon, Mr. Karasimas, and Mr. Satwalekar. The case is being supervised by Sheldon L. Pollock. The SEC appreciates the assistance of the United States Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.