The Securities and Exchange Commission filed a civil injunctive action Friday against the former CFO of carbon fiber manufacturer Zoltek Companies, charging him with accounting violations.

Kevin J. Schott was charged with violating the internal controls, books and records, lying to accountants, and certifications provisions of the Securities Exchange Act of 1934.

The SEC’s complaint alleges that Schott circumvented Zoltek's internal accounting controls and caused Zoltek to make two payments totaling $250,000 to an outside financing consultant who had raised funds for Zoltek in the past, despite an instruction from Zoltek's CEO to not to make the payments. Instead of following Zoltek's internal controls, which required the CEO to approve all wire transfers, the complaint alleges that Schott instructed the controller of Zoltek's foreign subsidiary in Hungary on two occasions to wire the payments to the financing consultant from the subsidiary's account.

According to the complaint, Schott told the Hungarian controller that the payments were for another purpose. Schott then further concealed the payments by creating a false document that he gave to Zoltek's CEO. By mischaracterizing the payments to the consultant, Schott caused Zoltek to make false entries into its books and records. The complaint further alleges that Schott made false and misleading representations in his certifications to the public and to Zoltek's external auditor for the fourth quarter of 2007 and the first quarter of 2008.

Schott has agreed to settle the matter without admitting or denying the allegations in the complaint. Schott has consented to an order permanently enjoining him from violating the securities laws and requiring him to pay a $20,000 civil penalty.

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