Penthouse International Inc. has settled charges of accounting fraud and financial reporting violations, the Securities and Exchange Commission announced last week.Former Penthouse executive Charles Samel and former shareholder Jason Galanis will both pay $60,000 to settle accounting fraud charges and be barred for five years from serving as officers or directors of any public company, although neither man admitted or denied wrongdoing as part of the settlement.
The charges revolved around SEC accusations that the company used an unauthorized electronic signature of Bob Guccione, the magazine's former chief executive, to meet Sarbanes-Oxley certification requirements in its 2003 first-quarter report. Samel and Galanis prepared and filed the misleading report, knowing Guccione had not seen or approved it and Penthouse's auditor had not done a proper review, the SEC said.
According to the SEC, in that 2003 report, Penthouse improperly booked a $1 million upfront payment in connection with a five-year Web site management agreement as revenue, as well as changing a loss of more than $165,000 to a net profit of more than $825,000.
Guccione resigned as chief executive in late 2003, when the magazine filed for bankruptcy. The company later reorganized and Penthouse is now published by Penthouse Media Group, formerly known as General Media. Guccione reached a settlement in January 2005 with the SEC to settle allegations of faulty financial disclosures.
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