The Securities and Exchange Commission has filed securities fraud charges against three former executives of national restaurant chain Buca Inc., which operates the Buca di Beppo and Vinny T's of Boston national restaurant chains.
Former chief executive Joseph Micatrotto has already agreed to settle the charges, agreeing to a civil penalty of $500,000 and being barred from serving as an officer or director of a public company. He also transferred the title of an Italian villa to Buca.
Charges were also filed against the company's former chief financial officer Greg Gadel, and its former controller Daniel Skrypek. According to the SEC, the three men received about $1 million in undisclosed compensation, participated in undisclosed related party transactions, and committed financial statement fraud from 2000 to 2004.
"Buca's top officers created a tone at the top and a corporate culture that allowed them to loot the company and engage in a financial fraud," stated Linda Thomsen, the SEC's Director of Enforcement. "
The SEC said that Gadel and Skrypek approved many of Micatrotto's inappropriate reimbursement requests -- including $131,000 in cash withdrawals from ATMs; a total of $127,000 for the same airline tickets submitted for reimbursement multiple times; the entire bill for the groom's dinner at his son's wedding; and other personal expenses, such as dog kenneling and the remodeling of homes in California, Las Vegas and Minneapolis.
Additionally, Gadel is accused of receiving nearly $100,000 in questionable reimbursements and both Gadel and Skrypek are accused of a financial fraud in which Buca inflated its income by nearly $12 million from 2000 to 2004 through improper capitalization of expenses.
Separately, an Associated Press article found that while the SEC has taken disciplinary action against more than 50 accountants in 2005 and 2006 for misconduct, few have paid compensation to shareholders and nearly half of them continue to hold valid state licenses as CPAs.
The story, which was passed on a review of public records, laid some of the blame at the feet of the SEC, which doesn't have an automatic process to notify state accounting regulators of federal disciplinary actions, and state boards that don't have the resources to battle the recent spate of corporate scandals.
