The Securities and Exchange Commission settled charges of accounting violations by two former executives at First American Health Concepts Inc., a marketer of vision care plans.
The violations occurred in 1999, when executives signed off on end-of-year income figures that the SEC said they knew to be inflated. The company restated its earnings in 2001, and was acquired a year later by Italian eyeglass company Luxottica Group SpA, which also owns the Ray-Ban, Lenscrafters, Pearle Vision and Sunglass Hut brands.
The charges were brought and settled on Monday against former chairman John Behrmann and former chief financial officer Margaret Eardley. Both knew the accounts receivables hadn't been reconciled for at least a year and were out of balance with the company's general ledger when signing off on the 1999 year. The discrepancy allowed the company to report a profit.
Behrmann agreed to pay a $75,000 fine and be barred from serving as a corporate officer or director. Eardley will pay $25,000; the SEC said that she informed Behrmann of the problem but followed his order to ignore it.
In a related move, John Back, a former KPMG LLP auditor responsible for auditing First American Health Concepts, agreed to be barred from public company accounting after the SEC said that he knew or should have known of the accounting problems. All three settled without admitting or denying the SEC allegations.
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