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Univ. of Toledo College of Law

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Wednesday, July 8, 2009

Former CFO of UCI Medical Affiliates Settles Fraud, Embezzlement Charges with SEC

The SEC filed a Complaint in the United States District Court for the District of South Carolina against Jerry F. Wells, Jr. ("Wells"), a former Executive Vice President and Chief Financial Officer of UCI Medical Affiliates, Inc. ("UCI" or the "Company"), a provider of nonmedical management and administrative services based in South Carolina.  The Complaint alleges that between 2003 and 2008, Wells embezzled approximately $2.97 million from UCI through a variety of measures, including submitting unsupported check requests for non-business expenses, including construction work on Wells' personal residences and personal credit card accounts. The Complaint further alleges that Wells capitalized the expenses as fixed assets on the Company's balance sheet, causing UCI to overstate its net earnings in the affected periods. According to the Complaint, to justify capitalizing these expenses, Wells altered invoices from contractors performing work on his personal residences to suggest that the work was for one of UCI's facilities, and provided fraudulent work descriptions on the related check requests. The Complaint also alleges that Wells signed each of the Company's Forms 10-Q and 10-K and accompanying Sarbanes-Oxley certifications, thereby misrepresenting that they did not contain any untrue statements of material fact. The Complaint further alleges that, in connection with the audit of the Company's annual financial statements, Wells also signed multiple management representation letters to UCI's auditors, thereby misrepresenting that the Company's financial statements were prepared in conformity with GAAP.

 Without admitting or denying the allegations in the complaint, Wells consented to the entry of an order (1) enjoining him from violating these statutes and rules and (2) barring him from serving as an officer and director of a public company.

http://lawprofessors.typepad.com/securities/2009/07/former-cfo-of-uci-medical-affiliates-settles-fraud-embezzlement-charges-with-sec.html

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