June 9, 2010
SEC Charges Former Advanced Materials Group CFO with Accounting Fraud & Misappropriation
On June 9, 2010, the SEC sued William G. Mortensen, the former CFO of Texas-based Advanced Materials Group, Inc. ("AMG"), in U.S. District Court in Dallas for fraudulently inflating AMG's publicly reported financial results over multiple quarters in 2008 and 2009. The Commission charged that Mortensen committed securities fraud, lied to accountants, falsified records and circumvented internal controls, and aided and abetted reporting, record-keeping and internal control violations. The Commission also alleged that Mortensen misappropriated hundreds of thousands of dollars from AMG to pay personal expenses.
The Commission also charged one of Mortensen's subordinates, Feng "Eric" Zheng, with lying to accountants, falsifying records and circumventing internal controls, and with aiding and abetting securities fraud and reporting, record-keeping and internal controls violations.
With respect to Mortensen, the Commission seeks civil penalties, disgorgement of misappropriated funds, a permanent bar from serving as a public company officer or director, and permanent injunctive relief. The litigation against Mortensen is continuing.
Zheng has settled the Commission's charges. Without admitting or denying the Commission's allegations, Zheng has consented to a $25,000 civil penalty and a permanent injunction against future violations of the antifraud, lying-to-accountants, reporting, record-keeping and internal controls provisions of the federal securities laws.
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