Monday, January 24, 2005

Penthouse Execs Accused of Accounting & Sarbanes-Oxley Violations

The SEC filed a civil injunctive action on Jan. 24 accusing Penthouse International, Inc. (now PHSL Worldwide, Inc.), Charles Samel, a former officer of the company, and Jason Galanis, shareholder in the company, of accounting and Sarbanes-Oxley certification violations.  In addition, the Commission filed and settled a separate cease-and-desist proceeding against Penthouse founder and former CEO Bob Guccione related to the Sarbanes-Oxley violations.  The SEC Litigation Release states that "Penthouse improperly included as revenue on the financial statements for that quarter $1 million received as an up-front payment in connection with a five-year website management agreement" and that "Samel and Galanis prepared and filed the false Form 10-Q, and they did so knowing or recklessly disregarding that Guccione had not seen or approved it, that Penthouse's auditor had not performed its required review of the Form 10-Q, and that it would be improper to include the $1 million payment as revenue for the quarter ended March 31, 2003." The Commission is seeking inter alia director-and-officer bars against Samel and Galanis.  The SEC complaint (here) does not have any pictures or forum items.(ph)

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