I think the landscape is changing in "pinkie land", most of these guys have been able to do and say what they wanted without impunity. That's why they hire moderators and "spokesmen" to buffer them from scrunity. Times they are achangin.
In the NEWS-JAILED CKYS CEO Nabbed by FBI
Posted on Thursday, March 15 @ 22:54:52 CDT
By Bethany Anderson
MN1 Investigates
ST GEORGE, Utah (March 15, 2007) – It’s been less than a month since trade resumed on CyberKey Solutions’ (PK:CKYS) stock, but the company finds itself in hot water again as its CEO has apparently been arrested and briefly jailed by the Federal Bureau of Investigation.
A source close to the situation said Jim Plant has been charged with securities fraud in district court. Documentation has not appeared on the US Pacer website, which serves as a clearinghouse for all court documentation on the federal level. As soon as they do appear, Market News First will relay the information.
Plant was apparently arrested by FBI agent Greg Haynie March 13, and booked into the Washington County, Utah, jail. He was released a few hours later, according to paperwork obtained from the Washington County Sheriff’s Office.
Nary a word of the arrest was mentioned in a press release sent out by CyberKey Thursday, where it said an internal investigation indicated that an unnamed company official “utilized improper accounting methods and reporting procedures while handling critical company contracts.”
“CyberKey’s accounting and reporting of certain matters may be in violation of the practices governed under securities laws,” the release added.
According to the release, the company’s accounting for revenues received and accounts receivable contained “numerous material errors” when it came to accounting for fulfilling a third party contract with the Department of Homeland Security.
“In November 2006, the Company began to discover information which indicated that this contract was not directly with DHS but instead with a third party distributor that was representing it was having the Cyberkey products delivered directly to DHS facilities in different locations,” the release continued. “The Company has discovered that none of the products supposedly sold to this third party distributor had been delivered to DHS as had been represented repeatedly during 2006.”
The company said that the revenues from the contract weren’t realized because the third party distributor “apparently circumvented the Company’s relationship with its manufacturer in China and secured direct payment and delivery of the CyberKey products without paying CyberKey anything.” The contract, the company said in the release, would have received more than $20 million in 2006 and operating profit totaling more than $12 million.
The company also said that its comptroller told the company’s legal counsel last week that the company’s financials for the last five quarters were inaccurate, and that she had improperly entered financial information into the accounting system and forged several documents. She was removed from her position last week, the company said.
In what is probably a notable case of chutzpah, CEO Jim Plant said in the release that he was “deeply troubled by the findings related to the accounting practices of our company.”
Plant disavowed any knowledge of the “problems,” but did say that they “happened on my watch.” He added that the company was putting in safeguards to avoid a similar situation again, and that the company would also be releasing corrected financial statements.
On Feb. 20, the company resumed trading after being suspended by the SEC 10 days earlier.
“It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of CyberKey Solutions, Inc. ("CyberKey") because of questions regarding the accuracy of assertions made by CyberKey, and others, in press releases and other public statements to investors, concerning among other things: (1) contracts with the Department of Homeland Security and/or other government agencies, (2) revenues received pursuant to those contracts, and (3) accounts receivable generated by those contracts,” the order for the suspension read.
CyberKey’s website says that it partners with “industry leading manufacturers and distributors to deliver secure USB drive-based solutions to vertical markets and content owners, service providers and resellers.”
According to unaudited financials for fiscal year 2006 that are posted on CyberKey’s website, the company says it generated over $33,000,000 in revenues and has also reported total assets exceeding $28,000,000, which is a 45 percent increase over the $19,500,000 in assets reported for the first half of 2006.
That $33 million in revenues includes purchase orders for 150,000 CyberKey from various federal agencies, the company said in a Jan. 29 press release.
“This was truly an amazing year for the growth of our company and it is reflected in our financial statements. We will continue to aggressively market our cutting edge security solutions and product line to our ever expanding list of vertical markets," Plant said at the time of the press release.
AI
