NTRZ News DJ SEC Charges NutraCea, Former Executives In Alleged Accounting Scheme.
Thursday, January 13, 2011 4:59 PM
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News for 'NTRZ' - (DJ SEC Charges NutraCea, Former Executives In Alleged Accounting Scheme)
DOW JONES NEWSWIRES
The U.S. Securities and Exchange Commission on Thursday charged health-food products manufacturer NutraCea (NTRZ) and five former employees for engaging in an alleged fraudulent accounting scheme to inflate sales .
The agency alleges that Arizona-based NutraCea, which focuses on processing and distributing stabilized rice bran and other rice bran-based ingredients, booked false sales and engaged in "improver revenue recognition practices to disguise its true operating results" in its 2007 annual report and financial statements for the second and third quarter of that year.
The SEC also charges NutraCea's former Chief Executive Bradley D. Edson, former Chief Financial Officer Todd C. Crow and former senior vice president and secretary Margie Adelman for their alleged roles in the scheme. The SEC also charged NurtraCea's former controller Joanne D. Kline and former director of financial services Scott Wilkinson.
NutraCea and four of the five individuals agreed to settle the SEC's charges against them, and the agency's litigation continues against Crow.
The SEC's complaint filed in an Arizona District Court alleged that NutraCea, Edson, Crow and Adelman falsified NutraCea's sales figures in 2007, and Kline and Wilkinson engaged in improper accounting by recording the false revenues. NutraCea booked $2.6 million in false sales to Bi-Coastal Pharmaceutical Corp. in the second quarter, resulting in overstated product sales of as much as 35%, the SEC alleged.
It was also alleged NutraCea improperly recorded revenue on a bill and hold transaction related to a $1.9 million sale of a product to ITV Global Inc. in the fourth quarter.
Without admitting or denying the SEC's allegations, Edson agreed to pay a $100,000 penalty, reimburse NutraCea $350,000 in bonuses he received in 2008 and agreed to a permanent officer and director bar. Kline and Wilkinson agreed to each pay a penalty of $25,000, with Adelman consenting to a five-year officer and director bar.
NutraCea, meanwhile, consented to the entry of the order. Last month, the company announced the settlement with Edson, who resigned from his posts with the company in March 2009. At the time, NutraCea Chairman and Chief Executive W. John Short said the company was pleased to recover stock options held by Edson and "sever all ties" between the two parties.
A NutraCea spokeswoman wasn't immediately available to comment Thursday on the SEC's charges.
-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com
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(END) Dow Jones Newswires
January 13, 2011 16:58 ET (21:58 GMT)
Copyright (c) 2011 Dow Jones & Company, Inc.- - 04 58 PM EST 01-13-11
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