Fred Gold, a former Arthur Andersen partner, has settled a civil suit against him, alleging fraud in relation to an American Tissue audit, by agreeing to a permanent anti-fraud injunction, $US100,000 civil penalty and practice suspension from USA’s Securities and Exchange Commission (SEC) in settlement of litigation.
Gold consented to the settlement without admitting or denying the commission's findings which alleged Gold helped American Tissue commit a $US300m (₤148m) fraud.
The SEC complaint alleged that, in 2000, American Tissue fraudulently inflated reported assets and earnings by improperly capitalising $US15.6m of previously expensed supplies and overvaluing its finished goods inventory by at least $12.5 million; Gold knew or was reckless in not knowing that American Tissue's finished goods inventory was overstated and that supplies American Tissue used in its manufacturing processes had been improperly classified as inventory instead of expenses.
SEC further alleged Gold directed others to alter audit work papers in an attempt to conceal audit work failures and destroyed documents and e-mails in a further attempt to conceal the audit failures.
Earlier this month, two other former Arthur Andersen partners, John Parson and Brendon McDonald, agreed to settle civil charges against them also in relation to the American Tissue audit.
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