BusinessCompany NewsSEC charges Hurricane Katrina firm with accounting fraud

SEC charges Hurricane Katrina firm with accounting fraud

Home Solutions of America execs charged with fraudulently booking revenues to inflate its share price, after Hurricane Katrina

A post-hurricane restoration company and several of its executives have been
charged by US regulators for inflating the company’s stock price after Hurricane
Katrina hit New Orleans.

The
SEC
alleges that the executives have fraudulently booked deals to boost its results
and inflate its stock price before selling their shares.

Executives from Home Solutions of America including CFO Jeff Mattich, then
CEO Frank Fradella, president of subsidiary Fireline Brian Marshall, booked
millions of dollars of bogus revenue.

“The company’s financial results were largely fabricated and its public
statements were intended to deceive,” said Rose Romero, director of the SEC’s
Fort Worth Regional Office.

“Simply put, instead of rebuilding New Orleans and other hurricane-stricken
areas, they constructed a fantasyland of fraud.”

Four others charged by the SEC simultaneously agreed to settle on the
following terms, without admitting or denying the allegations in the complaint,
including: former Home Solutions CFO and COO, Rick O’Brien, who consented to a
permanent injunction and a $130,000 (£79,000) penalty; and former Fireline
controller Stephen Gingrich, who consented to a permanent injunction, a $25,000
penalty, and an administrative order barring him from practicing before the
commission as an accountant for at least three years.

Further reading:

View
the SEC’s full statement

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