The findings, unearthed by PricewaterhouseCoopers Forensic Services and Cap Gemini Ernst & Young, mean e-district.net will pursue legal action against former employees.
Based on information obtained from sales agencies, revenues to June 2000 amounted to £32,872 instead of the £1m stated in its interim report. And for the 17 months to 31 December 2001, e-district.net had revenues of £96,938, not the £781,571 previously reported.
In March, the company notified the Fraud Squad of the Metropolitan Police over irregularities.
Investigators also found ‘supporting documentation, both written and electronic, including debtor confirmations provided to the editors, was fabricated or altered to substantiate the false revenue’.
E-district said about £980,000 was deposited into the company’s bank accounts and recorded as being received from sales agencies, when the money had in fact come from other accounts. Fabricated supporting documentation – stating receipts came from sales agencies- was also discovered.
The reports also showed a substantial overstatement of registered users and evidence of collusion within the company in connection with the overstatement.
Chairman Frank Lewis, who is also acting chief executive, said e-district would continue operations, focusing its strategy on ‘the company’s core competencies, in the delivery of interactive and community entertainment products for DTV’.
The company has taken out an injunction against former chief executive Steve Laitman after freezing his assets and suspending him in February. E-district.net also suspended two other senior managers.
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