The former CEO and CFO of FTE Networks Inc., located in Naples, Florida, have been charged with accounting fraud by the United States Securities and Exchange Commission (SEC). The network infrastructure company and the two former executives – Michael Palleschi and David Lethem – allegedly carried out numerous illegal activities over several years.
According to the SEC, FTE Networks committed the following fraudulent acts:
- Conducted a multi-year scheme that massively exaggerated the company’s revenue.
- Misused millions of dollars in funding for personal expenditures.
- Used convertible notes to conceal the company’s $22.7-million issuance.
To commit the alleged fraud, the CEO and CFO apparently kept other FTE Networks staff in the dark and presented them with misleading information. A third-party auditor that examined the company’s finances and operations was also allegedly misled by the pair. Perhaps most daring, the accused executives apparently had dealings with entire construction projects that never existed. The majority of the misused funds were reportedly used on luxury automobiles and jets, as well as salary increases for themselves.
The SEC complaint seeks:
- Injunctions
- Barring the accused from future securities-related operations
- Disgorgement and prejudgment interest
- Clawback of equity-based compensation
The U.S. Attorney’s Office for the Southern District of New York has brought criminal charges against FTE Networks’ former CEO and CFO. The two could be slammed with criminal penalties if convicted in that case, which will be handled separately from the SEC complaint.
Can You Sue FTE Networks for Accounting Fraud?
Were you defrauded by FTE Networks Inc. in Naples, Florida? With the SEC complaint and the criminal charges pending against the former CEO and CFO of the company, there is no better time than now to speak with a securities litigation attorney about your options.
Vernon Litigation Group represents the defrauded in securities lawsuits in pursuit of justice and deserved compensation. We have an office right here in Naples, so we are closely familiar with local companies and courts. If you lost money due to FTE Networks’ alleged misdeeds or you suspect that you did, then call our firm at (239) 319-4434 right now to schedule a consultation.