The Securities and Exchange Commission charged a telecommunications expense management company for its alleged use of fraudulent accounting practices that boosted company revenue between 2013 and 2015. Additionally, it charged four former members of the company’s senior management team for their roles in the alleged misconduct.
According to the complaint, Tangoe Inc. was formerly a publicly traded company headquartered in Connecticut. From 2013 to 2015, the firm engaged in improperly recognizing and reporting approximately $40 million in revenue out of the total of $566 million reported. In some instances, Tangoe allegedly reported revenue prematurely.
The accounting methods may have included work that the company had not performed, for example, service prepayments and non-revenue-producing transactions.
Furthermore, the SEC alleged that Donald Farias, a Tangoe executive, falsified business records. These were the same records that were provided to Tangoe’s external auditors in order to determine revenue recognition decisions.
Market Integrity and Accounting Methods
“Without accurate financial reporting, our public markets cannot function fairly or efficiently,” said Paul Levenson, director of the Boston Regional Office. “We are committed to protect the investing public against illegal accounting tactics that artificially boost company performance.”
The SEC’s complaint, filed in federal court in Connecticut, charged Tangoe, its former CEO Albert Subbloie, former CFO Gary Martino, former Vice President of Finance Thomas H. Beach and Farias, the former senior vice president of expense management operations. Each individual allegedly violated provisions of federal securities laws.
Tangoe, Subbloie, Martino and Beach have agreed to settle the charges without admitting or denying the allegations. As a result, they will pay penalties of $1.5 million, $100,000, $50,000 and $20,000, respectively.