The former top finance executive of a boxing promoter has settled civil charges brought by the Securities and Exchange Commission, which accused him of filing fraudulent financial reports.
James DiLorenzo, previously financial and accounting officer of Cedric Kushner Promotions, will pay a $25,000 penalty and be barred from serving as an officer or director of a public company for three years.
The SEC filed a complaint in 2004 charging DiLorenzo and others with fraud and other securities law violations in connection with the filing of an annual report and amended report in 2003 without the consent of the company’s auditors.
The complaint also alleged that DiLorenzo and others knew, or were reckless in not knowing, that the company’s financial statements included in its fiscal year 2002 filings were materially false and misleading.
DiLorenzo agreed to settle the charges without admitting or denying the allegations.
In 2005, also without admitting or guilt, CKP (currently called CKRUSH) and Cedric Kushner, the company’s former CEO and founder, both settled with the SEC. Kushner agreed to pay a $60,000 penalty and to be permanently barred from serving as an officer or director of a public company.
The original complaint alleged that in a filing for the year ended December 2002, CKP falsely represented that two separate audit firms had issued unqualified reports approving the firm’s financial statements. “In fact, the audit was not yet complete, and neither auditor had yet issued a report or consented to the filing,” the SEC stated.
The commission also alleged that the financial statements misstated, among other things, the company’s total assets by more than 100 percent, but that Kushner executed the certification required by the Sarbanes-Oxley Act that they fairly presented the company’s financial condition.
On May 23, 2003, the company disclosed in an amended filing that the auditors had not consented to the filing made three days earlier. Even so, the audit was still not complete as of May 23 and the financial statements that accompanied that filing were also materially false and misleading, the SEC added.
In addition, the complaint charged that the company failed to devise and maintain internal controls sufficient to ensure that transactions were recorded accurately.
CKP agreed to appoint new chief executive and financial officers, create an independent audit committee and majority independent board of directors, and retain an independent consultant to analyze the company’s internal accounting controls, recommend improvements, and oversee implementation of those improvements. “These undertakings represent an unusual departure from the Commission’s policy of limited intrusion into corporate governance, but were required by the unique facts of this case,” the SEC stated at the time.