The Securities and Exchange Commission has filed civil charges against SAExploration Holdings, a publicly traded seismic data acquisition company based in Houston, over an alleged multi-year accounting fraud that falsely inflated the company’s revenue and concealed the theft of millions of dollars.
In a complaint filed in the Southern District of New York, the SEC said senior executives engaged in an “elaborate, four-year-long fraud.” It names former chief executive officer and chairman Jeffrey Hastings, former chief financial officer and general counsel Brent Whiteley, former CEO and chief operating officer Brian Beatty, and former vice president of operations Michael Scott as defendants. It also names the spouses of Hastings and Whiteley, Lori Hastings and Thomas O’Neill, as relief defendants.
The executives allegedly entered into a series of seismic data acquisition contracts totaling approximately $140 million with a purportedly unrelated Alaska-based company that was in fact controlled by Hastings and Whiteley. The defendants allegedly misappropriated nearly $6 million from SAE and used the funds for a series of round-trip transactions then stole approximately $6 million for themselves. Whiteley allegedly misappropriated an additional $4 million through a separate fictitious invoice scheme.
The U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Hastings in a parallel action.
Hastings was arrested last month in Anchorage, Alaska. A spokesperson for the company said he was put on administrative leave more than a year ago and then resigned.
“As alleged in our complaint, SAE’s executives designed a multi-faceted fraud that enriched executives at the expense of investors,” Jennifer Leete, an associate director in the division of enforcement, said in a statement. “We will vigorously pursue wrongdoing by individuals and companies who engage in fraud and mislead investors.”
The SEC is seeking a permanent injunction against SAE and executives, civil penalties, disgorgement and office-and-director bars against the executives.