Long after it was clear that VoIP Inc was swirling down the drain for good, the SEC has finally stepped in to sniff around. What it found will surprise only those who weren’t watching at the time. The SEC says that through 2004 and 2005 executives of the company cooked the books, inventing revenues to make it look like they were doing better than they were. Well, ok that is a bit surprising, because their reported revenue numbers never looked the least bit healthy, and their costs were even worse – you’d think if someone is going to cheat they might as well cheat enough to win or at least to look viable.
But no, they apparently did just enough to manage to keep the company afloat so they could keep selling stock – CEO Ivester managed to sell $4.4M in stock before the end. And the end sure did take forever to happen, as the company managed an amazing string of toxic converts and other devices to stave off the inevitable. Their last gasp came with a claim that their patent portfolio was worth $1.25B and that they would be suing a bunch of Fortune 500 companies. I know lawyers exaggerate a bit here and there, but by three orders of magnitude? I thought only politicians were that brazen.
The SEC apparently wants them to give all the money back and be barred from running another publicly held company. That last part shouldn’t be too hard, any publicly held company that would hire these guys after the way they ran VoIP Inc (independently of the truth of these new SEC charges) would have to be crazy. But with Nacchio now serving his time at the country club up the river, one has to wonder why the SEC isn’t going further than this.
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