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Penthouse International Inc.

Washington, DC: (May-15-07) The US Securities and Exchange Commission brought charges against Penthouse International Inc., alleging that the company was guilty of accounting fraud and financial reporting violations. The SEC claimed that the company used an unauthorized electronic signature of Bob Guccione, the magazine's former chief executive, to meet Sarbanes-Oxley certification requirements in its 2003 first-quarter report. Former Penthouse executive Charles Samel and former shareholder Jason Galanis prepared and filed the misleading report, knowing Guccione had not seen or approved it and Penthouse's auditor had not done a proper review. The SEC claimed that in the 2003 report, Penthouse improperly booked a $1 million upfront payment in connection with a five-year Web site management agreement as revenue, as well as changing a loss of more than $165,000 to a net profit of more than $825,000. In a settlement reached, Charles Samel and Jason Galanis will both pay $60,000 to settle accounting fraud charges and be barred for five years from serving as officers or directors of any public company, although neither man admitted or denied wrongdoing as part of the settlement. [WEBCPA: ACCOUNTING FRAUD]


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Published on May-15-07


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