SEC Charges CPA with Fraud

SEC Charges CPA with Fraud

The Securities and Exchange Commission imposed sanctions Thursday against a Florida-based CPA for performing deficient and fraudulent audits and quarterly reviews for eight publicly traded companies, and issuing false and misleading audit opinions on the companies’ annual financial statements.

Terry L. Johnson, 56, of Casselberry, Fla., agreed to settle the SEC’s fraud charges and will be suspended from practicing as an accountant on behalf of any publicly traded company or other entity regulated by the SEC.

While conducting its investigation, the SEC discovered that following his release from prison, convicted felon and former CPA Stephen P. Corso served as the chief financial officer of several publicly-traded companies, including Primco Management, Inc., one of Johnson’s audit clients.

Corso signed Primco’s  annual and quarterly financial reports and certifications filed with the SEC using the alias names of “Steven J. Corso” or “Steven John Corso”, despite a 2009 bar from appearing or practicing before the SEC as an accountant, which was based on Corso’s felony conviction for wire fraud and attempted tax evasion. 

Corso, of Encinitas, Calif., also is alleged to have solicited business on the false pretense that he was an “SEC Consultant and Attorney.” Corso reaped more than $460,000 in illegal profits generated from his violation of the prior SEC order, said the Commission.

According to the SEC's order, Johnson’s audit deficiencies included the failure to properly plan audits, obtain sufficient appropriate audit evidence, and maintain audit documentation. Johnson also allegedly falsely stated in audit reports that he conducted his audits in accordance with the standards of the Public Company Accounting Oversight Board even though his conduct of the audits violated numerous PCAOB auditing standards.  As alleged in the order, Johnson also created back-dated, phony work papers to create the false appearance of having proper work papers once he learned he was the subject of an SEC investigation.

Some of the companies he audited included ADM Endeavors, Boreal Water Collection, Legendary Ventures, Monster Arts, Primco Management, Puissant Industries, UMED Holdings and Valley High Mining Company.  Read more on Accounting Today.