The complaint against John Blahnik, the former treasurer and vice president of treasury, mergers and acquisitions at Delphi Corp. was that he had participated in 3 fraudulent schemes, filing materially false and misleading financial statements on the company’s Forms 10-K for 2000 and 2003, and Forms 8-K for 2001 and 2003-2005.
The SEC alleged that Blahnik participated in fraudulent schemes at Delphi that led to filing materially false and misleading financial statements on the company’s filings for 2000 and 2003. The complaint stated that Delphi improperly accounted for two round trip transactions as sales rather than as financing transactions leading to materially overstating their net income for Q4 2000, with the ripple effect of overstating their EPS and cash flows from operations, some of the key numbers that investors rely on to judge the strength of a company. Thats not the end of it, from 2003 to 2004, Delphi intentionally failed to disclose material sales of accounts receivable, or factoring.
To settle the case, Blahnik agreed to pay $100,000 to settle accounting fraud charges with the Securities and Exchange Commission.He was also prohibited Blahnik from serving as an officer or director of a public company for five years. What bothers me is the amount of settlement, $100,000 doesnt sound like an amount to deter senior executives from getting involved with cooking the books!
