Andrew StranbergFormer executives at Swisher Hygiene (SWSH) have been charged by the SEC in connection with the North Carolina-based firm’s dodgy accounting practices, which ultimately led the stock into collapse.
The Securities and Exchange Commission filed civil charges on May 23, six months after filing criminal charges against the trio.
Former Swisher CFO Michael Kipp and former director of external reporting Joanne Viard face multiple charges of violating securities laws for alleged accounting manipulations. Former Swisher director of financial planning, John Pierrard, settled with the SEC by agreeing not to serve as an officer or director of a public company.
Pierrard has faced no financial penalty as he cooperated with the investigation.
It’s not the first scandal that has dogged the company, nor is it likely to be the last; existing Swisher executives are in hiding from a takeover offer from Andrew Stranberg, an entrepreneur with holdings in international shipping, promotional products and assorted other investments.
Stranberg has offered $0.98 per share for SWSH stock, which is currently halted at $0.93 and could remain that way for the next three years, as management has set that timeframe for the orderly wind-up of the company.
Shareholders looking to get their money back were devastated when existing Swisher executives announced that an agreement to dissolve the company would seem them take three years to complete, and that there would be no assurance of any return after that time.
Stranberg’s offer, meanwhile, was met with a stone wall news release from SWSH management, claiming they had no assurance the buyer had the money he was promising, and that no formal offer had been made.
I talked to Stranberg and, though he wouldn’t go into detail of his dealings with the company other than to say, “They won’t talk to me,” he did confirm that he has the money sitting in escrow, waiting for the SWSH board to take it.
One significant shareholder of SWSH stock contacted me about the proposed deal, stating, under a request of anonymity, “The board have decided to reward themselves with as much of my money as they can over the next three years. I’m told (and I can’t confim this but the person who told me has knowledge over such things) the company has pre-paid for health insurance for them all for the next ten years, they have a full executive sitting there getting six-figure salaries to just stare at the money they made from selling all our assets, and I’m supposed to just sit here for the next 36 months while they work their way through the dough. We’ve got an offer for a premium to market – take it already.”
In October, the U.S. Attorney’s Office in Charlotte announced Pierrard had pleaded guilty to his role in Swisher’s scheme to manipulate its books and inflate reported earnings. A grand jury duly indicted Kipp and Viard on securities fraud and obstruction of justice charges.
The company accepted responsibility for the conduct of its management team and paid a $2 million penalty.
According to a report in the Charlotte Observer, the SEC complaint alleges Kipp took advantage of Swisher’s weak internal controls and “directed his accounting group to aggressively reevaluate and manipulate various acquisition-related reserves and expenses” to meet predetermined earnings targets. Viard, according to the complaint, “identified potential acquisition-related entries that could be reclassified to meet earnings targets.”
Meanwhile, Michael Stranberg’s money gathers dust, and shareholder dollars continue to whittle down.
AndrewDisclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.