SEC accuses executives of hiding accounting errors in Southern District of Florida complaint

By Angela Underwood | Jan 8, 2018

The Securities Exchange Commission (SEC) wants restitution from a worldwide manufacturer or cables and wires with operations in Brazil, according to U.S. District Court for the Southern District of Florida records.

The Securities Exchange Commission (SEC) wants restitution from a worldwide manufacturer or cables and wires with operations in Brazil, according to U.S. District Court for the Southern District of Florida records.

The SEC is seeking a trial by jury for disgorgement of ill-gotten gains, prejudgment interest, civil penalties and other equitable relief from Mathias Francisco Sandoval Herrera, Maria D. Cidre and Jose Antonio Miranda Gonzalez of the Latin American operations of General Cable Corp. (GCC).

The case dates to 2012, when Sandoval, CEO, and Cidre, chief financial officer, allegedly failed to disclose tens of millions of dollars in accounting errors and material inventory from GCC executive management at the company’s subsidiary in Brazil, specifically instructing their subordinates to destroy any evidence of error from GCC’s internal and external auditors, according to court documents.

As a result, GCC overstated its inventory and net income that caused a "rest during the call," according to the complaint. When confronted, Sandoval and Cidre expressed disbelief. The chain of command was allegedly thwarted by a romantic relationship between Sandoval and Cidre, and “made it less likely that either would report improper conduct by the other, as required by GCC’s Code of Ethics,” the complaint states.

The company's investigation found Sandoval and Cidre signed documents proving they were aware of the materially false and misleading evidence, and the statements were then filed with the SEC, according to the complaint

The SEC alleges 13 claims against Sandoval and Cidre, including making multiple misstatements and omissions and concealment of accounting issues from GCC’s executive management. The SEC also alleges Miranda participated in the fraud perpetrated by Sandoval and Cidre

The SEC requests that the court enter a judgment "ordering Sandoval and Cidre to disgorge all ill-gotten gains obtained and losses avoided as a result of their unlawful conduct, plus prejudgment interest," according to the complaint, adding Sandoval, Cidre and Miranda should all pay civil penalties. 

The SEC is also seeking judgement "prohibiting Sandoval, Cidre, and Miranda from acting as an officer or director of any issuer that has a class of securities," according to the complaint, adding they three defendants also provide "further equitable relief as the Court deems just and appropriate or necessary for the benefit of investors," according to the complaint.

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