updated 5/10/2007 9:24:55 PM ET 2007-05-11T01:24:55

The company that publishes Penthouse magazine, one of its former executives, and a former investor have agreed to settle civil accounting fraud charges, the Securities and Exchange Commission announced Thursday.

The settlement with Penthouse International Inc. and the two individuals was approved late last month by a federal judge in Manhattan, the SEC said. Without admitting or denying wrongdoing, the company — now known as PHSL Worldwide Inc. — agreed to refrain from future violations of the securities laws.

In addition, Charles Samel, a former executive vice president and director of the company, and Jason Galanis, who owned about 8 percent of the company's stock, each agreed to pay a $60,000 civil fine and to be barred for five years from serving as officers or directors of any public company. They neither admitted nor denied the SEC's allegations.

In its January 2005 lawsuit, the SEC accused Penthouse International, Samel and Galanis of accounting fraud and financial reporting violations in connection with the company's financial statement for the first quarter of 2003.

Penthouse International went into bankruptcy a few months later, and that fall, Marc Bell, a bondholder in the company, emerged with control of the magazine.

The SEC alleged in its lawsuit that Penthouse improperly accounted for a $1 million payment it received from a company owned by Galanis in connection with an agreement to manage a Web site. The SEC said the company's regulatory filing for the quarter bore the electronic signature of founder and former CEO Robert Guccione even though he didn't review it.

The SEC reached an agreement with Guccione in January 2005 to settle allegations of faulty financial disclosures.

Guccione resigned as CEO in November 2003 after the magazine slipped into bankruptcy. He began Penthouse in 1965 as a racier competitor to Playboy, and for many years it flourished, drawing big audiences with erotic photography and articles.

But the magazine ran into problems in the late 1980s after some retail outlets stopped carrying it, and in the late 1990s it took a gamble by moving to hard-core porn. Over the space of a few years, Penthouse lost half of its circulation and its business began to founder.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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