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Penthouse charged with accounting fraud

The U.S. Securities and Exchange Commission said on Monday that it charged adult publishing group Penthouse International Inc. with accounting fraud.
/ Source: Reuters

Adult magazine publisher Penthouse International Inc. defrauded investors in a 2003 quarterly financial report, U.S. regulators charged on Monday in a legal action.

The U.S. Securities and Exchange Commission said it brought accounting fraud charges against Penthouse, former Penthouse executive Charles Samel and a Penthouse shareholder, Jason Galanis, in U.S. District Court in New York.

“Penthouse, Samel and Galanis engaged in accounting fraud and financial reporting violations at Penthouse in connection with the company’s” quarterly report for the three months ended March 31, 2003, the SEC said.

Robert Guccione, former Penthouse chief executive, entered into a separate, but related settlement agreement with the SEC, the agency said.

Penthouse improperly booked $1 million in revenues in the quarterly report for an up-front payment in connection with a five-year Web site management agreement, the SEC said.

“That payment should not have been recognized in that quarter,” said the agency in a statement.

The quarterly report was also misleading because it bore an unauthorized electronic signature of Guccione and made it look like he had reviewed and signed the report, the SEC said.

“In fact, Guccione had not seen or approved the filing,” the SEC said.

Attorneys for Guccione, Samel, Galanis and Penthouse did not immediately return phone calls seeking comment.