MANHATTAN (CN) – Two former top officers of Posterscope, one of the world’s largest billboard companies, were charged Thursday with a 5-year, $19.75 million accounting fraud that made it appear the company was meeting performance targets, so they could get higher salaries, bonuses and stock options.
James Buckley, 48, the company’s former finance director, was arrested Thursday at his home in Los Angeles.
The company’s former U.S. division president Todd Hansen, 48, was expected to turn himself in today (Friday).
Both are charged with conspiracy to commit wire fraud and wire fraud. Each charge is punishable by up to 20 years in prison. Hansen also is charged with mail fraud.
The 12-page complaint identifies their company only as Company-1, but wire services, including The Associated Press and The Wall Street Journal, citing trade magazines, said the men held the positions at New York-based Posterscope USA, which describes itself on its web page as “the world’s largest out-of-home communications agency.
The federal complaint states that from about 2004 to about 2009, the men “engaged in a scheme to cause false accounting entries to be made in the books and records of Company-1 in order to artificially improve the appearance of Company-1’s financial performance and, thereby, to obtain higher compensation and bonuses for themselves.”
The 12-page statement from an FBI agent describes Company-1 as “the United States division of one of the world’s largest outdoor advertising companies … a wholly owned subsidiary of a United Kingdom corporation (‘Parent-1’) with common stock listed on the London Stock Exchange.
The parent company was identified, but not in the complaint, as Carat.
The complaint does not state by how much swag the men got from the alleged scheme, but it says Hansen got about $1.1 million in salary and bonuses during the years in question, and Buckley got more than $650,000.
The FBI agent says that an outside accountant and Parent-1 determined that, “during the relevant time period, Company-1 had improperly overstated its net income by a total of approximately $19.75 million.”
Among other things, Hansen ordered the company controller to record rebates as revenue, though, “as Hansen well knew,” the company never got the rebates and was not entitled to get them, the FBI agent said.
“Former Controller-a repeatedly told Hansen and Buckley that he/she was uncomfortable making the false revenue entries that Hansen and Buckley were directing him/her to make, but Hansen and Buckley continued to direct him/her to make such false entries,” the complaint states. “Without disclosing it to Hansen or Buckley, Former Controller-1 secretly kept an ongoing record of false entries (the ‘Record of False Entries’) that he/she made at Hansen and/or Buckley’s direction.”
The former controller voluntarily provided the record of false entries, “which reflects millions of dollars in revenue and other entries,” the complaint states.
Hansen, who had authority to issue company checks, also had company employees write checks to pay the rent on his stepson’s apartment, to pay his initiation and dues for a country club in Bakersfield, Calif., for airplane tickets for himself and his family, and paid “tens of thousands of dollars” to his friends and family under the guise that they were consultants, according to the complaint.
Neither the company itself nor its corporate parent is accused of wrongdoing.