PITTSBURGH (CN) – World Health Alternatives CEO Richard McDonald defrauded the company of $6.4 million “for his personal benefit,” the SEC claims in Federal Court. McDonald “was the principal architect of the fraud” at the now-defunct medical staffing company, says the SEC, which demands another $4.7 million from three co-defendants.
Controller Deanna Seruga and former CEO Marc Roup are also named as defendants, as is the company’s former outside securities counsel, Joseph Emas.
McDonald at various times was CEO, CFO, principal accounting officer and chairman of the board. The SEC says he juggled the books to understate expenses and liabilities, and created false financial statements to make World Health appear more profitable and conceal his misappropriations.
McDonald’s fellow directors are accused of following his orders to create the phony records, and allowing McDonald to misappropriate the money by directing World Health to “repay” him more money for a loan to the company than he actually had loaned it, and by keeping money from sales of newly issued stock.
McDonald resigned in August 2005 and the company filed for bankruptcy in February 2006, after announcing “apparent discrepancies in the amount of the company’s outstanding stock,” according to the complaint.
McDonald, 35, of Leechburg, Pa., is accused of misappropriating $6.4 million.
Roup, 36, on Murrysville, Pa., and Miami, is accused of misappropriating $4.2 million.
Seruga, 34, of Pittsburgh, is accused of making $384,000 in salary and stock sales; and Emas, 55, of Surfside, Fla., of making $136,000 in fees and sales of unregistered stock.
The SEC seeks disgorgement, an injunction and civil penalties.