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Friday, May 24, 2024 | Back issues
Courthouse News Service Courthouse News Service

Pull the Other One, SEC Tells NIC

KANSAS CITY, Kan. - As CEO, Jeffery Fraser and his company NIC told investors that Fraser worked "virtually for free," concealing his receipt of more than $1.2 million over 5 years, and more than $1 million in other "perquisites," the SEC claims in Federal Court. NIC describes itself as "the nation's leading provider of official government portals, online services, and secure payment processing solutions."

The SEC sued NIC, Fraser, NIC's former CFO Eric Bur, and its former COO Harry Herington. It sued NIC's present CFO Stephen Kovzan in a separate complaint.

According to the SEC complaint:

"Fraser's undisclosed perquisites included over $4,000 per month to live in a ski lodge in Wyoming; monthly cash payments to Fraser for purported rent for a Kansas house owned by an entity Fraser set up and controlled; vacations for Fraser, his girlfriend, and his family; Fraser's flight training, hunting, spa, skiing, and health club expenses; computers and electronics for Fraser and his family; a leased Lexus SUV; costs for Fraser to commute by private aircraft from his home in Wyoming to his office at NIC's Kansas headquarters; and other day-to-day living expenses such as groceries, liquor, tobacco, nutritional supplements, and clothing.

"For most of the period, Fraser did not have a personal credit card and routinely charged day-to-day living expenses on NIC credit cards. In order to have NIC pay for these personal expenses, Fraser submitted expense vouchers that falsely claimed personal items were business related. Fraser disregarded NIC's policies requiring him to ensure full disclosure in Commission filings and to achieve responsible use of and control over assets. Fraser did not provide documentation of business purpose for any of his expenses before mid-2006, failed to keep accurate records of funds spent, used NIC credit cards for non-business purposes, and failed to disclose his perquisites in NIC's Commission filings."

The SEC adds: "NIC's related party transaction disclosures for 2002 through 2005 also were misleading. NIC disclosed it paid over $1.3 million to rent private planes from Fraser's entity but failed to disclose it paid an additional $1 million to other people and entities to fly and operate the planes for Fraser."

Bur and Herington are accused of signing off on the bogus "disclosures" in NIC's public findings, and aiding and abetting NIC in its reporting and proxy violations.

The SEC seeks penalties and injunctions.

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