Three top executives at a large mortgage company schemed to hide the firm's deteriorating financial condition from its investors and auditors before the firm finally failed, the Securities and Exchange Commission said Tuesday in a suit charging the executives with fraud.
An SEC federal court complaint named Santa Fe, New Mexico-based Thornburg Mortgage chief executive Larry Goldstone, former chief financial officer Clarence Simmons and former chief accounting officer Jane Starrett. The executives denied the charges and vowed to fight them.
According to the complaint, the charged executives fraudulently overstated the firm's income by over $400 million and falsely recorded a profit instead of an actual loss for the fourth quarter of 2007. The scheme was in effect while the firm was facing a severe liquidity crisis and could not make on-time payments for substantial margin calls by its lenders in the weeks ahead of filing of its annual report on February 28, 2008.
Even though the
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