The Securities and Exchange Commission on Dec. 6 charged American Renal Associates and three of its senior executives for their alleged roles in a revenue manipulation scheme.
The commission alleges that the Beverly, Mass.-based dialysis service provider and the executives manipulated revenue adjustments, called topsides, to embellish the provider's financial performance. The three executives facing allegations are former CFOs Jonathan Wilcox and Jason Boucher and former controller Karen Smith.
The SEC claims that American Renal Associates identified proper topside adjustments but did not record them until the revenue adjustments were needed to meet financial targets. The SEC further alleges that American Renal Associates and the three executives misled its auditor to prevent discovery of the revenue enhancement scheme.
The SEC claims that the scheme took place from 2017-18.
"ARA and its senior executives allegedly engaged in an extensive revenue manipulation scheme for nearly two years," said Jennifer Leete, associate director of the SEC's Division of Enforcement. "The SEC will continue to hold companies and their executives responsible for providing investors with misleading financial information."
The SEC filed its complaint in the U.S. District Court for the Southern District of New York. Without admitting or denying the allegations in the complaint, the company agreed to a permanent injunction and a $2 million civil penalty, which needs court approval.