(Updates with a comment from Pruitt's attorney)
By Sarah N. Lynch
WASHINGTON, April 28 U.S. regulators on Friday
filed civil charges against two former executives at government
contractor L3 Technologies over accounting violations
that led the company to improperly recognize $17.9 million in
revenue from a contract with the U.S. Army.
The Securities and Exchange Commission said that David
Pruitt, former vice president of finance in the Army Sustainment
Division at L3, plans to fight the charges, while L3's former
Army Sustainment Division President Mark Wentlent has agreed to
settle related charges.
The company previously settled with the SEC in January and
paid a $1.6 million penalty.
The SEC said Friday that the improper recognition of the
company's revenue was caused by the creation of invoices that
were not actually delivered at the same time the revenue was
The regulator said that Pruitt, a CPA, allegedly tried to
hide the issues with the undelivered invoices from L3's
corporate office and its external auditor.
Pruitt's attorney John Carney said that his client, a
"highly decorated career Army officer," will be vindicated at
his hearing before an SEC administrative law judge.
"It is highly unusual for the SEC to bring a revenue
recognition case where there is no allegation of fraud and it is
undisputed that the work was fully performed, the amounts were
immaterial and the company fully collected on the receivables at
issue," Carney said.
The SEC also said that Wentlent, meanwhile, failed to follow
up on the red flags "that Pruitt had caused L3."
He is settling without admitting or denying the charges, and
will pay a $25,000 penalty. The company also separately
rescinded his bonus.
An attorney for Wentlent could not be immediately reached
(Reporting by Sarah N. Lynch; editing by Bernard Orr and Diane