Cramer's TheStreet.com Charged With Accounting Fraud

Tyler Durden's picture




 

Over two years ago, while scouring through TheStreet.com's filing we stumbled upon something interesting: "As a result of the need for the Company and its independent registered public accounting firm to focus attention on matters related to the Company's previously-announced review of the accounting in its former Promotions.com subsidiary, which subsidiary the Company sold in December 2009 -- including matters related to the preparation and filing by the Company in February 2010 of a Form 10-K/A for the year ended December 31, 2008, a Form 10-Q/A for the quarter ended March 31, 2009 and Forms 10-Q for the quarters ended June 30, 2009 and September 30, 2009, respectively, and matters related to an investigation commenced by Securities and Exchange Commission in March 2010 -- the Company requires additional time  to prepare its financial statements, assess its internal controls and file its Form 10-K for the year ended December 31, 2009 ("2009 Form 10-K")." Oops. We can't wait to see how Mr. Cramer will explain to the Mad Money faithful this particular twist on the hangover of the show's five year birthday bash. Also, we wonder if CNBC will finally cancel the ludicrous Jim "truth" Cramer campaign once this news breaks. We doubt it- in the quest for evaporating eyeballs, all is fair." This was in April 2010. Today, we got resolution on the matter, as the SEC finally has put the matter to close.

From the SEC:

SEC Charges Financial Media Company and Executives Involved in Accounting Fraud

Washington, D.C., Dec. 18, 2012 — The Securities and Exchange Commission today charged a digital financial media company and three executives for their roles in an accounting fraud that artificially inflated company revenues and misstated operating income to investors.

Additional Materials

The SEC alleges that TheStreet Inc., which operates the website TheStreet.com, filed false financial reports throughout 2008 by reporting revenue from fraudulent transactions at a subsidiary it had acquired the previous year.  The co-presidents of the subsidiary – Gregg Alwine and David Barnett – entered into sham transactions with friendly counterparties that had little or no economic substance.  They also fabricated and backdated contracts and other documents to facilitate the fraudulent accounting.  Barnett is additionally charged with misleading TheStreet’s auditor to believe that the subsidiary had performed services to earn revenue on a specific transaction when in fact it did not perform the services.  The SEC also alleges that TheStreet’s former chief financial officer Eric Ashman caused the company to report revenue before it had been earned.  

The three executives agreed to pay financial penalties and accept officer-and-director bars to settle the SEC’s charges.

“Alwine and Barnett used crooked tactics, Ashman ignored basic accounting rules, and TheStreet failed to put controls in place to spot the wrongdoing,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.  “The SEC will continue to root out accounting fraud and punish the executives responsible.”

According to the SEC’s complaints filed in federal court in Manhattan, the subsidiary acquired by TheStreet specializes in online promotions such as sweepstakes.  After the acquisition, TheStreet failed to implement a system of internal controls at the subsidiary, which enabled the accounting fraud. 

The SEC alleges that through the actions of Ashman, Alwine, and Barnett, TheStreet:

  • Improperly recognized revenue based on sham transactions.
  • Used the percentage-of-completion method of revenue recognition without meeting fundamental prerequisites to do so, including reliably estimating and documenting progress toward the completion of relevant contracts.
  • Prematurely recognized revenue when the subsidiary had not performed actual work and therefore had not really earned the revenue. 

According to the SEC’s complaint, when the subsidiary’s financial results were consolidated with TheStreet’s financial results for financial reporting purposes, the improper revenue on the subsidiary’s books resulted in material misstatements in the company’s quarterly and annual reports for fiscal year 2008.  On Feb. 8, 2010, TheStreet restated its 2008 Form 10-K and disclosed a number of improprieties related to revenue recognition at its subsidiary, including transactions that lacked economic substance, internal control deficiencies, and improper accounting for certain contracts. 

Ashman agreed to pay a $125,000 penalty and reimburse TheStreet $34,240.40 under the clawback provision (Section 304) of the Sarbanes-Oxley Act, and he will be barred from acting as a director or officer of a public company for three years.  Barnett and Alwine agreed to pay penalties of $130,000 and $120,000 respectively, and to be barred from serving as officers or directors of a public company for 10 years.  Without admitting or denying the allegations, the three executives and TheStreet agreed to be permanently enjoined from future violations of the federal securities laws. 

The SEC’s investigation was conducted by Senior Counsel Maureen P. King and Staff Accountant Nandy Celamy of the New York Regional Office.  Aaron Arnzen served as Senior Trial Counsel in the matter. 

* * *

How totally shocking...

0
Your rating: None
 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 12/18/2012 - 14:04 | 3075277 CunnyFunt
CunnyFunt's picture

"Without admitting or denying the allegations, ..."

TYPICAL

Tue, 12/18/2012 - 14:10 | 3075301 camaro68ss
camaro68ss's picture

Bahahahahaha, This is classic.

(in deep voice) HOUSE OF PAIN

BITCHEZ!!!!

Tue, 12/18/2012 - 14:17 | 3075313 francis_sawyer
francis_sawyer's picture

What's the name of that fucking nerdy dweeb who always talksabout S&P 2,000?... I hope they put him in a cell with a dude named Bubba...

Edit: "Altucher" ~ that's who I'm looking for... Fuck that little prick... Hey Cramer... You still got a BUY BUY BUY on BEAR STEARNS?...

~~~

BYE BYE BYE you fucking morons!

Tue, 12/18/2012 - 14:32 | 3075379 Tijuana Donkey Show
Tijuana Donkey Show's picture

+1000 for dissing Altucher. My dog is a better writer, and all she puts down is roof roof. 

Tue, 12/18/2012 - 16:16 | 3075831 Metalredneck
Metalredneck's picture

Some of us love minimalist poetry.

Tue, 12/18/2012 - 20:29 | 3076920 Dave Thomas
Dave Thomas's picture

You'd love mine then, it puts down shit mandelas.

Tue, 12/18/2012 - 14:33 | 3075381 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

TheStreet.com is fiine!

Tue, 12/18/2012 - 15:28 | 3075587 Pegasus Muse
Pegasus Muse's picture

Boo-Hoo-Ya Cramer and CNBC:  A perfectly matched pair.

Tue, 12/18/2012 - 15:32 | 3075613 The Limerick King
The Limerick King's picture

 

 

Jim Cramer is looking at fraud

It's time for the world to applaud

A phoney, a fake

A nerd on the take

Cramerica just lost their God

Tue, 12/18/2012 - 15:39 | 3075637 nope-1004
nope-1004's picture

 

 

Jim Cramer IS a fraud

The SEC just gave the nod

He doesn't talk like a guy

Tries to convince us to buy

Hoping the Green Shoots will one day be sod

Tue, 12/18/2012 - 16:09 | 3075809 Zer0head
Zer0head's picture

Am I missing something?

This is ancient history and a quater million dollar accounting boondogle.   If it took the SEC this long on something this basic and small it would seem to me the real story is that  the real thieves of Wall Street have noting to fear. 

Cramer must have doen something to really piss off these guys -- now think back to early in the Obama first term - Cramer went nuts on him.  Now think to the last election and Cramer all but gave him a blow job.    Now we know why.

Tue, 12/18/2012 - 16:28 | 3075836 Supernova Born
Supernova Born's picture

One of his "proudest" moments modified for the circumstances:

"They KNOW something?! They KNOW something!"

-Jim Cramer, December 2012

Tue, 12/18/2012 - 16:22 | 3075853 eclectic syncretist
eclectic syncretist's picture

Jim Cramer the investing dope,

Finally reached the end of his rope,

His friends all said,

You'd be better off dead,

And don't bend over to pick up the soap!

Tue, 12/18/2012 - 14:38 | 3075395 midtowng
midtowng's picture

I still have total faith in Cramer. He wouldn't lie to us, right?

Tue, 12/18/2012 - 15:10 | 3075467 MachoMan
MachoMan's picture

nevermind, carry on.

Tue, 12/18/2012 - 19:53 | 3076788 nmewn
nmewn's picture

All I want for Christmas is to see Krammer in ass pounding prison...along with Corzine.

Tue, 12/18/2012 - 16:06 | 3075794 Freddie
Freddie's picture

Back when he was running his hedge fund, he would whisper stories to Maria about stocks. 

It was widely believed he was front running but his best buddy was Elliot Spitzer also known as Customer #8.

Cramer probably had a get out of jail card like Bernie Madoff did.  

I bet a lot of people knew Bernie was run a big ponzi scheme but as long as it was "working" - everyone kept their mouth shut.

Tue, 12/18/2012 - 16:45 | 3075952 ToNYC
ToNYC's picture

"...but as long as it was "working" - everyone kept their mouth shut." 

It could be that autistic children get this hard lesson quite early and keep their mouths shut early.

Tue, 12/18/2012 - 14:56 | 3075452 Ignatius
Ignatius's picture

Let's face it, we ALL want to see Cramer in jail.

The SEC will then claim "See, we're cleaning up the banking mess."

Turd sandwich, anyone?

Tue, 12/18/2012 - 15:01 | 3075477 kliguy38
kliguy38's picture

Yeh...they need to "Martha Stewart" Biatch slap him......That should let the peeps know the bankers have been put on notice there's a "new sheriff in town! BWAAAAAAAAA

Tue, 12/18/2012 - 17:05 | 3076027 Remington IV
Remington IV's picture

Booyah !!!

Tue, 12/18/2012 - 14:11 | 3075311 ParkAveFlasher
ParkAveFlasher's picture

It pays to be badge-wearing carnival barker for financial douchebaggery. 

Tue, 12/18/2012 - 14:11 | 3075315 HedgeAccordingly
HedgeAccordingly's picture

SOO Many LOLZZZ .. content scraping morons 

Tue, 12/18/2012 - 14:13 | 3075320 LongSoupLine
LongSoupLine's picture

BOOYAA you fucking stinking fucking asshole.  Eat shit Cramer, you fuck!

Tue, 12/18/2012 - 14:28 | 3075367 El Viejo
El Viejo's picture

Man, you are in a good mood today!

Tue, 12/18/2012 - 14:36 | 3075391 LongSoupLine
LongSoupLine's picture

Picturing Cramer getting his ass ripped by cell mate Bubba just helped my mood...although I'm well aware conviction or jail time is a fucking pipe dream for anyone in the fucking piece of shit financial shitpool.

Tue, 12/18/2012 - 15:09 | 3075498 mayhem_korner
mayhem_korner's picture

 

 

I hope his cell mate is Elmo Blatch...

http://www.youtube.com/watch?v=MtnDFS0RhuY

Tue, 12/18/2012 - 15:10 | 3075500 MsCreant
MsCreant's picture

Does it change your mind if Cramer likes it? He looks like a bottom to me. Just sayin'...

Tue, 12/18/2012 - 15:51 | 3075707 koncaswatch
koncaswatch's picture

No jail time for GS alumni... just won't happen.

Tue, 12/18/2012 - 14:17 | 3075333 FL_Conservative
FL_Conservative's picture

Hey Cramer....how do those bracelets feel on you?  They look good though.

Tue, 12/18/2012 - 18:45 | 3076445 ball-and-chain
ball-and-chain's picture

The Street.

What a joke.

Jim should be cornholed and shot.

What a disgrace.

http://www.angrysinner.blogspot.kr/2012/12/wednesday.html

Tue, 12/18/2012 - 14:06 | 3075280 mktsrmanipulated
mktsrmanipulated's picture

boooyah jim

 

Tue, 12/18/2012 - 14:07 | 3075282 Flakmeister
Flakmeister's picture

It is as if a convicted shoplifter could avoid punishment by simply paying 50% of the price of the stolen item....

Oh, and they get to keep the item...

Tue, 12/18/2012 - 15:21 | 3075546 ToNYC
ToNYC's picture

Central Bankers have that beat; create from thin air and charge what the traffic will bear.

Tue, 12/18/2012 - 15:44 | 3075643 Flakmeister
Flakmeister's picture

Can you provide proof that you have never used credit in any form? Just curious...

Tue, 12/18/2012 - 14:07 | 3075286 Stoploss
Stoploss's picture

Sell!! Sell!! Sell!!

Tue, 12/18/2012 - 14:07 | 3075287 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

His non profit trading vehicle.

Go figure.

Tue, 12/18/2012 - 14:20 | 3075343 wisefool
wisefool's picture

Non-profit tax free trading vehicle. A long time ago, when I could afford to watch the tax funded CNBS channel I remember the only times he advocated investing in gold was when he was talking about how he ran this "charity". Otherwise, the closest he would get is advocating investing in "Junior Miners".

Tue, 12/18/2012 - 15:31 | 3075599 ToNYC
ToNYC's picture

Junior Miners buy their mine maps from senior miners who know leaverite and lose money until investors show up. Then they lose more money and save some areas for later.

There's always a bulls*it market somewhere, 'cause he makes 'em up on his own.

Tue, 12/18/2012 - 14:08 | 3075288 HANKREARDON
HANKREARDON's picture

Crooks in finance?! Say it ain't so.

Tue, 12/18/2012 - 14:08 | 3075289 Godisanhftbot
Godisanhftbot's picture

 They set him up because he does good work, helping ma and pa beat the market.

 

 Oh yeah, TST,  -99 % for the last 10 years. Nice job Jimbo!

Tue, 12/18/2012 - 15:20 | 3075544 francis_sawyer
francis_sawyer's picture

Don't forget NYX... Call of a fucking lifetime... I'm sure tonight he'd be top ticking the Nikkei... Fuck CNBS too...

Tue, 12/18/2012 - 16:25 | 3075869 Squid Vicious
Squid Vicious's picture

never forget his BUY BUY BUY on netflix at 295... well, he was right for 5 bucks!

Tue, 12/18/2012 - 14:08 | 3075291 StoleYourMoney
StoleYourMoney's picture

Lulz

Tue, 12/18/2012 - 14:08 | 3075292 Racer
Racer's picture

And how much money did they earn whilst doing the fraud?

Tue, 12/18/2012 - 14:09 | 3075299 Godisanhftbot
Godisanhftbot's picture

 given the stocks trajectory, not enough.

 

 booya

Tue, 12/18/2012 - 14:08 | 3075293 Levadiakos
Levadiakos's picture

Boo-Yah. The SEC succeeds.......oh wait

Tue, 12/18/2012 - 14:08 | 3075294 Flakmeister
Flakmeister's picture

Ever notice that if Mad Money is on and the TV is muted how much the show resembles a colorized version of Howdy Doody?

Tue, 12/18/2012 - 14:09 | 3075304 Godisanhftbot
Godisanhftbot's picture

 leave out the howdy part, and you have .....

Tue, 12/18/2012 - 14:08 | 3075295 The Gooch
The Gooch's picture

Where's Corzine?

Do NOT follow this link or you will be banned from the site!