Cramer's Charged With Accounting Fraud

Tyler Durden's picture

Over two years ago, while scouring through'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 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, 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...

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CunnyFunt's picture

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


camaro68ss's picture

Bahahahahaha, This is classic.

(in deep voice) HOUSE OF PAIN


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!

Tijuana Donkey Show's picture

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

Metalredneck's picture

Some of us love minimalist poetry.

Dave Thomas's picture

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

Pegasus Muse's picture

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

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

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

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.

Supernova Born's picture

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

"They KNOW something?! They KNOW something!"

-Jim Cramer, December 2012

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!

midtowng's picture

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

nmewn's picture

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

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.

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.

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?

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

ParkAveFlasher's picture

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

HedgeAccordingly's picture

SOO Many LOLZZZ .. content scraping morons 

LongSoupLine's picture

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

El Viejo's picture

Man, you are in a good mood today!

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.

MsCreant's picture

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

koncaswatch's picture

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

FL_Conservative's picture

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

ball-and-chain's picture

The Street.

What a joke.

Jim should be cornholed and shot.

What a disgrace.

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...

ToNYC's picture

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

Flakmeister's picture

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

Stoploss's picture

Sell!! Sell!! Sell!!

Mr Lennon Hendrix's picture

His non profit trading vehicle.

Go figure.

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".

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.


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

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!

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...

Squid Vicious's picture

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

Racer's picture

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

Godisanhftbot's picture

 given the stocks trajectory, not enough.



Levadiakos's picture

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

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?

Godisanhftbot's picture

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

The Gooch's picture

Where's Corzine?