Semiconductor production software company HPL Technologies has gone public over a massive accounting fraud that was based on "fictitious transactions" and falsified documents made by a former chief executive.
According to HPL interim chief executive and chairman Elias Antoun, at least $11m of the $13.7m in revenue reported in the quarter ended 31 March was based on fake transactions with the company's Japanese distributor, Canon Sales.
Antoun said during a conference call that Canon had never agreed to enter into the transactions.
The company removed its former chief executive, David Lepejian, a 41 year old engineer who had been HPL's boss since he helped start the company in 1989.
HPL explained that it has been unable to contact Lepejian since he left a week ago.
In addition, HPL has demoted chief financial officer Ita Geva, and put Rita Rubinstein, previously corporate secretary and vice president of administration and human resources, on administrative leave.
HPL said that it has notified the Securities and Exchange Commission of its discoveries and will co-operate with any investigation.
The company admitted that it is unlikely to complete its acquisition of IDS Software Systems, and will postpone its 30 July annual meeting and the scheduled 25 July release of its first-quarter results.
HPL expects to restate figures for the fiscal year ended 31 March, and possibly for the previous year when it was still a privately held company.
Shares fell $10 on the statement to $4 before trading on Nasdaq was suspended.
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