SEC Charges Executives of Network Infrastructure Company With Accounting Fraud

The Securities and Exchange Commission today charged the former CEO and CFO of FTE Networks Inc., a network infrastructure company formerly based in Naples, Florida, with conducting a multi-year accounting fraud. This alleged scheme involved inflating the company’s revenues for certain periods by as much as 108 percent, the misappropriation of millions of dollars of company funds for personal use, and concealing the then-NYSE listed publicly traded company’s issuance of almost $23 million in convertible notes. According to the SEC’s complaint, Michael Palleschi and David Lethem, the former CEO and CFO respectively of FTE, directed the company to issue approximately $22.7 million in convertible notes with short-term maturities, steep interest rates, and market-price-based formulas for conversion into shares.