James Materna, John Holtzhauser, and Paul Venesky

Cleveland, OH: (Jul-18-07) The US Securities and Exchange Commission filed charges against three former OM Group Inc. executives, alleging that they participated in an accounting fraud at the Cleveland-based producer of specialty chemicals. James Materna, OM Group's former chief financial officer, and John Holtzhauser, its former controller, were accused of accounting frauds that increased the company's net income for the fiscal years ending Dec. 31, 2001, and Dec. 31, 2002, and in the company's quarterly reports on Form 10-Q for the first three quarters of 2002, and the fourth quarter results on Form 10-K, and the first three quarters of 2003 filed on Form 10-Q. Paul Venesky, the former controller at OMG Americas, an OM Group subsidiary, was accused of aiding the fraud by making improper accounting entries at the subsidiary.

The suit was filed after an investigation revealed that the accounting fraud had resulted in misrepresentation of the company's fiscal health. SEC officials stated that OM Group had issued a restatement reducing its retained earnings for the relevant period by $64 million as a result of the fraud. In a settlement reached, Materna and Holtzhauser each accepted a ban of five years on serving as an officer or director of a public company and agreed to pay civil penalties of $100,000 each. The SEC said that Holtzhauser also agreed to pay disgorgement of $76,707. Venesky agreed to pay a $25,000 civil penalty. [CRAINS CLEVELAND BUSINESS: ACCOUNTING FRAUD]

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Published on Jul-19-07