Commission seeks an injunction against Levin
The Securities and Exchange Commission filed financial fraud and other charges Wednesday against former Team Communications CEO Drew Levin and other former execs of the small TV producer and distributor.
The SEC alleges in its lawsuit, filed in Los Angeles District Court, that Levin oversaw a scheme to falsely inflate the revenue and profits of Team Communications from approximately 1999 to 2001. Company co-produced the 2001 ABC telepic “Final Jeopardy.”
Lawsuit claims Levin engaged in two forms of fraud. The first involved “circular” sales transactions between Team and other parties in which the parties essentially bought things from each other, thereby inflating revenues. The other involved the use of nonbinding “minimum-guarantee” distribution contracts. Team booked the minimum guarantees as revenue but assured the other parties those guarantees would not be enforced, according to the lawsuit.
Claims “without merit”
Peter Sheridan, an attorney for Levin, who is now the chief exec of TMC Entertainment, said in a statement Wednesday that “the claims against Mr. Levin are without merit. We will vigorously defend Mr. Levin against these claims, claims the SEC has delayed in bringing about for over four years.”
Sheridan added that the sales “the SEC bases its claims on are 5- and 6-year-old contracts entered into by Team’s subsidiary and were known to Team’s auditors and counsel.”
Two other former Team execs, Noel Cronin and Michael Macchiarella, were named as defendants in the SEC lawsuit, but have settled with the commission without admitting or denying the allegations against them. They have both agreed to avoid future violations of securities laws. In addition, Cronin has agreed to an order prohibiting him from acting as an officer or director of a public company for five years. Macciarella will also pay a $50,000 fine plus interest.
The SEC seeks an injunction against Levin preventing further violations of securities laws, an order prohibiting him from acting as an officer or director of a public company, plus repayment of unlawful gains and civil fines.