The Securities and Exchange Commission had suggested that the former The North Face CFO, Christopher Crawford, former Sales VP Todd Katz and former regional sales manager Richard Tyrer overstated revenue and gross margins by falsely recognizing revenue on certain barter deals and recording consignment sales as completed regular sales in 1997 and 1998.
The three former executives settled with the SEC without admitting or denying any wrongdoing.
Under the settlement, Crawford agreed to give up about $28,980 in ill-gotten gains plus interest, and to pay a civil penalty of $30,000. He cannot work for another public company in any accounting role for five years. Katz agreed to pay a civil penalty of $40,000. Tyrer paid no fine, but agreed to an order permanently barring him from further securities law violations.
Securities and Exchange Commission regulators said the three men, with the help of two former TNF customers, improperly booked fake sales orders and then tried to cover their trail. Katz and Tyrer allegedly enlisted the help of Donald Marcus and Harry Adler to keep the scheme from being discovered.
The SEC contends that Marcus was enlisted to lie about over $9 million in sales recorded in late 1998. The SEC said Marcus company, a wholesale distributor in Texas, never booked an order larger than $1 million. Tyrer allegedly had Marcus issue a false P.O. for the fake order. The SEC alleged that Katz coaxed Adler to lie about a $2.6 million consignment order that TNF booked as a regular order. No sale ever occurred.
Marcus and Adler also settled with the SEC in the case without admitting or denying the agency’s findings.
