SEC Charges Former Olevia TV Execs With Fraud; James Li, Thomas Chow and Wayne Pratt Ran Failed Tempe TV-Maker Syntax-Brillian
The executives who ran former Tempe-based TV maker Syntax-Brillian have been accused of defrauding investors in a complex scheme that used bogus sales figures to inflate stock prices.
James Li, Thomas Chow, Wayne Pratt habitually misled and lied to investors and regulators between 2006 and 2006, says a federal complaint filed yesterday by the U.S. Securities and Exchange Commission.
In 2007, Syntax-Brillian was considered a rising underdog, selling its Olevia brand high-def TV in a market dominated by much bigger companies. Its marketing partnership with ESPN brought major recognition, but two years later the company foundered amid rumors of possible fraud.
The scope of the deception is now being made clear by the SEC.
At first, Li and Chow -- the CEO and chief procurement officer, respectively -- simply made up fake shipping and sales documents to fabricate fictitious sales to its Chinese distribution company, South China House of Technology Consultants, or SCHOT.
The California residents apparently got addicted to their nefarious plan and figured out how create bogus sales documents on a mass scale with help from the Tempe company's manufacturer, Taiwan Kolin Co., Ltd.:
Under the guise of paying various invoices, Li and Chow funneled millions of dollars from Syntax to Kolin. Liu and Kao then authorized the transmittal of these funds to SCHOT. SCHOT then transferred the funds back to Syntax, which recorded the cash transfers as payments for the previously recorded fictitious sales.
Pratt, the company's chief financial officer, was neck deep in the scheme, says the SEC.
The complaint outlines how the Chandler resident intentionally ignored accounting "red flags" and signed official securities paperwork containing the bad info.
We left a message at Pratt's Chandler home, but haven't heard back yet. We also tried him at the offices of his
current employer, Tempe's Unicorn Media, where he works as chief financial officer. UPDATE: Though one Unicorn employee told us that Pratt had been at the company as recently as last week, Unicorn's new chief financial officer, Vickie Wittie, tells us he left the company earlier this year. Pratt's Linked In site states that his employment ended in January. Wittie says Pratt's no longer on Unicorn's board of directors, either.
The SEC has already doled out some punishments for the alleged fraud:
* Pratt agreed to pay a total of $195,000 and a five-year ban against him serving as a company's officer or director was imposed.
* Two execs with Kolin, Christopher Liu and Roger Kao, agreed to each pay $100,000.
The court has yet to determine sanctions for Li and Chow.
Get the ICYMI: Today's Top Stories Newsletter Our daily newsletter delivers quick clicks to keep you in the know
Catch up on the day's news and stay informed with our daily digest of the most popular news, music, food and arts stories in Phoenix, delivered to your inbox Monday through Friday.