Securities and Exchange Commission v. Joseph J. Monterosso, et. al., Case No. 07-61693 (S.D. Fla.). On October 18 2012, the SEC announced that it obtained disgorgement, civil penalties, and officer-and-director bars against four remaining defendants in an accounting fraud action the SEC filed in 2007. Timothy Huff was ordered to pay a $1.21 million civil monetary penalty and $1.5 million in disgorgement. Lawrence Lynch was ordered to pay a $780,000 civil monetary penalty. Joseph Monterosso was ordered to pay a $300,000 civil monetary penalty and $675,000 in disgorgement plus prejudgment interest and will be barred from serving as an officer or director of a public company for 10 years. Luis Vargas was ordered to pay a $150,000 civil monetary penalty and will be barred from serving as an officer or director of a public company for 10 years.
In 2007, the SEC sued the Defendants for reporting millions of dollars in telecommunications revenue that was fake. Huff and Thomas Jimenez were sentenced to prison as a result of parallel criminal prosecutions. Monterosso and Vargas created hundreds of false invoices as part of the fraud. Lynch alleged knew that the invoices submitted by Monterosso and Vargas did not represent actual telecom business but made and approved journal entries to record the fake revenue.