SEC Files Charges Against Three Thornburg Executives

Posted by Orb Staff on March 15, 2012 No Comments
Categories : Residential Mortgage

11108_embezzle SEC Files Charges Against Three Thornburg Executives The U.S. Securities and Exchange Commission (SEC) has charged three executives at the now-defunct Thornburg Mortgage Inc. with fraudulent misrepresentations and omissions regarding the company's financial health at the onset of the financial crisis.

The SEC alleges that Thornburg Mortgage CEO Larry Goldstone, Chief Financial Officer Clarence Simmons and Chief Accounting Officer Jane Starrett ‘schemed to fraudulently overstate the company's income by more than $400 million and falsely record a profit rather than an actual loss for the fourth quarter in its 2007 annual report.’ The SEC claims that Thornburg was facing a ‘severe liquidity crisis and was unable to make on-time payments for substantial margin calls it received from its lenders in the weeks leading up to the filing of its annual report on Feb. 28, 2008.’

‘"When Thornburg began to default on this new round of margin calls, it was forced to disclose its problems in 8-K filings with the SEC,’ says the agency. ‘By the time the company filed an amended annual report on March 11, its stock price had collapsed by more than 90 percent. Thornburg never fully recovered and filed for bankruptcy on May 1, 2009.’

Goldstone, Simmons and Starrett are being charged with violations of the antifraud, deceit of auditors, reporting, record keeping, and internal controls provisions of the federal securities laws. The complaint seeks officer and director bars, disgorgement, and financial penalties.

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