By MARCY GORDON(AP)-35 minutes ago
WASHINGTON ?? The company that sells the Derma Wand skin care appliance through TV infomercials has settled civil charges that it falsely inflated its earnings by reporting sales of the anti-aging product while it still sat unsold in the warehouse.
The Securities and Exchange Commission announced Monday the settlement with International Commercial Television Inc., a marketer of health and beauty products based in Bainbridge Island, Wash. The company wasn’t fined under the deal. It didn’t admit or deny wrongdoing but consented to an injunction against future violations of securities laws.
SEC charges against ICTV’s former chief financial officer, Karl Redekopp, are still pending. His attorney didn’t immediately return a telephone call seeking comment. Redekopp resigned from the company in August 2008.
The agency said that ICTV turned millions of dollars of losses into profits from early 2007 to mid-2008 by falsely booking sales of the Derma Wand, which it sold in infomercials on the Home Shopping Network. Altogether, the company overstated its revenue by $3.7 million and net income by $3.9 million, reporting quarterly net income when in fact it had sustained net losses, the SEC said in a complaint filed in federal court in Tacoma, Wash.
Derma Wand, which ICTV says “reduces fine lines and wrinkles, and improves overall skin appearance,” is the company’s best-selling product.
ICTV announced in October 2008 that it would restate its earnings for the fiscal year ended in 2007 and the first two quarters of 2008 to correct improper reporting of revenue.
The SEC is seeking an unspecified penalty against Redekopp and an order barring him from serving as an officer of any public company.
The agency also began administrative proceedings against the company’s former outside auditors Steven Dohan and Nancy Brown and their firm Dohan + Co. CPAs, and against Canadian accountant Erez Bahar. Their attorneys didn’t immediately return telephone calls seeking comment.
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