SEC Charges Former CEO and CFO of a Wisconsin Assisted Living Facility With Fraud
The U.S. Securities and Exchange Commission (SEC) announced on Dec. 3 that it filed fraud charges against two former executives of a Wisconsin assisted living facility.
Laurie Bebo and John Buono, the former CEO and CFO of Assisted Living Concepts Inc., respectively, are facing serious allegations that they intentionally violated the Securities Exchange Act of 1934.
Bebo and Buono are alleged to have fabricated fake residents in order to pad the assisted living facility’s internal documents and corporate filings. Based on the facility’s lease, a certain number of occupants were required to reside on the premises. When enrollment levels began to decline, Bebo and Buono simply created new occupants from 2009-2012.
The facility leased the building from a Chicago-based real estate trust named Ventas Inc. When Bebo and Buono realized that that the facility may default on its financial obligations under the lease to Ventas, they began to falsify documents and manipulate internal records to increase occupancy rates.
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The SEC is involved in this case because in the course of falsifying the companys internal records to fulfill its obligations to Ventas, the company also filed quarterly and annual reports with the SEC that included the fraudulently tabulated occupancy rates.
The executives are accused of violating numerous sections and rules of the Securities Exchange Act of 1934, including Sections 10(b) and 13(b)(5). The executives are also alleged to have assisted others in violating the Securities Exchange Act of 1934.
Bebo and Buono are accused of instructing internal personnel to calculate the facility’s occupancy rates by using the names of the executives family members, friends and former employers. One of the alleged occupants of the facility was discovered to be a 7-year old child.
The SECs Enforcement Division is continuing their investigation into these violations and the case will be heard before an administrative law judge.