SEC charges fraud against Canopy, executive
The Securities and Exchange Commission filed fraud charges against Canopy Financial Inc., the health care financial services company that tumbled into bankruptcy this week amid accusations that it had falsified financial reports.
In its complaint, the SEC alleges that Canopy and Jeremy Blackburn — the former president and chief operating officer who resigned shortly after the reports of fraud surfaced — had raised $75 million from venture capital investors by providing falsified documents and information exaggerating Canopy’s health.
The documents “devised to show that Canopy had a much healthier cash balance and larger client base than it actually did,” the SEC states in a press release. Blackburn “misappropriated at least $1.7 million from the offering into his personal bank accounts.”
The SEC won a court order freezing Blackburn’s assets.
The SEC said “the fraud came to light when (accountants) KPMG discovered that Canopy had been claiming that its financial statements for 2007 and 2008 were audited by KPMG. In fact, KPMG had never been retained by Canopy to audit its financial statements.”
The complaint was filed under seal on Nov. 30 and opened Dec. 2.
The SEC’s investigation is continuing, as well as a probe by the FBI.
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