Suburban Manufacturer to Pay $1.7 Million Civil Penalty to SEC as Part of Resolution of Fraud Investigation by U.S. Attorney’s Office
CHICAGO — Power Solutions International Inc., a suburban Chicago manufacturing company, has agreed to pay a $1.7 million civil penalty to the Securities and Exchange Commission and continue to cooperate with the government in a criminal prosecution of its former employees as part of a resolution of a fraud investigation by the U.S. Attorney’s Office.
PSI, which is based in Wood Dale, admitted in resolution documents that from 2014 to 2016, executives and other employees of the company participated in a scheme to defraud shareholders and other investors in connection with PSI’s common stock, which at the time was listed on the Nasdaq Stock Market. PSI admitted that during the scheme it fraudulently inflated by millions of dollars the revenue the company reported to the investing public in certain periods. In doing so, PSI admitted that it deceived the company’s shareholders and other investors about the company’s financial health and performance.
In addition to the $1.7 million civil penalty to the SEC, PSI previously agreed to pay $8.5 million to settle consolidated class action lawsuits brought by shareholders. The company will also strengthen its compliance program and provide periodic updates to the government on its progress.
The U.S. Attorney’s Office entered into a non-prosecution agreement to resolve this matter. In exchange for PSI’s fulfillment of its obligations under the agreement, the U.S. Attorney’s Office will not criminally prosecute the company for any of the conduct arising out of the corporate fraud investigation. The agreement does not relate to any potential tax charges. PSI’s obligations under the agreement, which has a term of three years, include continuing to provide cooperation in the criminal prosecutions of the company’s former executives. Former CEO Gary S. Winemaster, former vice president of sales Craig M. Davis, and former general manager James F. Needham were indicted last year on securities fraud and other charges. They have pleaded not guilty and are awaiting trial in federal court in Chicago.
The non-prosecution agreement with PSI was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois. The investigation was conducted by the Chicago Field Office of the FBI. The government is represented by Assistant U.S. Attorneys L. Heidi Manschreck and Corey B. Rubenstein.