Top financial officers at insurance company Conseco Inc. schemed to mislead investors and the government in 1999 as the firm skidded toward bankruptcy, the Securities and Exchange Commission has concluded.
The SEC's findings were included in an order issued Wednesday demanding the firm end all ongoing or future violations, part of a settlement between the agency and the Carmel-based insurer.
No fines or monetary penalties were imposed.
As part of the settlement, Conseco did not admit or deny the SEC's findings.
The federal agency found that Conseco and its onetime subsidiary, Conseco Finance, "made materially false and misleading statements" in SEC filings and public earnings statements throughout fiscal 1999, overstating results by hundreds of millions of dollars.
The SEC said that Conseco misrepresented the value of interest-only securities held by its finance unit, formed through the 1998 purchase of mobile home lender Green Tree Financial Corp. _ a deal that saddled Conseco with much of the $6 billion in debt that forced it into bankruptcy.
The order alleges that Conseco's former chief financial officer, Rollin Dick, and former treasurer, James Adams, "conducted a fraudulent accounting scheme to avoid writing down the value of certain securities held by Conseco Finance and the resulting charges to earnings."
Dick and Adams also ordered accountants to make adjustments to Conseco Finance's financial statements that inflated earnings in each of the first three quarters of 1999, the SEC order alleged.
The agency said those actions violated sections of the Exchange Act requiring SEC-registered companies to make accurate quarterly reports and keep accurate books.
In response, Conseco agreed to cease and desist from any such violations in the future. In a statement released Wednesday, Conseco said "it was pleased to have resolved this legacy issue."
The Associated Press left a message seeking comment Thursday at the office of Dick's attorney. There were two phone numbers listed for James Adams in Carmel, and people who answered at those numbers said he did not live there.
In September, a judge approved Conseco's bankruptcy reorganization plan, which cut the firm's debt load. The bankruptcy filing was the third largest in U.S. history, trailing only the filings of WorldCom Inc. and Enron Corp.
