Former CEO in Wood Dale charged with fraud, inflating revenue by $25M
Gary Winemaster, allegedly coordinated with two other executives to record revenue from sales that were never intended to be completed.
A former executive of a manufacturing company in the northwest suburbs has been charged with fraud and inflating revenue reports to investors by almost $25 million.
Gary Winemaster, 61, was the CEO of Wood Dale-based Power Solutions International Inc. when he coordinated with two other executives to record revenue from sales that were never intended to be completed, according to federal prosecutors and the Securities and Exchange Commission.
Winemaster was charged in federal court with one count of securities fraud, 10 counts of wire fraud, two counts of making false statements to an auditor and one count of failing to certify financial reports, the U.S. Attorney’s Office of the Northern District of Illinois said in a statement Friday.
The alleged fraud occurred from 2014 to 2016, and involved the company’s vice president of sales, Craig M. Davis, and its general manager, James F. Needham, prosecutors said. They were both charged with a count of securities fraud and 10 counts of wire fraud.
The SEC said the trio deceived investors by filing improper “bill and hold” arrangements, in which they allegedly made incomplete sales but marked them as complete.
The special terms of those sales were concealed from customers and the company’s accounting department, which recorded the sales as revenue and led the company to defraud shareholders of the company’s publicly traded stock, prosecutors said. They allegedly overstated the company’s revenues by almost $25 million, the SEC said.
The Securities and Exchange Commission filed a civil enforcement lawsuit against Winemaster, Davis and Needham, and is seeking injunctions and penalties against them.
The maximum sentence for securities fraud is 25 years in prison, while wire fraud and making false statements to an auditor are each punishable by up to 20 years, prosecutors said.Failing to certify financial reports is punishable by up to 10 years and a fine of up to $1 million. Their arraignments were scheduled for July 25.