The US Securities and Exchange Commission (SEC) says it has filed a complaint against five individuals charging them with a financial fraud that allegedly involved bogus letters of credit (L/Cs) purportedly worth US$47 million.

The complaint against Anthony Huff, Danny Pixler, Anthony Russo, Otha Ray McCartha and Charles Spinelli has been filed in a Florida court.

Financial fraud

The SEC's complaint charges the five with a financial fraud arising from their involvement with Certified Services Inc, a South Florida publicly traded company.

Certified operated a professional employee leasing business providing services such as workers' compensation insurance, but it filed for Chapter 11 bankruptcy protection in 2005, at which point it owed US$2.7 million for workers' compensation.

Funds siphoned

The SEC alleges that between 2001 and 2004, the defendants siphoned approximately US$30 million from Certified through an elaborate scheme.

At the same time, the commission alleges that the defendants participated in a scheme to inflate Certified's financial statements by reporting approximately US$47 million in bogus L/Cs as assets while not recording liabilities which peaked at about US$65 million during 2004.

The complaint also alleges that Certified failed to fully disclose related party relationships.

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