The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit in federal court against the founder of Left Behind Games and Ronald Zaucha. The SEC claims that Left Behind Games CEO and CFO Troy Lyndon inflated the company's reported revenue by 1,300 percent by issuing nearly 2 billion shares of stock to Zaucha as "purported compensation for consulting services" to the California-based company.
"The true purpose of the arrangement was to enable Zaucha to sell millions of unregistered shares of Left Behind Games stock into the market and then kick back a portion of his stock proceeds to the company in order to prop up its revenue at a time when it was in dire need of additional funds," the SEC said in a statement announcing its lawsuit.
The SEC said that Zaucha sold his 2 billion shares for $4.6 million and kicked back $3.3 million.
"LBG touted itself as 'the only publicly traded exclusive publisher of Christian modern media' and 'the world leader in the publication of Christian video games and a Christian social network provider,'" the SEC said in its lawsuit. But it fired all its employees and closed up shop in 2011.
The SEC suspended trading in the company's shares Tuesday.
Left Behind Games made several strategy games based on the popular Christian book series of the same name about "the Rapture" as described in the Book of Revelations in the Bible.
You can read the complaint here (PDF).
Source: Courthouse News