SEC Charges Manitex International and Three Former Senior Executives With Accounting Fraud

Washington, D.C.–(Newsfile Corp. – September 29, 2020) – The Securities and Exchange Commission today announced settled charges against Manitex International, Inc., a Bridgeview, Illinois manufacturer and distributor of cranes, forklifts and heavy equipment, and three of its former senior executives for two accounting fraud schemes that resulted in the issuance of materially misstated financial statements.

According to the SEC’s orders, Manitex improperly accounted for and misled its outside auditor about nonexistent inventory.  The orders find that in 2014, Andrew Rooke, the company’s former Chief Operating Officer, and Stephen Harrison, the former general manager of a Manitex subsidiary, created false inventory lists and shipping documents to cover up a $1.39 million inventory shortfall at another of Manitex’s subsidiaries.  The orders further find that Manitex later provided the fabricated documents to its outside auditor, contributed the nonexistent inventory to a joint venture, and recorded the nonexistent inventory on its books.  As a result, the orders find, Manitex materially overstated its 2014 operating and pre-tax income. 

According to the orders, Manitex also improperly recognized revenue from and misled its outside auditor about approximately $12 million in purported “bill and hold” crane sales.  According to the orders, during a downturn in the oil and gas services industry, Manitex entered into an agreement to sell cranes to a dormant company with no operations.  The orders find that, because the company had no ability to obtain financing, Harrison, at Rooke’s direction, secured and, on behalf of Manitex, guaranteed the financing for the purchases.  The orders further find that in consultation with Rooke, Harrison also created a purported financing subsidiary for the company and prepared fraudulent invoices to conceal Manitex’s role.  As set forth in the orders, Michael Schneider, Manitex’s former Controller and Chief Financial Officer, approved the fraudulent invoices despite knowing they were not genuine.  As a result, according to the order, Manitex materially overstated its 2016 net revenues and gross profits. 

“The securities laws require public companies and their executives to make truthful disclosures of material information about a company’s financial condition,” said Kathryn A. Pyszka, an Associate Director in the SEC’s Division of Enforcement.  “The SEC’s orders find that Manitex and these executives misled investors by providing false information concerning the company’s operations and financial condition.”

The SEC’s orders find that Manitex, Rooke, Schneider, and Harrison violated certain antifraud, reporting, books and records, and internal accounting controls provisions of the federal securities laws.  Without admitting or denying the orders’ findings, they agreed to cease and desist from future violations of the charged provisions and Manitex, Rooke, and Schneider agreed to pay civil penalties totaling $485,000.  Rooke, Schneider and Harrison agreed to bars from serving as officers or directors of public companies, and Rooke and Schneider agreed to suspensions from appearing or practicing before the SEC as accountants.   

The SEC’s investigation was conducted by Richard G. Stoltz, Rebecca Hollenbeck, and Ben Hanauer of the Chicago Regional Office, and was supervised by Anne C. McKinley.