WASHINGTON – The U.S. Securities and Exchange Commission settled a complaint Wednesday against the former chief financial officer of Bon Secours Cottage Health Services alleging he overstated the company’s earnings by millions of dollars.
David G. Zilli, of Clinton Township, Mich., has also been charged with fraud by the U.S. Attorney for the District of Maryland.
Zilli was chief financial officer of Bon Secours Cottage Health Services in Michigan. The company is a subsidiary of the Maryland-based non-profit Bon Secours Health System Inc., a Catholic health care ministry operating dozens of hospitals and health care services in several states.
Between 1998 and 2003, the SEC and the U.S. Attorney have charged, Zilli fraudulently raised income numbers in Cottage Health’s monthly financial statements before they were sent to the parent company in Maryland to be added to the company’s consolidated financial statement.
Over that period, according to the SEC statement, Bon Secours’ income was overstated by about $117 million due to Zilli’s misstatements.
The income was overstated in order to match Cottage Health’s performance numbers to its financial goals, according to the SEC.
Calls to Zilli, his attorney, the U.S. Attorney’s Office and Bon Secours were not returned Thursday.
Zilli did not admit or deny the allegations by the SEC, said Richard Grime, assistant director in the SEC’s Division of Enforcement, and upon federal court approval of the settlement, he will be ordered to pay $144,513 in compensation. Zilli will also be permanently barred from serving as an officer or director of a public company and prohibited from violating antifraud laws.
If found guilty of the criminal fraud charges in U.S. District Court, Zilli could face a maximum sentence of 20 years in prison, according to the U.S. Attorney’s statement.