Newport Firm Tells SEC Its Auditor Quit
NEWPORT BEACH — MPTV Inc., facing the possibility that it has violated federal securities laws, said its auditor resigned this month after recommending that the company be more forthcoming about its financial dealings.
The Newport Beach timeshare developer, in a document filed Monday with the Securities and Exchange Commission, said auditor Corbin & Wertz had advised the firm to provide shareholders with more information regarding a number of company activities, including the potential securities violation.
The company acknowledged in an earlier SEC filing that it apparently failed to register 58 million shares of stock, worth $2.9 million, that it issued last year in exchange for unspecified services.
MPTV revealed Corbin & Wertz’s recommendations and the firm’s Jan. 17 resignation as part of an earnings report filed with the SEC for the three months ended Sept. 30. The company has hired Sarna & Co. of Westlake Village as its new auditor.
Although his signature appears on the SEC filing, MPTV Chairman James Vellema said Tuesday that the document doesn’t fully describe the circumstances surrounding the auditor’s departure.
Vellema said MPTV was displeased with the firm’s service and decided not to retain Corbin & Wertz after the auditor raised its rates. Vellema also maintains that MPTV has always complied with the auditor’s disclosure recommendations.
He said the SEC document contains a different version of events on the advice of his lawyers. “I was advised to handle it in this manner,†Vellema said. “But they were terminated at our request . . . and we always disclosed what they requested,†Vellema said
Corbin & Wertz officials didn’t return calls Tuesday requesting comment.
The auditor’s resignation came shortly after the company asked shareholders to double its authorized shares to 200 million--the second such request in less than a year. The company had issued a flurry of new shares over the past year as it tried to raise capital, and has admitted in SEC documents that at times it issued more shares than shareholders had approved.
Vellema said MPTV currently has about 123 million shares outstanding. The stock, which has been trading on the OTC Bulletin Board since it was delisted by Nasdaq last July, closed Tuesday at 4.1 cents a share, virtually unchanged.
Since it was incorporated in 1992, MPTV has lost more than $28 million. Nasdaq removed the company’s stock from its SmallCap listings because the firm failed to meet ongoing minimum financial requirements.
Additionally, the SEC reportedly has contacted MPTV and more than a dozen other small firms as part of an investigation into a Miami company that arranged offshore stock sales for companies in need of quick capital.
SEC officials would not confirm or deny an investigation. Vellema says his firm was contacted last year by the agency regarding a 1994 foreign stock sale it arranged through the Miami firm. But he denied that MPTV has been subpoenaed or was a target of an SEC probe.
Vellema said Nasdaq’s delisting set the company back at least six months in obtaining funds needed to complete Lake Tropicana, a Las Vegas timeshare resort that is the company’s principal asset.
He said the company recently obtained a $7.6-million loan to finish the project. He said he expects MPTV to begin marketing the timeshares by late February or early March.
