HONOLULU (CN) - The founder of a "Left Behind" religious-theme video game and a crony inflated the company's reported revenue by 1,300 percent, the SEC claims in court.
The SEC sued Troy Lyndon and Ronald Zaucha, in Federal Court.
It claims that Lyndon, CEO and CFO of Left Behind Games Inc., issued 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.
Both men live in Hawaii. The SEC suspended trading in the company's shares Tuesday.
Zaucha sold his 2 billion shares for $4.6 million and kicked back $3.3 million, the SEC said in the complaint.
"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.