Newport company’s ex-CEO to pay $65,000 in settlement with SEC

The former chief executive of a Newport Beach telecommunications equipment company will pay $65,000 in a settlement of allegations brought by federal regulators that his company overstated its revenue in 2012.

In August, the Securities and Exchange Commission filed a complaint against Irvine resident Hideyuki Kanakubo and the company he founded, AirTouch Communications, alleging they fraudulently misstated the company’s finances.

According to the filing, the company developed a product it intended to sell to a landline provider in Mexico. About $1.2 million worth of that product was stored by a separate entity in Florida with the intent of eventually shipping it to a buyer.

However, before any sale occurred, AirTouch reported the $1.2 million of stored product as revenue, according to the SEC.

As a result, AirTouch reported net revenue of $1.03 million in the third quarter of 2012, according to the settlement document.

“Without the revenue recognized on the inventory shipped to the Florida entity, AirTouch would not have had any positive revenue for the quarter,” the document states.

The SEC called the revenue report “false and misleading.”

As part of the settlement, Kanakubo, who resigned as chief executive in March 2013, will pay a $50,000 penalty.

He also will hand over $15,000 that the SEC said he was paid as a bonus as a result of the wrongdoing.