Former Lucent Polymers executives Kevin Kuhnash and Jason Jimerson will be sentenced Jan. 25 for fraud-related charges connected to the sale of that compounding firm to Citadel Plastics.
Kuhnash, Lucent's former CEO, pleaded guilty on July 28 to two counts of securities fraud and one count of money laundering, according to a news release from the U.S. Securities and Exchange Commission.
Jimerson, former Lucent chief operating officer, pleaded guilty to two counts of securities fraud, one count of money laundering and one count of making false statements to federal agents on June 18.
The sentencing will take place at U.S. District Court in Evansville, Ind. The charges were filed by the U.S. Attorney for the Southern District of Indiana.
The SEC had charged Kuhnash and Jimerson in February 2019 for their roles in a scheme to conceal that Lucent's core business model "was a sham" in connection with the company's acquisition in 2013, SEC officials said in the release.
Citadel is not mentioned in the release, but the firm announced its acquisition of Lucent in December 2013. Citadel then was sold in early 2015 to A. Schulman Inc., which is now owned by LyondellBasell Industries. Schulman filed a suit against Citadel in June 2016 in relation to falsified product information.
According to the SEC complaint, Lucent routinely lied to its customers and falsified its certifications of test data to show that its products complied with customer specifications, including on important aspects such as fire-retardant measures.
Kuhnash and Jimerson also allegedly hid Lucent's fraudulent practices, made misrepresentations to the buyer and continued the fraud even after the sale of the business to secure future payments, officials said in the release.
In total, the indictment alleged that Kuhnash and Jimerson personally received approximately $2 million from two acquisitions of their stock.
The SEC's litigation was stayed pending resolution of the criminal action and now will continue, officials said. The SEC's complaint charges Kuhnash and Jimerson with violating anti-fraud provisions of federal securities laws and seeks permanent injunctions, disgorgement plus prejudgment interest, civil monetary penalties, and officer-and-director bars.
A trial originally was scheduled for May 2019, then delayed to May 2020 when lawyers for the defendants asked for more time to prepare.