October 10, 2016

September 27, 2016

Oil services company Weatherford International will pay a $140 million penalty to settle charges that it inflated earnings by using deceptive income tax accounting.  According to the SEC’s order, Weatherford fraudulently lowered its year-end provision for income taxes by $100 million to $154 million each year so the company could better align its earnings results with its earlier-announced projections and analysts’ expectations.  James Hudgins, Weatherford’s Vice President of Tax, and Darryl Kitay, tax manager, made numerous post-closing adjustments to fill gaps and meet the previously disclosed effective tax rate.  Weatherford regularly touted its favorable effective tax rate to analysts and investors as one of its key competitive advantages, and the fraud created the misperception that Weatherford’s designed tax structure was far more successful than reality.  Weatherford was forced to restate its financial statements on three occasions in 2011 and 2012.   Hudgins and Kitay will pay about $365,000 collectively to settle charges that they were behind the scheme.  SEC

*     *     *

If you would like more information or would like to speak to a member of Constantine Cannon’s whistleblower lawyer team, please click here.