SEC Files Fraud Charges Against TV Azteca, Chairman

U.S. regulators filed civil fraud charges Tuesday against TV Azteca, accusing the Mexican media company, its chairman and two directors of conspiring to conceal $109 million in profit from a debt transaction.

The civil lawsuit by the Securities and Exchange Commission wasn’t a surprise.

TV Azteca, Mexico’s second-biggest television broadcaster, previously disclosed that several executives -- including its chairman and controlling shareholder, Ricardo B. Salinas Pliego -- had been notified in August by the SEC that the agency was planning to file civil charges against them.

The SEC is seeking injunctions, unspecified fines and restitution of allegedly ill-gotten gains by Salinas Pliego and Pedro Padilla Longoria, a director of TV Azteca who was the company’s chief executive from October 2001 through July 2004. The agency also is seeking to have Salinas Pliego and Padilla Longoria banned from serving as officers or directors of any public company with U.S.-traded shares.

The SEC’s suit, filed in federal court in Washington, also named Luis Echarte Fernandez, a director of TV Azteca who is president and CEO of Azteca America, a subsidiary based in New York. Salinas Pliego, 49, and Padilla Longoria, 38, are Mexican citizens; Echarte Fernandez, 59, holds U.S. citizenship.

The three men withheld information from and lied to directors about Salinas Pliego’s link to the transactions at issue and his $109-million profit, the SEC said.

About a year ago, the SEC began investigating transactions between Unefon, a subsidiary of Azteca Holdings; Canadian equipment supplier Nortel Networks Corp.; and private concern Codisco Investments.

In 2003, Codisco bought $325 million in debt that Unefon owed Nortel for $107 million, then made a $218-million profit when Unefon paid the debt in full.

TV Azteca’s U.S. shares sank 91 cents, or 9%, to $9.14 on the New York Stock Exchange.