Three executives at the U.S. subsidiary of an Australian defense contractor were charged with accounting fraud for allegedly participating in a three-year scheme to lower cost estimates and prematurely book revenue.

Craig Perciavalle, former Austal USA president; William Adams, former combat ships director; and Joseph Runkel, current director of financial analysis, were charged with violating the antifraud provisions of the Securities Exchange Act, the Securities and Exchange Commission (SEC) announced Friday. The agency said it will seek disgorgement plus prejudgment interest, civil penalties, and officer-and-director bars in its ongoing litigation.

Austal USA is an Alabama-based subsidiary of Austal Limited and has contracts to build vessels for the U.S. Navy.

The details: From 2013-16, Perciavalle, Adams, and Runkel “engaged in a deceptive scheme to fraudulently overstate revenues and earnings before interest and tax,” the SEC said in its complaint, filed in U.S. District Court for the Southern District of Alabama.

The three executives instructed Austal USA personnel responsible for calculating estimates at completion (EACs) for completed shipbuilding projects to arbitrarily lower them to meet budget estimates, according to the agency.

The reductions to the EACs were worth tens of millions of dollars, the SEC said, which led Austal USA to file inflated revenue figures to its parent company. The alleged fraud increased the company’s revenue, enabled Austal to hit analyst’s revenue targets, and resulted in a higher share price for Austal’s stock. When confronted by Austal’s auditors about the scheme, the three men lied, the SEC said.

All three defendants invoked the Fifth Amendment against self-incrimination when confronted with the SEC’s findings, the agency said.

Compliance considerations: The company’s materials manager repeatedly resisted directives to artificially lower the EACs below their true cost. She raised her concerns with Runkel and Adams, the SEC said.

After the materials manager complained about the artificially lowered EACs, Adams told her she should not discuss them with Austal’s chief financial officer if she wanted to keep her job, according to the complaint. The materials manager reduced the EAC calculations as instructed but “maintained a spreadsheet to memorialize the material EACs she calculated as compared to the artificially reduced material EACs” Austal USA returned to parent company Austal, the SEC said.

Perciavalle, Adams, and Runkel also allegedly provided incomplete information on the company’s processes for tabulating EACs and falsified financial statements to Austal USA’s auditors.

The Department of Justice on Friday announced wire fraud charges against each of Perciavalle, Adams, and Runkel.

Company response: “Austal USA has invested significant time and resources to strengthen its compliance program since the investigations began,” a company spokesperson said in an emailed statement. “While significant changes have been implemented, a review of its current compliance programs and practices is continuing to ensure that it maintains a significantly enhanced compliance program and conducts business with the highest level of integrity.”