A New York City-based telecommunications company will pay $500,000 to settle charges it committed fraud by overstating its revenue by approximately $42 million over six quarters, then providing false information to auditors when confronted about the alleged misconduct.

Pareteum Corp. overstated revenue by approximately $12 million in fiscal year 2018 and approximately $30 million for the first two quarters of FY2019, according to a Securities and Exchange Commission (SEC) administrative proceeding Thursday. The revenue was recognized based on non-binding purchase orders prior to shipment of product, a practice in violation of generally accepted accounting principles (GAAP).

In addition, at least four members of Parateum’s accounting team directed false information to the company’s auditors to cover up the fraud, the SEC said. The company did not admit or deny wrongdoing, and the SEC said it considered Parateum’s cooperation in determining the final penalty amount.

According to the SEC’s order, Pareteum’s auditor identified the revenue overstatements in a 2018 audit and began sending notices to customers to confirm whether they agreed with Pareteum’s calculation of how much was owed to the company as of year-end 2018. Parateum sales executives encouraged many of the customers to sign the audit confirmations, even though they were inflated, the SEC said.

The company also “improperly recognized millions in revenue based on an unsigned, mid-negotiation purchase order for International Mobile Subscriber Identity numbers, or IMSIs, which was never ultimately agreed to by the customer,” the order said.

In 2019, Pareteum announced it would restate its revenue for the first two quarters of that year and all of 2018. The board’s audit committee launched an independent investigation, which eventually “resulted in the separation of multiple Pareteum executives – comprising almost all of the senior management team and certain senior executives in sales and finance positions,” the order said.

The company also improved internal controls and took other measures to prevent recurrence of the conduct, the SEC said. During the agency’s investigation, the company provided documents and summaries of its findings from its own internal investigation.

Pareteum provides communications platform as a service solutions to clients around the world, according to its Website. The company did not respond to a request for comment.