An internal whistleblower exposed a scheme by three executives of a Chicago-area engine manufacturer to improperly inflate revenue and cover their tracks by lying to company accountants and independent counsel.

Power Solutions International has agreed to pay a $1.7 million fine and take steps to improve its financial reporting practices, after the Securities and Exchange Commission (SEC) accused the company of improperly overstating its revenue by almost $25 million over two years.

In 2014 and 2015, Power Solutions International recorded revenue for the sale of products that weren’t complete; that the customer had not agreed to accept, at falsely inflated prices; and for improper “bill and hold” arrangements, the SEC said in its complaint.

Three former Power Solutions executives—CEO Gary Winemaster and senior sales executives Craig Davis and James Needham—were previously charged for their roles in the alleged fraud. The three executives also misled company accountants about the nature of these transactions, the SEC said, as well as an independent auditor.

The fraud was exposed by an internal whistleblower, identified by the SEC as the company’s former chief operating officer (COO). When the COO left the company in 2016 in an employment dispute, he “communicated allegations of unethical and unlawful activities to the PSI Board in the form of a letter and draft complaint,” the SEC said. The COO detailed numerous instances of the company improperly pulling revenue from one quarter into another, and of the involvement of the three executives in attempting to cover it up.

After launching an internal investigation, the company’s board of directors later retained independent counsel to investigate the COO’s allegations. The company also informed its independent auditor about the allegations. These pressures caused the scheme to be exposed.

The scheme was launched in 2015, due in part to a depression in the price of oil. One of Power Solutions’ largest customer segments is the oil and gas industry. As a result of lower oil prices, Power Solutions’ oil and gas customers had less demand for Power Solutions’ products. In response, the company began to “provide incentives to their customers to take additional product before the end of quarters, including by incenting customers to place additional orders for product they did not currently need and pushing customers to take delivery of already ordered product earlier than desired,” the SEC said in its complaint.

“Doing so resulted in a significant amount of sales being ‘pulled ahead’ from future periods to a current quarter,” the SEC said.

The Power Solutions executives also negotiated improper bill and hold agreements, where the customer would agree to receive a bill for goods, and Power Solutions would agree to hold those goods until the customer was willing to pay for them.

But many of these agreements were simply created in order to “jam” revenue from one quarter into another, the SEC said. In one case, Power Solutions convinced a customer to agree to take on 30 engines, worth $846,000, that they planned to order in 2015 by the end of 2014. That allowed Power Solutions to book that revenue in the fourth quarter of 2014.

“They don’t want any of them, but agreed to help us out,” a sales associate wrote about the agreement in an email that was part of the SEC complaint.

Some of these bill and hold agreements had undisclosed side agreements regarding product return rights and special financing and payment terms. In other cases, the company recognized revenue for some bill and hold agreements that exceeded the sale price, the SEC said.

“The order finds that Power Solutions deprived investors of truthful information about its financial health by fraudulently recording revenue to meet revenue targets and projections,” said Kathryn Pyszka, associate regional director of the SEC’s Chicago Regional Office, in a Thursday press release.

The company has agreed to comply with an undertaking to remediate deficiencies in its internal controls over financial reporting, the SEC said. Separately, the U.S. Attorney’s Office for the Northern District of Illinois announced a non-prosecution agreement with Power Solutions related to the same misconduct.