| WASHINGTON, Sept 25
WASHINGTON, Sept 25 The creator of a video game
based on the popular Christian "Left Behind" novel series and
his friend have been charged with scheming to inflate the
company's revenue by nearly 1,300 percent, U.S. regulators
Left Behind Games Inc Chief Executive and Chief
Financial Officer Troy Lyndon issued nearly 2 billion shares to
his friend Ronald Zaucha, purportedly as compensation for
consulting services, the Securities and Exchange Commission's
The real reason for issuing the stock was so Zaucha could
sell millions of unregistered shares in the marketplace and then
kick back the proceeds and use other "sham purchases" to help
bolster the struggling company's books, the SEC said.
The SEC's lawsuit was filed late on Tuesday in a federal
court in Hawaii, where Lyndon and Zaucha both reside. The SEC
suspended the company's stock Wednesday.
The complaint charges both men with fraud, and the SEC said
its probe is continuing.
The charges come roughly two weeks after the company
announced in an SEC filing that its public accountant Malone
Bailey had resigned after previously expressing "substantial
doubt" about the company's ability to continue.
Last year, in March 2012, Lyndon filed a voluntary petition
for Chapter 7 bankruptcy, the SEC said.
Lyndon, of Honolulu, said he only learned of the charges
early Wednesday morning after a press inquiry from Reuters and
that he believes the government is discriminating against him.
"I'm just a video game guy. If any violation occurred, it
would never have been intentional - and certainly, never
fraudulent. My attorney told me that any person that earned
shares could use them for any purpose," he said.
"For more than two years, I've asked SEC to explain how and
if I have violated any rule, so that I could self-report it. As
I see it, the government has systematically and intentionally
conspired to dismantle Left Behind Games and the facts are both
true and hard to believe - worthy of a Ron Howard film or John
A more detailed statement from Lyndon can be found at
Efforts to reach Zaucha were unsuccessful.
According to the SEC's allegations, Lyndon and Zaucha made a
"last ditch" effort to save the struggling company in 2009.
After issuing 1.7 billion shares in stock, the SEC said
Zaucha sold most of it for $4.6 million, roughly $3.3 million of
which was later kicked back to the company in a variety of ways.
One such example, the SEC said, was when in December 2010
Zaucha formed a company and used the stock sale proceeds to buy
$1.38 million in obsolete Left Behind Games inventory.
Zaucha's company then gave most of the products away to
churches and religious groups, while Left Behind went on to
recognize the transaction as revenue.
The SEC also said Zaucha never truly performed any real
consulting services to the company, and he was also allowed to
keep more than $1 million of the stock sale proceeds that he
used for personal expenses, including buying property in
California and Hawaii.
According to his online biography, Lyndon was the "original
team lead developer" of the first 3D versions of the John Madden
Football video game, among others.
Reuters could not immediately independently verify those
He started working on development of religious video games
in 2002, and took Left Behind Games public in 2006, he says.
"Although government regulations have resulted in the loss
of nearly 50 percent of America's public companies over the past
15 years, Left Behind Games continues to operate and has
products in more than 500 retail locations throughout the USA,"
he wrote on his website.