The SEC alleges that Benjamin Silva III, former vice president of sales for Tvia (Santa Clara, Calif.), made side deals with customers and concealed the terms from Tvia's executives and auditors. This fraudulently caused Tvia report millions of dollars in excess revenue, according to an SEC statement detailing the allegations.

The SEC also alleges that Diane Bjorkstrom, formerly the chief financial officer at Tvia, also played a role in improper accounting, allowing Tvia to recognize revenue on merchandise shipped to a customer weeks before the customer had agreed to accept it. The SEC also charged that Bjorkstrom failed to to act on red flags surrounding Silva's misconduct.

Bjorkstrom agreed to settle the charges against her by paying a $20,000 penalty, the SEC said. Without admitting or denying the SEC's allegations, Bjorkstrom consented to pay the fine and accepted a ban on her appearing or practicing before the SEC as an accountant for a period of two years, the SEC said.

The SEC's complaint, filed in federal district court in San Jose, Calif., alleges that Silva's side agreements inflated Tvia's revenue by approximately $5 million from September 2005 through June 2006, according to the statement. This caused the company's quarterly revenue to be consistently overstated, including by as much as 165 percent in one quarter, the SEC alleged.

The regulatory body also accuses Silva of fraudently applying payments from new customers to old receivables in order to divert auditors' attention from delinquent customer payments.

Silva profited $300,000 from his actions through the cashing in of award options tied to revenue goals, according to the SEC's charges.

The SEC's complaint against Silva charges him with violations of the antifraud, reporting, books and records and internal control provisions of the federal securities laws, and seeks a permanent injunction, disgorgement of the $300,0000 plus prejudgment interest and a financial penalty, according to the statement.

The SEC also seeks a court order permanently barring Silva from acting as an officer or director of any public issuer, statement said.

Tvia, a fabless provider of display processors, filed for bankruptcy protection last October.