UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933

Release No. 11245 / September 28, 2023

SECURITIES EXCHANGE ACT OF 1934

Release No. 98577 / September 28, 2023

ACCOUNTING AND AUDITING ENFORCEMENT

Release No. 4462 / September 28, 2023

ADMINISTRATIVE PROCEEDING

File No. 3-21745

In the Matter of

Stanley Stefanski, CPA,

Respondent.

ORDER INSTITUTING PUBLIC 

ADMINISTRATIVE AND CEASE-ANDDESIST PROCEEDINGS, PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933, SECTIONS 4C AND 21C OF 

THE SECURITIES EXCHANGE ACT OF 

1934, AND RULE 102(e) OF THE 

COMMISSION’S RULES OF PRACTICE, 

MAKING FINDINGS, AND IMPOSING

REMEDIAL SANCTIONS AND A CEASEAND-DESIST ORDER AND NOTICE OF 

HEARING

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”), Sections 4C1 and

1 Section 4C provides, in relevant part, that: 

The Commission may censure any person, or deny, temporarily or permanently, to any 

person the privilege of appearing or practicing before the Commission in any way, if that person 

is found . . . (1) not to possess the requisite qualifications to represent others; (2) to be lacking in 

character or integrity, or to have engaged in unethical or improper professional conduct; or (3) to 

have willfully violated, or willfully aided and abetted the violation of, any provision of the 

securities laws or the rules and regulations issued thereunder.
2

21C of the Securities Exchange Act of 1934 (“Exchange Act”), and Rule 102(e)(1)(iii) of the 

Commission’s Rules of Practice2 against Stanley Stefanski (“Stefanski” or “Respondent”).

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose 

of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 

which the Commission is a party, Respondent admits the Commission’s jurisdiction over him and 

the subject matter of these proceedings, and consents to the entry of this Order Instituting Public 

Administrative and Cease-and-Desist Proceedings, Pursuant to Section 8A of the Securities Act of 

1933, Sections 4C and 21C of the Securities Exchange Act of 1934, and Rule 102(e) of the 

Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions and a Ceaseand-Desist Order and Notice of Hearing (“Order”), as set forth below.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds3 that:

Summary

1. This case concerns accounting and disclosure fraud by Pareteum Corporation, a 

telecommunications company, spanning from 2018 through mid-2019 (the “relevant time period”). 

During this time, Pareteum’s public filings materially overstated revenue by approximately $12 

million for fiscal year 2018 (60% of the ultimately restated revenue), and by approximately $30 

million for the first and second quarters of 2019 (91% of the ultimately restated revenue). 

2. These misstatements resulted from improper accounting practices, whereby 

Pareteum executives, including Stefanski, allowed revenue to be recognized based on non-binding

purchase orders and prior to product shipment, which was not in accordance with generally 

accepted accounting principles (“GAAP”). Further, Stefanski and others took steps to conceal these 

practices from Pareteum’s auditor.

2

 Rule 102(e)(1)(iii) provides, in pertinent part, that: 

 The Commission may . . . deny, temporarily or permanently, the privilege of appearing or 

practicing before it . . . to any person who is found...to have willfully violated, or willfully aided 

and abetted the violation of any provision of the Federal securities laws or the rules and 

regulations thereunder. 

3

 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding. 
3

 

3. As a result of the conduct described herein, Stefanski willfully violated Section 17(a)

of the Securities Act and Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) and 13b2-2 

thereunder, and willfully aided and abetted and caused Pareteum’s and Pareteum’s CFO’s 

violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 

10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. 

Respondent

4. Stanley Stefanski, age 48, is a resident of New York, New York. Stefanski served 

as Business Controller of Pareteum during his employment with the company from November

2017 until he resigned in September 2020. He obtained a New York CPA license in 2001, but it is 

currently lapsed. 

Other Relevant Entity

5. Pareteum Corporation was incorporated in Delaware with a principal place of 

business in New York, New York. At all relevant times, Pareteum was a telecommunications and 

cloud software company. On May 15, 2022, Pareteum filed a Chapter 11 bankruptcy petition and 

is currently in liquidation. Until November 2020, its common stock was registered with the 

Commission pursuant to Section 12(b) of the Exchange Act, and prior to November 12, 2020 

traded on the NASDAQ exchange under the symbol “TEUM.” It then traded under the same 

symbol on the OTC Markets Group Inc.’s Pink Open Market until filing for bankruptcy. On 

September 2, 2021, the Commission instituted a settled cease-and-desist proceeding finding that 

Pareteum violated Section 17(a) of the Securities Act, and Sections 10(b), 13(a), 13(b)(2)(A), and 

13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 thereunder, 

and imposing a $500,000 civil penalty. 

Background

6. During the relevant time period, Pareteum was a telecommunications “Software as 

a Service” or “SaaS” company that offered various services such as SIM card services, WiFi 

service, and a Cloud platform. Pareteum’s customers were telecommunications businesses that 

contracted with Pareteum for these service offerings and related materials (such as SIM cards), and 

then marketed and sold the services directly to downstream consumers. One portion of Pareteum’s 

business was its mobile bundled services line, which provided SIM cards with customizable 

service plan options. Pareteum’s customers then resold the SIM cards and service plans to

consumers.

7. At all relevant times, in its Forms 10-K and 10-Q filed with the Commission, 

Pareteum represented that the financial statements included in those forms were prepared in 

accordance with GAAP. FASB Accounting Standards Codification Topic 606, Revenue From 

Contracts With Customers (“ASC 606”), provides guidance for recognizing revenue for the type of 

sales agreements described above. ASC 606 requires entities to recognize revenue to depict the 
4

transfer of promised goods or services to customers in an amount that reflects the consideration to 

which the entity expects to be entitled in exchange for those goods or services.

8. ASC 606 requires entities to apply the following steps to assess whether and what 

revenue should be recognized: (1) identify the contract with a customer; (2) identify the 

performance obligations in the contract; (3) determine the transaction price; (4) allocate the 

transaction price to the corresponding performance obligation(s); and (5) recognize revenue when 

or as the entity satisfies a performance obligation by transferring control of a promised good or 

service to a customer.

9. Consistent with this, Pareteum disclosed in its 2018 Form 10-K that starting on 

January 1, 2018, Pareteum was reporting revenue in accordance with ASC 606 which, Pareteum 

stated, “requires entities to recognize revenue when control of the promised goods or services is 

transferred to customers at an amount that reflects the consideration to which the entity expects to 

be entitled in exchange for those goods or services.”

Pareteum’s Improper Revenue Recognition Practices Based on 

Non-Binding Purchase Orders

10. Despite disclosing that it would adhere to ASC 606, in practice, the company did 

not have internal accounting controls in place to provide reasonable assurance that it would follow 

that guidance. While serving as Pareteum’s Business Controller, Stefanski implemented the 

revenue recognition process under the direction of Pareteum’s CFO. In practice, Pareteum

recognized revenue based on non-binding purchase orders and without any regard to whether

Pareteum satisfied any performance obligations. For a number of customers, Pareteum recognized

revenue prior to any “contract with the customer” to satisfy the first step of ASC 606. Moreover, 

there were no revenue recognition policies and procedures in place to require sufficient review of 

the purchase orders’ payment terms or collectability, and there was no formal process in place to 

provide reasonable assurance that Pareteum’s performance obligations under a purchase order had 

been satisfied, as ASC 606 requires.

11. Instead of properly following ASC 606, Pareteum’s revenue recognition procedure 

for mobile bundled services customers during the relevant time period was as follows: (1) a new 

customer signed a contract and master services agreement; (2) Pareteum drafted a purchase order 

providing the number of SIM cards the customer intended to purchase, as well as an estimated cost 

for the associated average monthly service plan they were expecting to sell to downstream 

consumers; (3) the customer signed this purchase order, which in most cases indicated that the full

cost listed was just an estimated forecasted amount that would not be due unless the customer sold 

the product to downstream consumers; and (4) Pareteum’s Finance department recognized revenue 

for the entire amount listed in the purchase order provided by the Pareteum Sales department, 

without regard to whether the order was even a contract under step 1 of ASC 606, and without 

checking whether any of Pareteum’s performance obligations under the purchase order had been 

met. Pareteum recognized the total revenue of each purchase order regardless of whether the SIM 

cards had been shipped or whether a platform had been set up by Pareteum sufficient to even allow 

the SIM card service plans to work.
5

12. To comply with Step 5 of ASC 606, Pareteum had to satisfy its performance 

obligations under the purchase order prior to recognizing revenue. Specifically, Stefanski and 

other Pareteum executives should have ensured that the SIM cards had been shipped, and that the 

platform had been created and was operational. In multiple instances, Pareteum failed to meet all 

of these requirements prior to recognizing revenue. 

13. Pareteum’s CFO had not put in place sufficient internal accounting controls to 

assess whether the required performance obligations had been met prior to Pareteum recognizing 

revenue, and in practice, such checks often were not properly done. As a result, Stefanski, 

alongside and under the direction of Pareteum’s CFO, recognized the amounts listed in the 

purchase orders based solely on the purchase order being signed by the customer without 

confirming whether these amounts were recognizable under ASC 606, resulting in Pareteum 

improperly recognizing millions of dollars of revenue in contravention of ASC 606.

14. Recognizing the full amount of each purchase order once signed, rather than in

accordance with GAAP, became standard practice for Pareteum’s mobile bundled services line of 

business. Stefanski and other former Pareteum executives knew or were reckless in not knowing 

that the requirements for proper revenue recognition had not been met and yet continued to 

authorize or accept decisions to recognize millions of dollars of revenue improperly. These 

improper revenue recognition decisions accounted for millions of Pareteum’s revenue each quarter,

starting in 2018 and continuing through the first half of 2019, even though it was not yet owed by 

the customers. By August 2019, Pareteum had only collected a fraction of the tens of millions in 

revenue it had recognized for mobile bundled services customers.

Misstatements Made to Pareteum’s Auditor

15. Due to the improper revenue recognition practices described above, Pareteum’s 

accounts receivable (“AR”) balance ballooned by the end of 2018. Realizing that a large AR 

balance without supporting invoices would raise red flags with Pareteum’s auditors, Pareteum’s 

then-CFO began a push to get all AR amounts invoiced by the end of November 2018, and 

Stefanski assisted.

16. When Pareteum’s independent auditor performed its 2018 end-of-year audit 

testing in February 2019, it included Pareteum’s accounts receivable as a main risk area. To test 

the validity of the AR amounts, the auditor sent out audit confirmations to many of Pareteum’s 

customers asking the customers to sign that they agreed with Pareteum’s record of how much 

was owed to Pareteum as of year-end 2018. These audit confirmations went out to the vast 

majority of the customers that accounted for the $12 million in revenue that Pareteum improperly 

recognized in 2018. None of these customers should have been able to sign these confirmations, 

as they knew they did not owe the amount stated on the confirmations at that time. Some of 

these customers did not initially return the confirmation to the auditor, so Pareteum’s CFO and

Stefanski directed Pareteum sales employees to reach out to the customers and encourage them 

to sign the confirmations.
6

17. Stefanski knew the audit confirmations should not have been provided to the 

auditor because he understood that the customers were confirming amounts that they did not 

actually owe at the time.

Pareteum’s Improper Recognition of Revenue From an Unsigned Purchase Order, and 

Related Cover-up Steps

18. In addition to the improper revenue recognition practices discussed above, 

Pareteum also improperly recognized millions in revenue based on an unsigned, mid-negotiation 

purchase order for International Mobile Subscriber Identity numbers, or IMSIs, to which the 

customer never ultimately agreed. 

19. Unlike SIM cards, IMSIs are “virtual” and do not require the shipment of a 

physical SIM card – instead, Pareteum would deliver IMSIs by assigning and emailing the 

relevant IMSI numbers to the customer once the necessary platform had been developed and 

created by Pareteum. 

20. In late January 2019, Pareteum and a customer were negotiating an IMSI 

purchase order. A former Pareteum sales employee drafted a purchase order for 6.3 million 

euros and circulated an unsigned version internally to others at Pareteum for approval.

21. Despite the fact that the customer had not signed or agreed to the 6.3 million euro 

purchase order, a senior executive at Pareteum told Stefanski that Pareteum should recognize 

20% of the purchase order in January 2019. Stefanski was provided no reasoning for why 20% 

of the purchase order was an appropriate amount, which he knew was necessary before 

recognizing revenue. Regardless, the day after receiving this instruction, Stefanski forwarded 

the unsigned draft order to his accounting staff and asked them to recognize 20% of it for 

January 2019. This amount, approximately $1.4 million, was included in Pareteum’s revenue for 

the first quarter of 2019.

22. The sales order did not meet the criteria for revenue recognition: Most 

significantly, the customer had not actually agreed to the purchase order, and so there was no 

contract under Step 1 of ASC 606. In addition, Pareteum had not yet begun to perform any of its 

obligations, as required by Step 5 of ASC 606 prior to recognizing revenue. Finally, Stefanski 

understood that there was no basis or reason for specifically recognizing 20% of the draft 

purchase order amount – other than the fact that he had been told to do so.

23. Meanwhile, the former Pareteum sales employee ultimately finalized the purchase 

order with the customer in February 2019 – but for 630,000 euros, not 6.3 million. 

Notwithstanding this change in the purchase order, Stefanski continued to recognize revenue off 

of the unsigned draft purchase order for 6.3 million euros. Pareteum recognized another 20% of 

revenue from the draft purchase order in February 2019, and another 20% in April 2019. 

Ultimately, Pareteum recognized a total of approximately $4.4 million in revenue for this 

customer in the first and second quarter of 2019, before the service platform was even functional 
7

and despite the fact that the signed agreement was only for 630,000 euros, or approximately 

$750,000 – an amount that was still just a consignment agreement and not recognizable revenue.

Pareteum’s Misleading Filings

24. Pareteum’s 2018 Form 10-K, filed on March 18, 2019, was materially misleading 

as it overstated 2018 revenue by 60% ($12 million). Pareteum’s 10-Qs were also misleading 

from at least November 14, 2018 through August 9, 2019, as these filings also overstated 

revenue by up to 102% (Q2 2019 10-Q, dated August 9, 2019). 

25. In addition, with respect to each quarterly or annual filing, from at least March 12, 

2019 through August 13, 2019, Pareteum filed current reports on Form 8-K, pursuant to 

Exchange Act Rule 13a-11, attaching materially misleading press releases concerning financial 

results for the completed reporting period. These press releases were misleading because they

included, and often highlighted, the revenue amounts that were materially overstated. 

Pareteum’s Restatement and Offer of Settlement

26. On October 21, 2019, Pareteum publicly announced that it would be issuing 

financial restatements for all of 2018 and the first two quarters of 2019, and that it expected the 

restatements to reduce the reported revenue by $9 million for all of 2018 and $24 million for the 

first half of 2019. After this announcement, Pareteum’s Audit Committee began an independent 

investigation.

27. On December 14, 2020, Pareteum filed a restated Form 10-K for 2018, reducing the 

full year revenue from $32.4 million to $20.3 million. On March 12, 2021, Pareteum restated is 

financial results for 2019, reporting a full year revenue of $62.05 million – reducing its stated 

revenue for the first quarter of 2019 from $23.04 million to $13.07 million, and for the second 

quarter of 2019 from $34.2 to $16.9 million. 

28. On September 2, 2021, Pareteum agreed to an Offer of Settlement and the 

Commission commenced a settled cease-and-desist proceeding, finding that Pareteum violated

Section 17(a) of the Securities Act, and Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the 

Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 thereunder, and imposing a 

$500,000 civil penalty. 

Violations

29. As a result of the conduct described above, Stefanski willfully violated Section 

17(a) of the Securities Act, which prohibits fraudulent conduct in the offer or sale of a security.

30. As a result of the conduct described above, Stefanski willfully violated Section 

10(b) of the Exchange Act and Rules 10b-5(a) and (c) promulgated thereunder, which prohibit 

fraudulent conduct in connection with the purchase or sale of securities.
8

31. As a result of the conduct described above, Stefanski willfully aided and abetted 

and caused Pareteum’s CFO’s and Pareteum’s violations of Section 10(b) of the Exchange Act and 

Rule 10b-5 promulgated thereunder, which prohibit fraudulent conduct in connection with the 

purchase or sale of securities.

32. As a result of the conduct described above, Stefanski willfully violated Rule 13b2-2 

under the Exchange Act, which prohibits any officer or director of an issuer from directly or 

indirectly making or causing to be made a materially false or misleading statement to an 

accountant in connection with any audit, review, or examination of the financial statements of the

issuer.

33. As a result of the conduct described above, Stefanski willfully aided and abetted 

and caused Pareteum’s violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 

13a-11 and 13a-13 promulgated thereunder, which require issuers of securities registered pursuant 

to Section 12 of the Exchange Act to file periodic and other reports with the Commission, 

including annual, quarterly and current reports that must contain any material information 

necessary to make the required statements made in the report not misleading.

34. As a result of the conduct described above, Stefanski willfully aided and abetted and 

caused Pareteum’s violations of Exchange Act Section 13(b)(2)(A), which requires issuers of 

securities registered pursuant to Section 12 of the Exchange Act to make and keep books, records and 

accounts which, in reasonable detail, accurately and fairly reflect their transactions and dispositions of 

assets. 

35. As a result of the conduct described above, Stefanski willfully aided and abetted 

and caused Pareteum’s violations of Exchange Act Section 13(b)(2)(B), which requires issuers of 

securities registered pursuant to Section 12 of the Exchange Act to devise and maintain a system of 

internal accounting controls sufficient to provide reasonable assurances that, among other things,

transactions are recorded as necessary to permit preparation of financial statements in accordance 

with GAAP.

Stefanski’s Cooperation

36. In determining to accept the Offer, the Commission considered Stefanski’s 

cooperation afforded to the Commission staff.

IV.

Pursuant to the Offer, Respondent agrees to additional proceedings in this 

proceeding to determine what, if any, disgorgement, prejudgment interest and civil penalties are

appropriate and in the public interest under Section 8A of the Securities Act, and appropriate under

Sections 21B and 21C of the Exchange Act. In connection with such additional proceedings: (a) 

Respondent agrees that he will be precluded from arguing that he did not violate the federal 

securities laws described in this Order; (b) Respondent agrees that he may not challenge the validity 

of this Order; (c) solely for the purposes of such additional proceedings, the findings made in this

Order shall be accepted as and deemed true by the hearing officer; and (d) the hearing officer may 
9

determine the issues raised in the additional proceedings on the basis of affidavits, declarations, 

excerpts of sworn deposition or investigative testimony, documentary evidence, and, if the hearing 

officer determines it necessary, hearing testimony.

V.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent Stefanski’s Offer.

Accordingly, pursuant to Section 8A of the Securities Act, Sections 4C and 21C of the 

Exchange Act, and Rule 102(e)(1)(iii) of the Commission’s Rules of Practice, it is hereby 

ORDERED that:

A. Respondent Stefanski shall cease and desist from committing or causing any 

violations and any future violations of Section 17(a) of the Securities Act, Sections 10(b), 13(a), 

13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a13, and 13b2-2 thereunder.

B. Respondent Stefanski be, and hereby is prohibited from acting as an officer or 

director of any issuer that has a class of securities registered pursuant to Section 12 of the 

Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act.

C. Respondent Stefanski is denied the privilege of appearing or practicing before the 

Commission as an accountant.

VI.

IT IS ORDERED that a public hearing for purposes of taking evidence on the questions set 

forth in Section IV hereof shall be convened at a time and place to be fixed and before an 

Administrative Law Judge to be designated by further order as provided by Rule 110 of the 

Commission’s Rules of Practice, 17 C.F.R. § 201.110, following the entry of a final judgment 

against the last remaining defendant(s) in Securities and Exchange Commission v. Victor Bozzo, et 

al. (S.D.N.Y.) (the “Related Actions”). 

If Respondent fails to appear at a hearing after being duly notified, the Respondent may be 

deemed in default and the proceedings may be determined against him upon consideration of this 

Order, the allegations of which may be deemed to be true as provided by Rules 155(a), 220(f), 

221(f) and 310 of the Commission’s Rules of Practice, 17 C.F.R. §§ 201.155(a), 201.220(f), 

201.221(f) and 201.310.

IT IS FURTHER ORDERED that, pursuant to Rule 360(a)(2) of the Commission’s Rules 

of Practice, 17 C.F.R. § 201.360(a)(2), the Administrative Law Judge shall issue an initial 

decision no later than 75 days from the occurrence of one of the following events: (A) The 

completion of post-hearing briefing in a proceeding where the hearing has been completed; (B) 

Where the hearing officer has determined that no hearing is necessary, upon completion of 

briefing on a motion pursuant to Rule 250 of the Commission’s Rules of Practice, 17 C.F.R. § 
10

201.250; or (C) The determination by the hearing officer that a party is deemed to be in default 

under Rule 155 of the Commission’s Rules of Practice, 17 C.F.R. § 201.155 and no hearing is 

necessary. 

The Commission finds that it would serve the interests of justice and not result in 

prejudice to any party to provide, pursuant to Rule 100(c) of the Commission’s Rules of Practice, 

17 C.F.R. § 201.100(c), that notwithstanding any contrary reference in the Rules of Practice to 

service of paper copies, service to the Division of Enforcement of all opinions, orders, and 

decisions described in Rule 141, 17 C.F.R. § 201.141, and all papers described in Rule 150(a), 17 

C.F.R. § 201.150(a), in these proceedings shall be by email to the attorneys who enter an 

appearance on behalf of the Division, and not by paper service.

In the absence of an appropriate waiver, no officer or employee of the Commission engaged 

in the performance of investigative or prosecuting functions in this or any factually related 

proceeding will be permitted to participate or advise in the decision of this matter, except as witness 

or counsel in proceedings held pursuant to notice. Since this proceeding is not “rule making” within 

the meaning of Section 551 of the Administrative Procedure Act, it is not deemed subject to the 

provisions of Section 553 delaying the effective date of any final Commission action.

By the Commission.

Vanessa A. Countryman

Secretary