Diebold Inc. has agreed to pay $25 million to settle charges of fraudulent accounting with the Securities and Exchange Commission while the SEC continues to pursue charges against former Diebold officers.

The SEC says Diebold management played a number of different accounting games to manage earnings, including improper using of bill-and-hold and side agreements to accelerate revenue recognition, manipulating reserves and accruals, improperly delaying and capitalizing expenses, and writing up the value of used inventory.

The SEC says Diebold management received “flash reports,” sometimes daily, comparing earnings with analyst forecasts. Financial management also provided “opportunity lists” with ways the company could close the gap between earnings and forecasts using various fraudulent accounting transactions, the SEC said.

The SEC charged Diebold, former CFO Gregory Geswein, former controller and later CFO Kevin Krakora, and former director of corporate accounting Sandra Miller. The SEC also targeted Diebold’s former CEO Walden O’Dell for reimbursement of cash bonuses, stock, and stock options under the clawback provisions of Sarbanes-Oxley. Diebold’s $25 million payment settles the corporate charge, but cases are ongoing against Diebold’s former officers.

Diebold said it reached a settlement agreement in principle with the SEC in May 2009 but the SEC recently finalized and announced the settlement. The company said in a statement it is pleased to have the SEC charges settled and has been advised it will not face charges from the U.S. Attorney’s office.

"Moving forward, we will continue to direct our energy and focus toward the essential work of improving our competitive position and creating value for all our stakeholders while maintaining effective financial controls within our processes," said Thomas W. Swidarski, Diebold president and CEO.

The SEC said Diebold manipulated earnings from at least 2002 through 2007 and made material misstatements and omissions to investors in dozens of filings and press releases throughout that period. The SEC says the cumulative pretax effect on earnings was at least $127 million.

In their ongoing case against former officers, the SEC is seeking officer-and-director bars, penalties, disgorgement of gains, and reimbursement of bonuses and other incentive compensation. While the Commission did not accuse O’Dell of engaging in the fraud, O’Dell agreed to reimburse the company $470,016 in cash bonuses, 30,000 shares of stock, and options for 85,000 more shares.