Howley, who served as engagement partner on most firm audits, and Wood, concurring partner on most work, can apply for reinstatement after three years and the firm must pay a $130,000 civil money penalty. The SEC says the two did not follow up the fact that the prior auditor had sent allegations from a former LocatePlus board member that the company had loaned $2 million to Andover Secured Resources, another phony unit. The prior auditor had also resigned in 2004, telling the client his concerns about the reliability of management's representations.

Many of the issues surround Omni Data, which was purportedly part of the channel for LocatePlus' services, databases that were searchable for individual's names, addresses and real estate holdings. In 2005 and 2006, Omni Data paid $300,000 a month for unlimited access to the data while LocatePlus was supposed to spend $500,000 to build a website for the client. LocatePlus reported $6 million in revenue from Omni Data, representing 25 percent of revenue for the two years.
However, Omni Data was a sham company and the accounting firm was unable to find any records of Omni Data in Connecticut, at times could not contact or even find a president of the company nor could the accountants locate a website, even thought Omni Data was supposedly selling data over the web. In August 2005, Howley received a call from a former LocatePlus board member who questioned the sales to Omni Data and said its president was Latorella's former girl friend, a ballet teacher.

To fund the Omni Data sales, Fields and Latorella funneled $2 million in cash to the company, which made its way back to LocatePlus. Among other issues was the fact that the contract to Omni Data was signed months before the firm was incorporated in Delaware.

When Howley and Wood met the former auditor in 2005, he added that reasons for his resignation included management's providing contradictory explanations and its providing unsigned contracts as audit evidence. Even after receiving the information from the informant, the two came to no conclusion about the allegations even though information was shared with the firm. In fact, in 2005 the firm identified "overstated and/or fictitious revenues/accounts receivable" relating to Omni Data.

Nevertheless, the firm accepted representations from management and the chairman of the client's audit committee that there was no truth to the allegations.