SiliconBeat

If we suddenly seem obsessed with UTStarcom (ticker:UTSI) of Alameda, well, guilty as charged. But then, with filings this fun, what’s not love?

As we wrote last week, there’s been big layoffs, there are two federal investigations, including one for allegedly bribing a Mongolian official, and some funny business with its sales offices in Western China.

Now comes the proxy. UTStarcom filed its proxy on Tuesday for 2006, and as you’d expect, executives were rewarded for a job well done. CEO Hong Liang Lu got $3.34 million last year, including a $700,000 salary and some assorted stock and options. And CFO Francis Barton got $2.032 million package, including $85,624 for a car allowance.

The filing also notes this gem. In February, the board voted to raise the salary of Ying Wu, the executive vice president of the company’s China operations, from $500,000 to $550,000. In June, he was “terminated.”

As UTStarcom (ticker: UTSI) of Alameda tries to dig its way out of various holes, it can at least say it’s caught up with its securities filings. So check that off the list.

However, that’s about as far as the good news runs. We noted last week that UTStarcom had announced big layoffs and various ongoing investigations from federal agencies. The company reported Thursday that it had lost $61 million in the second quarter ending June 30.

But in the 10-Q filed on Friday for those second quarter results, the company also disclosed the results of two investigations. One related to revenue recognition. And one related to stock options backdating. And neither came with good news.

On the revenue front, the company company had to reduce its sales from 2000 to 2006 by $270.8 million, and its profits by $96.7 million. Why? Apparently there was some funny business going on in its western China offices related to the way it was counting revenue. While the company’s investigations said there was no out and out fraud, there was a lack of control. As such, the company said: “certain members of management in China bear varying degrees of responsibility for inadequate oversight of activities. As a result, certain employees in China have either been terminated or placed on suspension for failure to provide adequate oversight of activities.”

On the stock options front, it turns out that yes, there was options backdating. And as such, the company will need to increase its compensation expenses between 1998 and 2006 by another $26.7 million. And that, of course, also comes off the bottom line.

And then, of course, there’s still the various governmental investigations. UTStarcom said it has “has received notice of a formal inquiry by the staff of the Securities & Exchange Commission into certain aspects of the Company’s financial disclosures.” And:

“In December 2005, the U.S. Embassy in Mongolia informed the Company that it had forwarded to the Department of Justice (“DOJ”) allegations that an agent of the Company’s Mongolia joint venture had offered payments to a Mongolian government official in possible violation of the Foreign Corrupt Practices Act (the “FCPA”). The Company through our Audit Committee, authorized an independent investigation into possible violations of the FCPA, and the Company has been in contact with the DOJ and SEC regarding the investigation. The investigation has identified possible FCPA violations in Mongolia, Southeast Asia, India, and China, as well as possible violations of U.S. immigration laws. The DOJ has requested that the Company voluntarily produce documents related to the investigation and the SEC has subpoenaed the Company for documents.”

Besides that, everything is fine. So let’s all get back to work.

Our good friends up the road in Alameda, UTStarcom(UTSI) haven’t had the best of times lately. As Michelle Leder at footnoted.org writes, this once robust telecom company last week announced it was firing 700 employees, about 11 percent of the workforce, and still faces investigations by the U.S. Department of Justice and the U.S. Securities and Exchange Commission. Yikes

But what’s really interesting is this little nugget that Leder unearthed from UTStarcom’s latest 10-K filed last week. The company warns that if those investigations result in charges, the company could “face sanctions including, but not limited to, fines, disgorgement and an injunction.”

Read her whole post here.