Christian software company head claims discrimination

The Securities and Exchange Commission (SEC) froze the stock of Christian software developer Left Behind Games in the midst of a fraud investigation. Troy Lyndon, Left Behind Games founder, CEO and CFO, and Ronald Zaucha, Lighthouse Educational Ministries prison ministry founder and executive director, have been charged with conspiring to artificially inflate the software company’s revenues by 1,300%.

Lyndon issued nearly 2 billion shares of stock to Zaucha in what the SEC lawsuit alleges was a scheme to falsely inflate the company’s value by injecting millions of unregistered shares into the marketplace.

When the stock was issued to Zaucha in 2009, the company said it was for compensation for consulting services. Federal regulators alleged that Zaucha provided few, if any, consulting services, however.

Filing the suit in Hawaii, where Lyndon and Zaucha live, the SEC alleges that Zaucha, a friend of Lyndon’s, sold virtually all of the 1.7 billion shares for $4.6 million, then funneled $3.3 million back into the company.

One such way Zaucha kicked back sales proceeds was by purchasing $1.38 million in obsolete inventory at a steep discount in December 2010, then donating the software to churches and religious groups, the lawsuit alleges. The company counted the full $1.38 million as revenue.

“Lyndon and Zaucha’s scheme duped investors into believing Left Behind Games was becoming a successful enterprise when it actually was struggling to stay afloat,” Michele Wein Layne, director of the Los Angeles SEC office, said in a statement.

Lyndon has denied the charges and expressed his belief that the SEC is discriminating against him and his company. Zaucha deferred media requests for comment to his lawyer.

“I’m just a video game guy,” Lyndon said. “If any violation occurred, it would never have been intentional—and certainly never fraudulent.”

“For more than two years, I’ve asked SEC to explain how and if I have violated any rule, so that I could self-report it,” he added.

Titles developed and/or published by Left Behind Games include Left Behind 4: World at War, King Solomon’s Trivia Challenge 2, Praise Champion 2 and Scripture Chess.

Left Behind Games is described on its website as “the world’s leading publisher of Christian video games,” but the company closed its offices in 2011. Its trade names are Inspired Media Entertainment, LB Games and Cloud 9 Games.

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