SEC Charges Former AMMO Executives with Accounting Fraud

The U.S. Securities and Exchange Commission (SEC) has taken significant action against three former executives of AMMO, Inc., now known as Outdoor Holding Company. On **August 15, 2025**, the SEC filed a detailed **63-page complaint** in the U.S. District Court for the District of Arizona, accusing the executives of engaging in a multi-year scheme to mislead investors and falsify corporate records. This enforcement action demonstrates the SEC’s commitment to pursuing accounting fraud, even in the face of reduced staffing and morale within the agency.

The complaint names **Fred W. Wagenhals**, the former CEO, **Robert D. Wiley**, the former CFO, and **Christopher D. Larson**, the co-founder and vice president of finance. The SEC alleges that all three violated essential antifraud provisions of the **Securities Act of 1933** and the **Securities Exchange Act of 1934**. Specifically, Wagenhals and Wiley are accused of falsifying corporate records, misleading auditors, and failing to return compensation after AMMO’s financial restatement under **Section 304(a)** of the **Sarbanes-Oxley Act**.

Allegations of Concealment and Misrepresentation

Central to the SEC’s case is the assertion that Larson operated as a de facto senior executive from **2017 to 2022**, despite a federal court ruling in **2020** prohibiting him from serving as an officer or director of any public company for five years. The SEC claims that Wagenhals and Wiley knowingly concealed Larson’s significant role from shareholders and regulators. According to the complaint, Larson was deeply involved in AMMO’s operations, including leading negotiations for a **$240 million** acquisition of **GunBroker.com**.

Despite Larson’s active participation, AMMO’s SEC filings from **2020 to 2023** consistently excluded his name from the list of executive officers and falsely stated that no officer had faced recent disciplinary action. The SEC has highlighted instances where Wagenhals and Wiley misled outside audit firms regarding Larson’s employment status, including a backdated “separation agreement” that falsely suggested he had left the company.

Undisclosed Transactions and Financial Manipulation

The SEC’s complaint also outlines undisclosed related-party transactions benefiting Larson and his family. For example, AMMO hired the construction company owned by Larson’s brother to build a **$25 million** manufacturing facility without competitive bids or board approval. This arrangement resulted in payments exceeding **$25 million** over two fiscal years. Additionally, AMMO allegedly entered into a “kickback” arrangement with a payment processor, where **$814,000** of fees were shared with Larson’s consulting firm, yet these transactions were not disclosed in AMMO’s annual reports.

In terms of financial reporting, Wiley and Larson are accused of manipulating AMMO’s financials. In a notable incident, when internal calculations indicated negative “Adjusted EBITDA” for the quarter ending **September 30, 2020**, Wiley allegedly altered the calculation methodology to show a positive result of **$976,521**. This change was not disclosed to investors, who were then presented with misleading information about AMMO’s financial health.

The SEC is seeking various remedies, including permanent injunctions, civil penalties, and officer-and-director bans. They are also pursuing the disgorgement of gains from Larson, along with reimbursement of compensation from Wagenhals and Wiley.

This case serves as a critical reminder to public company executives about the legal obligations surrounding full disclosure, transparent governance, and accurate financial reporting. The SEC’s actions emphasize that attempts to obscure material facts or misrepresent financial results can lead to serious consequences, not just for companies but also for individual executives. The Sarbanes-Oxley Act’s provisions for clawbacks of incentive pay highlight the potential for significant financial repercussions following misconduct.

The SEC continues to reinforce its commitment to holding individuals accountable for fraudulent activities within public companies, underscoring the necessity of ethical practices in corporate governance.