After a 14-month government investigation, Peregrine Systems Inc. has been charged with "massive fraud" by the U.S. Securities and Exchange Commission for allegedly falsifying sales and exaggerating revenue, then covering up the scheme.After a 14-month government investigation,\u00a0Peregrine Systems Inc.\u00a0has been charged with "massive fraud" by the U.S. Securities and Exchange Commission for allegedly falsifying sales and exaggerating revenue, then covering up the scheme.In an eight-page lawsuit filed yesterday, the SEC charged the San Diego-based infrastructure management software company with reporting violations, financial fraud, and books and records violations during 11 consecutive quarters from April 1, 1999, to Dec. 31, 2001.In March, the company restated its income, cutting $509 million from its previously reported revenue.The apparent problem, according to the SEC suit, was that Peregrine aggressively sought ways of making good on the market's rising revenue expectations at the time. The company had 17 straight quarters of revenue growth after its initial public offering in April 1997, then allegedly began taking fraudulent steps to bolster revenue and sales when they weren't meeting expectations, the SEC said.One method the company allegedly used, according to the SEC, was to "park" significant amounts of its software with resellers and mark it as sold goods on its books, although the resellers often weren't obligated to pay for the products.In transactions in its financial reports, Peregrine allegedly "used other deceptive practices to inflate the company's revenue," including entering into reciprocal agreements with customers for bartering or swaps that failed to meet specific conditions under SEC rules. In other cases, "Peregrine essentially paid for its customers' software purchases" by giving them vested stock or cash, then taking the stock or cash back to "pay" for the software purchases, according to the SEC. Such practices are against SEC regulations.As a result of the allegedly fraudulent practices, Peregrine accumulated millions of dollars of aging receivables, some of which were bogus, on its balance sheet, according to the SEC.The company also allegedly sold false invoices to banks to raise cash to make it appear that money was coming in to pay for products, according to the SEC suit.In a statement, the SEC said Peregrine has entered into a partial settlement in the case and has agreed to retain an internal auditor to ensure that future financial statements are accurate. The company also agreed to disclose the current condition of its books and reporting procedures, as well as meeting several other conditions. Any monetary civil penalties will be determined later, the SEC said.A spokesman for the SEC office in Los Angeles couldn't be reached for comment this morning.Peregrine CEO Gary Greenfield said in a statement: "The company's partial settlement with the SEC is an important step for Peregrine as the company moves toward emergence from Chapter 11 this summer. The company has cooperated fully with the investigation by all governmental agencies since May 2002. We stand by our commitment to ensure that Peregrine's corporate governance, and financial policies and practices meet high standards."The SEC suit came after months of government investigations into the alleged fraud. Last September, Peregrine filed for Chapter 11 bankruptcy protection as it sought to reorganize amid the legal actions being pondered by the government.Peregrine first announced an independent investigation into its financial reports in May 2002, and at the same time announced the resignations of CEO and Chairman Steve Gardner and Chief Financial Officer Matt Gless.Gless was charged with fraud in April by the SEC in connection with the case. Two other former company officials have also been charged.