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+ Litigation Release No.  16885 / January 31, 2001 
+
+ Accounting and Auditing Enforcement Release No.  1365 / January 31, 2001 
+
+ SECURITIES AND EXCHANGE COMMISSION v. DAVID W. MCCONNELL AND CHARLES P. MORRISON (United States District Court for the Eastern District of Pennsylvania, Civil Action No. 00 CV 2261)                               
+
+   Charles P. Morrison, the former chief financial officer of the Delaware Valley region of Allegheny Health Education and Research Foundation ("AHERF") and an AHERF senior vice president, consented, without admitting or denying the allegations of the Commission's Complaint, to the entry of a Final Judgment and Order in the case.  The Order permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and requires him to pay a civil money penalty in the amount of $25,000.  The Order was entered on January 31, 2001, by the Honorable Norma L. Shapiro. 
+
+   Also on January 31, 2001, the Commission instituted and simultaneously settled a Rule 102(e) proceeding against Morrison.  Based upon the District Court injunction,  the Commission suspended Morrison from appearing or practicing before the Commission as an accountant with the right to apply for reinstatement in three years.   
+
+ The Commission's Complaint in the District Court action alleged that Morrison violated the securities laws by, among other things, creating, reviewing and approving false financial statements of AHERF and a group of its subsidiaries collectively known as the Delaware Valley Obligated Group ("Delaware Valley"), thereby masking, from at least December 1996 through July 1998, AHERF's severely deteriorating financial condition.  Specifically, the Commission's Complaint alleged that the financial statements overstated:  (a) the 1996 income of Delaware Valley by, approximately, $40 million; (b) the 1997 income of AHERF by approximately $59.6 million; and (c) the 1997 income of Delaware Valley by approximately $59.6 million, in documents issued to the public in December 1996 and February 1998. 
+
+ AHERF is a Pennsylvania nonprofit healthcare organization.  On July 21, 1998, AHERF filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code on behalf of itself and four of its subsidiaries in the U.S. District Court for the Western District of Pennsylvania.  By the time of its bankruptcy filing in 1998, groups of one or more of AHERF's subsidiaries ("obligated groups") were responsible for repaying at least thirteen bond issues issued by or for the benefit of these obligated groups, totaling more than $900 million (the "AHERF Bonds").   
+
+ On behalf of the obligated groups, AHERF provided to nationally recognized municipal securities information repositories annual Secondary Market Disclosure Reports which contained a section explaining the financial health of the reporting entities, debt service coverage ratios, and which attached audited financial statements.  The Disclosure Reports were made available to the public through these repositories and were the most easily accessible source of information for investors and potential investors in AHERF bonds.   
+
+   According to the Complaint, between December 12, 1996 and January 7, 1997, AHERF sent Delaware Valley's 1996 Disclosure Report and audited financial statements to the repositories and numerous other third parties.  The Complaint alleged that Delaware Valley's audited financial statements for the year ended June 30, 1996 were materially false and misleading, and failed to comply with Generally Accepted Accounting Principles ("GAAP"), because they materially overstated Delaware Valley's 1996 income by, approximately, $40 million and misrepresented the condition of Delaware Valley accounts receivable.  The Complaint further alleged that Delaware Valley's 1996 Disclosure Report was materially false and misleading in that it mirrored the numerical misstatements in the 1996 financial statements and it materially misrepresented the condition of Delaware Valley accounts receivable.   
+
+   The Complaint further alleged that, in February 1998, AHERF distributed its 1997 audited consolidated financial statements with consolidating schedules and consolidated Disclosure Report to the repositories and numerous other third parties.  According to the Complaint, AHERF's audited consolidated financial statements with consolidating schedules for the year ended June 30, 1997, which purported to be prepared in accordance with GAAP, were materially false and misleading and failed to comply with GAAP in that they materially overstated AHERF's 1997 consolidated net income by, approximately, $59.6 million and they materially overstated the 1997 net income of Delaware Valley by, approximately, $59.6 million.   AHERF's 1997 consolidated Disclosure Report allegedly was materially false and misleading in that it:  (1) mirrored the numerical misstatements in the AHERF 1997 audited consolidated financial statements and consolidating schedules;  (2) misrepresented the condition of Delaware Valley accounts receivable; and  (3) misrepresented the financial condition of another AHERF obligated group, namely the Centennial obligated group. 
+
+   See Litigation Release No. 16534, Accounting and Auditing Enforcement Release No. 1254 (May 2, 2000) 
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diff --git a/raw/aaer/2001/AAER-1366.txt b/raw/aaer/2001/AAER-1366.txt
new file mode 100644
index 0000000000000000000000000000000000000000..863eadfc19555015031fd9cbe22453000ab51615
--- /dev/null
+++ b/raw/aaer/2001/AAER-1366.txt
@@ -0,0 +1,1537 @@
+
+
+ 
+ 
+   
+     
+ 
+ 
+ 
+ 
+ 
+ 
+
+     
+     
+     SEC.gov | YourBankOnline.com, Pakie Plastino and William L. Butcher 
+     
+     
+     
+     
+     
+     
+     
+         !function(){var e=navigator.userAgent,a=document.documentElement,n=a.className;n=n.replace("no-js","js"),/iPad|iPhone|iPod/.test(e)&&!window.MSStream&&(n+=" ua-ios"),a.className=n}(); 
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+           
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+
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+        YourBankOnline.com, Pakie Plastino and William L. Butcher
+       
+
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+
+ SECURITIES EXCHANGE ACT OF 1934
+
+ Release No.   43923 / February 5, 2001 
+
+ ACCOUNTING AND AUDITING ENFORCEMENT
+
+ Release No.   1366 
+
+ ADMINISTRATIVE PROCEEDING
+
+ File No. 3-10313 
+
+    
+        In the Matter of 
+        SECURE SIGN, INC. (FORMERLY  YOURBANKONLINE.COM),
+       PAKIE V. PLASTINO and
+       WILLIAM L. BUTCHER, C.P.A.
+      	      Respondents
+         
+     
+       : : : : : : : : : : :   
+       
+      ORDER  MAKING FINDINGS AND ISSUING A CEASE-AND-DESIST ORDER AGAINST SECURE SIGN, INC. (FORMERLY YOURBANKONLINE.COM)
+          I. 
+
+   On September 27, 2000 the Securities and Exchange Commission (the "Commission") instituted public cease-and-desist proceedings against respondent Secure Sign, Inc. (formerly YourBankOnline.com) pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") to determine whether it violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.   
+
+   In response to the institution of these proceedings, Secure Sign, Inc. (the "Company") has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept.  Solely for the purpose of this proceeding and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except that the Company admits the jurisdiction of the Commission over it and over the subject matter of this proceeding, the Company consents to the issuance of this Order Making Findings and Issuing a Cease-and-Desist Order Against Secure Sign, Inc. (Formerly YourBankOnline.com) ("Order").   
+
+ II. 
+
+             On the basis of this Order and the Offer, the Commission makes the following findings:  1   
+
+ A. Nature of Proceeding 
+
+ 1. This matter involves fraud by Secure Sign, Inc., an Internet-related software company based near Seattle, Washington.  2    The action is based on the Company's substantial inflation of the value of its primary asset, an Internet banking software program called YourBankOnline (the "software"), in a press release and registration statement.  
+
+ 2. In March 1999, the Company - a small software company with minimal operations at the time - acquired the software in exchange for restricted shares of Company stock.  Shortly thereafter, the Company issued a press release claiming that it had just acquired a new software program for $10,000,000 in cash and stock.  In fact, the stock the Company exchanged for the software had a substantially lower value at the time of the acquisition; moreover, the company which sold the software to the Company had acquired the software for $410,000 just six months earlier.  This press release, which was followed by a series of additional releases touting the software, caused the Company's stock price to climb from under $1 to a high of $32 per share in the two weeks following the initial announcement.
+
+  3. In August 1999, the Company filed with the Commission a registration statement on Form 10-SB incorporating audited financial statements reporting a substantially inflated asset value for the software.  The software represented nearly 99% of the Company's assets.
+
+  4. The Company had no legitimate basis for the valuation given to the software in the March press release and the August registration statement.
+
+  B. Respondent 
+
+ 5. Secure Sign, Inc. is a software company with its principal place of business in Mountlake Terrace, Washington.  The Company's common stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act, and is quoted on the OTC Bulletin Board under the symbol SECU.  During the relevant period, the Company was called Consolidated Data, Inc., and its stock was quoted on the OTC Bulletin Board under the symbol CSDD.  From February 2000 to November 2000, the Company was called YourBankOnline.com, and its stock was quoted on the OTC Bulletin Board under the symbol YBOL.
+
+  C. Background 
+
+     The Formation Of The Company 
+
+ 6. Contractors Directory, a company involved in developing an Internet database of building contractors and subcontractors, was formed in 1997.  Contractors Directory generated $17,515 in revenue for the fiscal year ended September 30, 1998 and $13,970 in revenue for the six months ended March 31, 1999. 
+
+  7. In April 1997, Contractors Directory entered into a reverse merger with a public shell company that had no operations.  The entity changed its name to Consolidated Data in November 1998, and began trading on the OTC Bulletin Board under the ticker symbol CSDD.  Between November 1998 and March 1999, the Company's stock traded at approximately $.25 per share on minimal volume.  
+
+   Development Of The YourBankOnline Software  
+
+ 8. The YourBankOnline software program was developed in 1998 by a California bank (the "bank").  The software allows small financial institutions to provide Internet-based banking services to their customers.  The bank originally planned to sell the rights to the program to a larger institution (the "licensee") for licensing to end users.  In September 1998, as the result of delays in the negotiations between the bank and the licensee, the bank instead sold the software to a third party (the "owner") for $410,000.  The owner intended to license the software to the licensee for a profit, while retaining the right to license the YourBankOnline software to other financial institutions as well.
+
+  9. In early 1999, the owner licensed the non-exclusive rights to the software to the licensee in exchange for 50% of any revenues generated by the licensee's licensing of the software to end-users, up to a maximum of $1.3 million in revenues (i.e. $650,000 maximum payable to the owner).  No cash changed hands in this transaction.   
+
+   The Company's Acquisition Of The YourBankOnline Software 
+
+ 10.   The owner of the software was unsuccessful in its efforts to license the software rights to any other financial institutions.  In February 1999, the owner contacted the Company and offered to sell the software for $10,000,000.  According to the company's August 1999 Form 10-SB, as of March 31, 1999, the Company had a total of $138 in cash (as well as property and equipment valued at $7,004).
+
+  11. The Company agreed to a deal which on paper appeared to represent a sale of the software for $10,000,000.  According to the contract, executed on March 10, 1999, the Company purchased the YourBankOnline software from the owner under the following terms.  First, the Company would immediately issue the owner two million shares of restricted stock at an assigned value of $2 per share.  Second, the Company would pay the owner $6,000,000 in cash or 1.2 million shares of restricted stock assigned a value of $5 per share.  The latter payment would be made at a rate of $10,000 per software license issued by the Company, with the remainder payable in stock at the end of twelve months.
+
+  12. Pursuant to the agreement, the Company issued two million shares of restricted stock to the owner in March 1999; the remaining 1.2 million shares were issued, at the owner's request, in April 1999.
+
+  D. The Company Issued a False And Misleading Press Release On March 30, 1999, Which Materially Overstated The Value Of The YourBankOnline Software. 
+
+  13. On March 30, 1999, the Company issued a press release announcing that it "has finalized an agreement with [the owner] to purchase its proprietary software YourBankOnline.com.  The ten million ($10,000,000) purchase price is to be paid in a combination of cash and stock."  This press release was disseminated over the Internet and discussed on Internet stock discussion boards.  
+
+  14. The following day, the Company's stock price closed at $3 3/8 (a 100% increase over the prior day's close, and nearly ten times the price which had prevailed through most of March) on record volume.  
+
+  15. The Company followed this press release with a flurry of additional releases - nearly a dozen in April alone - each touting a different technical aspect of the YourBankOnline software.  Many of these press releases were characterized by "ticker spamming," the practice of including the names and ticker symbols of numerous well-known technology companies so that investors searching for news on the bigger companies are more likely to come across the press release.
+
+  16. The Company's promotional efforts resulted in a substantial run-up in the stock price.  The price went as high as $32 in intraday trading on April 12, and then steadily declined to $3 by August 1999.  
+
+  17. The March 30 press release was materially misleading.  The Company did not, in fact, pay $10,000,000 in cash and stock for the software.  The $10,000,000 price was based on the $2 and $5 assigned valuations used in the agreement between the Company and the owner.  However, the Company was, at the time of the agreement, a thinly traded OTC Bulletin Board stock trading in the range of $.20 to $.50 per share, and these valuations were thus entirely speculative.  The stock that the Company exchanged for the software had a market value far below $10,000,000 at the time the software purchase was announced (particularly since the stock issued to the owner was restricted and could not be freely traded). 
+
+  18. In addition, just one week before signing the contract, the Company had hired an outside consulting firm to help draft a registration statement and business plan for the Company. Under the contract between the Company and the firm, the Company issued the firm 300,000 shares of common stock in exchange for services valued at $60,000 - the equivalent of $.20 per share.  This stock, unlike the stock issued to the owner, was unrestricted.
+
+  19. Despite the press release's claim that the Company had purchased the software for $10,000,000 in "cash and stock," the Company had no financial ability to make cash payments at the time of the contract.  The press release gave the false impression that the Company had the financial strength to acquire a valuable new software program for $10,000,000, when in fact the Company had a total of $138 in the bank, the consideration it exchanged for the software was worth far less than $10,000,000, and the same asset had been purchased by the owner from the bank that designed the program for $410,000 just six months earlier.
+
+  20. The Company knew, or was reckless in not knowing, that the March 30 press release was materially false and misleading.  Based on the foregoing, the Company violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
+
+  E. The Company Filed A Registration Statement Which Incorporated Financial Statements Reflecting The Inflated Software Valuation.   
+
+  21. On August 9, 1999, the Company filed a registration statement on Form 10-SB, signed by Pakie V. Plastino ("Plastino").  The registration statement incorporated audited financial statements for the fiscal year ended March 31, 1999.  The Company reported total assets of $4.1 million, of which $4 million consisted of the YourBankOnline software.  (Because the financial statements covered the period ending March 31, and the final 1.2 million shares of Company stock were not delivered to the owner until April, the Company chose to include only the 2 million shares paid to the owner in March in calculating the software's asset value.)
+
+  22. This registration statement was false and misleading.  There was no basis for the $4 million asset valuation.  The stock issued in exchange for the software was worth far less than $2 per share at the time of the software purchase, and the same software had recently been purchased for only $410,000 by the owner.
+
+  23. The Company's use of the $2 per share stock price in calculating the asset value was not in conformity with generally accepted accounting principles ("GAAP").  Under GAAP, assets received by a corporation in return for stock must be recorded at fair value; the fair value may be determined by reference either to the value of the assets received or the stock issued, whichever is more clearly evident.  Here, on the date of the software purchase, the Company's stock was trading at $.50, with minimal historical trading volume.  The restricted nature of the stock issued by the Company added further uncertainty to its fair value.  The use of an assigned $2 per share stock value by the Company was arbitrary and inappropriate.
+
+  24. In the absence of a clear fair value for the restricted stock issued to the owner, the Company should have recorded the asset at the value of the software itself.  At the time of the transaction, the Company had no appraisal of the value of the software, and no customers for the product.  The only evident and objective value of the asset was the price the owner had agreed to pay to the bank that had designed the software ($410,000).  At most, the Company could have considered the price the licensee agreed to pay the owner for the software licensing rights (a maximum of $650,000).  By recording the asset at $4,000,000, the Company materially overstated its assets by approximately $3.35 million.
+
+  25. The Company knew, or was reckless in not knowing, that the financial statements included in the Form 10-SB were materially false and misleading.  Based on the foregoing, the Company violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 
+
+ III. 
+
+   Based on the foregoing, the Commission deems it appropriate to accept the Offer submitted by Secure Sign, Inc.  Accordingly, IT IS HEREBY ORDERED pursuant to Section 21C of the Exchange Act that: 
+
+   Secure Sign, Inc. cease and desist from committing or causing any violations or any future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 
+
+   For the Commission, by its Secretary, pursuant to delegated authority.
+
+                Jonathan G. Katz
+
+               Secretary 
+			  
+ Footnotes 
+
+     1   
+		 The findings herein are made pursuant to the Company's Offer and are not binding on any other person or entity in this or any other proceeding. 
+	     2   
+		 During the relevant period, the Company operated under the name Consolidated Data, Inc.  In February 2000, the Company changed its name to YourBankOnline.com, the name under which this proceeding was initiated.  The Company changed its name to Secure Sign, Inc. in November 2000.  For purposes of clarity, respondent Secure Sign, Inc. is referred to as "the Company" in the Offer and the Order. 
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diff --git a/raw/aaer/2001/AAER-1367.txt b/raw/aaer/2001/AAER-1367.txt
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--- /dev/null
+++ b/raw/aaer/2001/AAER-1367.txt
@@ -0,0 +1,1380 @@
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+              Jeffrey L. Fuller, Rebecca L. Schultz, and C. Eric Baumann
+           
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+        Jeffrey L. Fuller, Rebecca L. Schultz, and C. Eric Baumann
+       
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+ LITIGATION RELEASE NO. 16887 / February 5, 2001 
+ ACCOUNTING AND AUDITING ENFORCEMENT
+ RELEASE NO.  1367 / February 5, 2001 
+
+  SECURITIES AND EXCHANGE COMMISSION v. Jeffrey L. Fuller, Rebecca L. Schultz, and C. Eric Baumann , Case No. 4:01CV3021 (D. Neb.) 
+
+   The Securities and Exchange Commission ("Commission") announced today that it filed a Complaint against Jeffrey L. Fuller, Rebecca L. Schultz, and C. Eric Baumann, all of whom are former officers of Transcrypt International, Inc. ("Transcrypt"), for their involvement in Transcrypt's dissemination of false financial information in press releases and Commission filings in 1996 and 1997.  The Commission alleges that Fuller (Transcrypt's former CEO and president) and Schultz (Transcrypt's former treasurer) improperly approved Transcrypt's recognition of revenue for certain transactions and failed to respond to "red flags" signaling Transcrypt's improper accounting.  These "red flags" included ballooning accounts receivable, contingent payment terms for various transactions, and concerns raised by Transcrypt's accounting department about possible side agreements and uncollectible receivables.  The Commission also claims that Fuller, Schultz, and Baumann (Transcrypt's former vice president of sales) misrepresented or omitted important information in their communications with Transcrypt's auditors or internal accountants.  Fuller and Schultz sold stock in Transcrypt's October 1997 second offering under a registration statement which included false financial information. 
+
+   Without admitting or denying any of the allegations, Fuller and Schultz each consented to the entry of a permanent injunction prohibiting them from future violations of certain antifraud and recordkeeping provisions of the securities laws.  Each of the defendants consented to a permanent injunction prohibiting them from future violations of Rule 13b2-2 under the Securities Exchange Act of 1934.  Fuller and Schultz also agreed to pay disgorgement of $100,000 and $49,120, respectively.  The Commission waived collection of additional amounts based on their financial inability to pay.  Baumann agreed to pay a civil penalty of $25,000 for his unlawful acts.   
+
+   The Commission filed its complaint in the United States District Court for the District of Nebraska in Lincoln, where Transcrypt is headquartered and Schultz resides.  Fuller resides in Fresno, California, and Baumann in Columbus, Ohio.  Previously, on January 5, 2001, the Commission ordered Transcrypt to cease and desist from violations of various antifraud and recordkeeping provisions it claimed Transcrypt violated. 
+
+ SUMMARY FOR NEWS DIGEST 
+
+ INJUNCTIVE ACTION FILED AGAINST THREE FORMER OFFICERS OF TRANSCRYPT INTERNATIONAL, INC. 
+
+   The Commission filed an injunctive action today against Jeffrey L. Fuller, Rebecca L. Schultz, and C. Eric Baumann, all of whom are former officers of Transcrypt International, Inc. ("Transcrypt"), a company headquartered in Lincoln, Nebraska, for their involvement in Transcrypt's dissemination of false financial information in press releases and Commission filings in 1996 and 1997.  As a part of this financial fraud, it alleges that Fuller (Transcrypt's former CEO and president) and Schultz (Transcrypt's former treasurer) wrongfully approved recognition of revenue on various transactions and disregarded "red flags" signaling Transcrypt's improper accounting.  The Commission also claims that Fuller, Schultz, and Baumann (Transcrypt's former vice president of sales) misrepresented or omitted important information in their communications with Transcrypt's auditors or internal accountants. 
+
+    Fuller and Schultz consented to the entry of a permanent injunction prohibiting them from future violations of various antifraud and recordkeeping provisions of the securities laws.  Each of the defendants consented to a permanent injunction prohibiting them from future violations of Rule 13b2-2 under the Securities Exchange Act of 1934.  Fuller and Schultz also agreed to pay disgorgement of $100,000 and $49,120, respectively, based on their sales of stock in Transcrypt's October 1997 second offering and bonuses related to Transcrypt's performance.  The Commission waived collection of additional amounts because of their financial inability to pay.  Baumann consented to pay a civil penalty of $25,000 for his unlawful acts.  Transcrypt previously consented to a cease-and-desist order prohibiting it from future violations of various antifraud and recordkeeping provisions of the securities laws which the Commission claimed it violated.  [SEC v. Jeffrey L. Fuller, Rebecca L. Schultz, and C. Eric Baumann, No. 4:01CV3021, D. Neb.] 
+
+ Contact Persons:   Randall J. Fons 
+
+       Donald M. Hoerl
+
+       Amy J. Norwood
+
+       Telephone 303-844-1000 
+
+       File No. D-2095 
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diff --git a/raw/aaer/2001/AAER-1370.txt b/raw/aaer/2001/AAER-1370.txt
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+++ b/raw/aaer/2001/AAER-1370.txt
@@ -0,0 +1,1418 @@
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+              UNITED STATES OF AMERICA  Before the  SECURITIES AND EXCHANGE COMMISSION  Securities Act of 1933  Release No. 7953 / February 14, 2001  Securities Exchange Act of 1934  Release No. 43959 / February 14, 2001  Accounting and Auditing Enforcement  Release No. 1370 / February 14, 2001  Administrative Proceeding  File No. 3-10420       In the Matter of  Computron Software, Inc.,    currently named AXS-One Inc.,    Respondents.    : : : : : : :       ORDER INSTITUTING PUBLIC PROCEEDING PURSUANT TO  SECTION 8A OF THE SECURITIES ACT OF 1933 AND SECTION 21C OF THE  SECURITIES EXCHANGE ACT OF 1934 AND ISSUING A CEASE-AND- DESIST ORDER      I.   The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be, and hereby are, instituted against Computron Software, Inc., currently named AXS-One Inc. (hereinafter "Computron," "AXS-One" or "Respondent"), pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Section 21C of the Securities Exchange Act of 1934 ("Exchange Act").   II.   In anticipation of the institution of these administrative proceedings, AXS-One has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except as to the Commission's finding of jurisdiction over Respondent and the subject matter of this proceeding, which AXS-One admits, AXS-One consents to the issuance of this Order Instituting Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934 and Issuing a Cease-and-Desist Order ("Order") and to the entry of the findings and imposition of relief set forth below.   III.    FINDINGS   On the basis of this Order and the Offer submitted by AXS-One, the Commission finds  1   that:   Summary   A. During the period described below, Computron, a company engaged in the business of, among other things, marketing computer software products and providing related support services, engaged in a financial fraud that violated the antifraud, periodic reporting, books and records and internal controls provisions of the federal securities laws. Specifically, Computron artificially inflated its revenue and net income on its books and records and in its public filings with the Commission by fraudulently recognizing sales revenue in connection with transactions that did not constitute bona fide sales in the period in which they were recorded. As a result, Computron's initial public offering registration statement, periodic reports and other documents filed with the Commission in 1995 and 1996 were materially false and misleading.   The Respondent   B. Computron is a Delaware corporation with principal offices located in Rutherford, New Jersey. On November 1, 2000, Computron changed its name to AXS-One Inc. Computron's common stock is registered with the Commission pursuant to Section 12(b) of the Exchange Act and trades on the American Stock Exchange. From August 24, 1995 until January 27, 1997, Computron common stock was traded on the NASDAQ National Market System. From January 27, 1997 through November 11, 1997, prices for shares of Computron's common stock were quoted on the NASD's Electronic Bulletin Board and in the National Quotation Bureau's "pink sheets." As of April 7, 2000, 46.99% of Computron's common stock was owned by its officers, directors and affiliates.   The Financial Fraud   C. In 1995 and 1996, Computron engaged in accounting irregularities that violated the antifraud, periodic reporting, books and records and internal controls provisions of the federal securities laws. In connection with its initial public offering ("IPO") in August 1995, Computron filed a registration statement that included financial statements that materially overstated revenue and net income for the years ended December 31, 1992, 1993, 1994 and interim periods within 1993, 1994 and the first half of 1995. Computron subsequently filed periodic reports with the Commission pertaining to quarterly and annual periods through the quarter ended September 30, 1996 that also overstated revenue and net income.  2    D. In connection with the audit of Computron's financial statements for the year ended December 31, 1996, Computron reversed a total of approximately $9 million in sales revenue that had been improperly recorded during the period January 1, 1992 through September 30, 1996 (the "Restatement"). The following chart shows the effect, expressed in thousands, of the Restatement on Computron's financial statements for each of the four annual periods and the nine months ended September 30, 1996:             1992      1993      1994      1995      9 Months Ended September 30, 1996       Original Revenues    20,513    24,282    34,958    55,519    36,846      Restated Revenues    19,645    23,588    32,473    52,795    34,677      Overstatement    868    694    2,485    2,724    2,169      Overstatement %    4%    3%    7%    5%    6%      Net Income (loss)    (2479)    (3170)    77    (7312)    (21,333)      Restated Net Income (loss)    (3347)    (3864)    (2308)    (8578)    (23,214)      Understatement of loss    868    694    2,485    1,266    1,881      Understatement of loss %    35%    22%    N/A  3      17%    9%      E. The foregoing misstatements resulted from accounting irregularities involving as many as 35 software transactions over a four year period and included, among other things, the recognition of revenue from sales contracts despite: (i) in at least 7 cases, the use of side letters to commit Computron to provide free services, alter or negate payment terms contained in sales contracts or promise to deliver products that were still under development; (ii) the creation of duplicate contracts containing conflicting payment terms; and (iii) the improper dating of sales contracts to accelerate revenue recognition.  1. Side Letters  a. The terms set forth in the side letters were disregarded when Computron recorded the transactions on its books and records, and, as a result, its financial statements were materially false and misleading. Some of the side letters gave purchasers the right to valuable free consulting, maintenance or training services or free products, which significantly offset the price of the software. Nevertheless, Computron improperly recognized the full purchase price as revenue and did not record the expenses associated with providing the free services.  b. Computron also issued side letters and apparently made oral agreements in which it gave resellers that had purportedly purchased software from Computron the unconditional right to a full refund if the resellers were unable to consummate sales with end users. Again, Computron improperly recognized revenue from these contracts as if they were unconditional sales.  c. On one occasion, a customer signed a contract to purchase a particular product, but the purchase price of over $1 million also covered a second product that still was under development and not yet ready for sale. A side letter obligated Computron to provide this additional product to the customer within a few months without any additional charge. Computron improperly recognized revenue at the time the contract was entered into for the full purchase price, even though part of the contract price was attributable to a product that, as it turned out, was not completed until over one year later.  2. Secret Duplicate Contracts  In at least three instances, sales personnel obligated Computron to one set of contract terms in a sales contract with a customer, then generated phony versions of customer sales contracts for Computron's files which omitted certain of the contract terms. For example, sales personnel committed Computron to a contract containing terms which provided that the customers could earn credits against amounts owed by performing demonstrations of the software to potential Computron customers. The sales personnel then created duplicate versions of the same contracts for Computron's official files that omitted these terms and sent the altered versions of the contracts to Computron's New Jersey headquarters. As a result, Computron improperly recognized the full purchase price as revenue and did not properly account for the credits.  3. Accelerated Reporting and Backdating of Contracts  Computron also improperly accelerated revenue recognition to earlier periods on contracts which had been dated prior to the date on which the contract terms were finalized. For example, on a contract still being negotiated in the fourth quarter of 1994, Computron backdated the contract to an earlier quarter and improperly accelerated recognition of $400,000 revenue to the third quarter of 1994.  F. The Restatement included the reversal of revenue that had been recorded under the circumstances described in paragraph E above.   Computron's Violations   G. By reason of the conduct and events set forth above, Computron violated Section 17(a) of the Securities Act, Sections 10(b), 13(a) and 13(b)(2) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder.   IV.    CEASE-AND-DESIST ORDER   Accordingly,  IT IS HEREBY ORDERED  that AXS-One shall cease and desist from committing or causing any violation, and from committing or causing any future violation, of Section 17(a) of the Securities Act, Sections 10(b), 13(a) and 13(b)(2) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder; and   IT IS FURTHER ORDERED  that AXS-One comply with the following agreements and undertakings set forth in its Offer:  A. AXS-One agrees and undertakes to cooperate fully with the Commission in any and all investigations, litigations or other proceedings relating to or arising from the matters described in the Order.  B. In connection with such cooperation, AXS-One agrees and undertakes:  1. To produce, without service of a notice or subpoena, any and all documents and other information requested by the Commission's staff;  2. To be interviewed, and to make its officers, directors, employees, agents and other representatives available to be interviewed, by the Commission's staff at such times as the staff reasonably may direct;     3. To appear and testify, and to make its officers, directors, employees, agents and other representatives available to appear and testify, without service of a notice or subpoena in such investigations, depositions, hearings or trials as may be requested by the Commission's staff; and  4. That in connection with any testimony of AXS-One to be conducted at deposition, hearing or trial pursuant to a notice or subpoena, AXS-One:  a. Agrees that any such notice or subpoena for AXS-One's appearance and testimony may be addressed to the General Counsel of AXS-One and served by mail; and  b. Agrees that any such notice or subpoena for AXS-One's appearance and testimony in an action pending in a United States District Court may be served, and may require testimony, beyond the territorial limits imposed by the Federal Rules of Civil Procedure.  By the Commission.   Jonathan G. Katz  Secretary   Footnotes     1     The findings herein are made pursuant to AXS-One's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.    2     Specifically, Computron filed the following documents with the Commission on the following dates: (i) Form 10-Q for the quarter ended September 30, 1995, filed on November 13, 1995; (ii) Form 10-K for the year ended December 31, 1995, filed on April 1, 1996; (iii) Form 10-Q for the quarter ended March 31, 1996, filed on May 15, 1996; (iv) Form 10-Q for the quarter ended June 30, 1996, filed on August 14, 1996; and (v) Form 10-Q for the quarter ended September 30, 1996, filed on November 14, 1996.    3     The understatement of loss percentage is not applicable during this period, because Computron went from initially reporting a profit to a loss after the Restatement.     
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diff --git a/raw/aaer/2001/AAER-1371.txt b/raw/aaer/2001/AAER-1371.txt
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+              UNITED STATES OF AMERICA  Before the  SECURITIES AND EXCHANGE COMMISSION  SECURITIES EXCHANGE ACT OF 1934  Release No. 43962 / February 14, 2001  ACCOUNTING AND AUDITING ENFORCEMENT  Release No. 1371 / February 14, 2001  ADMINISTRATIVE PROCEEDING File No. 3-7497       In the Matter of  Michael R. Ford, CPA    : : : : : : :       ORDER GRANTING APPLICATION FOR REINSTATEMENT TO APPEAR AND PRACTICE AS AN ACCOUNTANT RESPONSIBLE FOR THE PREPARATION OR REVIEW OF FINANCIAL  STATEMENTS REQUIRED TO BE FILED WITH THE COMMISSION     On June 17, 1991, Michael R. Ford, CPA ("Ford") was denied the privilege of appearing or practicing before the Commission as an accountant as a result of settled public administrative proceedings instituted by the Commission against Ford pursuant to then Rule 2(e) of the Commission's Rules of Practice.  1   This order is issued in response to his application for reinstatement to appear and practice before the Commission as an accountant responsible for the preparation or review of financial statements required to be filed with the Commission.  Ford, a CPA in the state of Colorado, audited the financial statements of Unocam for the year ended March 31, 1987, and issued an audit report containing an unqualified opinion thereon dated July 16, 1987. These financial statements were included in Unocam's annual report on Form 10-K for the fiscal year ended March 31, 1987, which was filed with the Commission on August 10, 1987. Unocam was incorporated in Colorado in 1986 as a "blank check" company which was to take advantage of business opportunities that arose. At all relevant times, the president of Unocam used his control over the company to treat Unocam's assets as his own, failed to keep accurate books and records for Unocam, and made false and misleading statements in public filings with the Commission.  The evidence gathered during the staff investigation established that Ford did not conduct the Unocam audit in accordance with generally accepted auditing standards ("GAAS"). These GAAS departures included: 1) failure to properly plan the audit; 2) failure to communicate material weaknesses in internal accounting controls to the appropriate parties; 3) improperly issuing an unqualified audit report on financial statements that were not presented in conformity with generally accepted accounting principles, 4) failure to appropriately consider the ramifications of a lack of management integrity; and 5) failure to maintain his independence.  In his capacity as an accountant responsible for the preparation or review of financial statements required to be filed with the Commission, Ford has undertaken to have his work reviewed by the independent audit committee of any future employer, or in some other manner acceptable to the Commission, while practicing before the Commission in this manner. Ford is not, at this time, seeking to practice before the Commission as an independent accountant and has represented to the Commission staff that if he should ever seek to resume practicing before the Commission as an independent accountant, he will submit an application to the Commission showing that he has complied and will comply with the terms of the original suspension order in this regard. Therefore, Ford's suspension from practice before the Commission as an independent accountant continues in effect until the Commission determines that a sufficient showing has been made in this regard in accordance with the terms of the original suspension order.  On the basis of information supplied, representations made, and undertakings agreed to by Ford, it appearing that Ford has complied with the terms of the June 17, 1991 order suspending him from practice before the Commission as an accountant responsible for the preparation or review of financial statements required to be filed with the Commission, that no information has come to the attention of the Commission relating to his character, integrity, professional conduct or qualifications to practice before the Commission that would be a basis for adverse action against Ford pursuant to Rule 102(e) of the Commission's Rules of Practice, and that Ford's undertaking to have his work reviewed by the independent audit committee of any future employer, or in some other manner acceptable to the Commission, in his practice before the Commission as a preparer or reviewer of financial statements required to be filed with the Commission is fair and in the public interest, it is accordingly,  ORDERED pursuant to Rule 102(e)(5)(i) of the Commission's Rules of Practice that Michael R. Ford, CPA is reinstated to appear and practice before the Commission as an accountant responsible for the preparation or review of financial statements required to be filed with the Commission.  By the Commission.   Jonathan G. Katz  Secretary   Footnotes     1     See Accounting and Auditing Enforcement Release No. 302, dated June 17, 1991. Ford was permitted, pursuant to the order, to apply for reinstatement after four years upon making certain showings. Rule 2(e) has been recodified in its entirety as Rule 102(e). Rule 102(e)(5)(i) provides:  "An application for reinstatement of a person permanently suspended or disqualified under paragraph (e)(1) or (e)(3) of this section may be made at any time, and the applicant may, in the Commission's discretion, be afforded a hearing; however, the suspension or disqualification shall continue unless and until the applicant has been reinstated by the Commission for good cause shown." 17 C.F.R. § 201.102(e)(5)(i).     
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diff --git a/raw/aaer/2001/AAER-1373.txt b/raw/aaer/2001/AAER-1373.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f88dda5b39dc16ae60a3d89d5756ffa71cd6de70
--- /dev/null
+++ b/raw/aaer/2001/AAER-1373.txt
@@ -0,0 +1,1369 @@
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+ Litigation Rel. No. 16912 / February 28, 2001 
+
+ Accounting and Auditing Enforcement Release No. 1373 / February 28, 2001  
+
+  SEC v. Vigue et al. , Civil Action No. 00113-B (United States District Court for the District of Maine, filed June 7, 2000) 
+
+   The Securities and Exchange Commission announced today that James F. Vigue and Ivy L. Gilbert, the former CEO and CFO of Firstmark Corp., have settled the Commission's enforcement actions against them.  The Commission's complaint alleged that Vigue and Gilbert carried out a long-running financial fraud and stock manipulation scheme involving the common stock of Firstmark, a Maine corporation formerly based in Waterville, Maine.  Vigue and Gilbert, residents of Waterville, Maine, consented, without admitting or denying the allegations of the Commission's complaint, to the entry of permanent injunctions and have agreed to pay a total of $160,000 within eighteen months, plus postjudgment interest, to settle this action.  Pursuant to their consents, Vigue is ordered to pay disgorgement plus prejudgment interest in the amount of $75,000 and a civil penalty of $50,000, and Gilbert is ordered to pay a civil penalty of $35,000.  In addition, Vigue has agreed to be barred from serving as an officer or director of a public company.  In a related consented-to administrative order, based on the entry of the injunctions, the Commission barred Vigue from association with any broker, dealer or investment adviser, and barred Gilbert from association with any broker, dealer or investment adviser, with the right to reapply for association after three years. 
+
+   The Commission's complaint in  SEC v. Vigue et al.  (D. Maine, filed June 7, 2000), alleged that, from 1994 until early 1997, Vigue carried out a scheme to maintain the price of Firstmark stock at $4 per share by inflating Firstmark's assets and income in financial statements filed with the Commission, and by effecting manipulative transactions in client and customer accounts of Firstmark's broker-dealer and investment adviser subsidiaries.  The complaint alleged that Vigue discouraged or prevented investors from selling their Firstmark stock; used nominee accounts to purchase Firstmark stock; effected trades where no real change in ownership took place ("wash sales"); and made purchases near the end of the trading day in order to increase Firstmark's stock price (known as "marking the close").  The complaint alleged that when the manipulation scheme collapsed, in early 1997, the price of Firstmark stock declined from approximately $4 to less than $1.  On April 27, 1999, Firstmark stock was delisted from the NASDAQ SmallCap market.  Many of Firstmark's approximately 650 shareholders are residents of the Waterville, Maine area. 
+
+   The complaint further alleged that Gilbert and Vigue inflated Firstmark's assets and income in financial statements filed with the Commission.  For the quarters ended December 1994 through March 1996, Firstmark's assets were overstated by ten to eighteen percent.  For the fiscal year ended June 30, 1995, Firstmark reported net income before taxes of $771,895 when it should have reported a loss of $54,886.  This resulted from Firstmark's failure to write off a $680,000 investment in a company that had become defunct, and from improperly treating as income a $146,781 increase in the value ofstock it owned in another company.   In addition, the complaint alleged that Vigue defrauded his advisory clients by failing to disclose investment risks, his receipt of commissions and his conflicts of interest.  The complaint also alleged that Gilbert aided and abetted Vigue's manipulation scheme by misrepresenting account activity and falsifying client reports issued to conceal purchases of Firstmark stock. 
+
+   The complaint alleged that Vigue violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.  The complaint also alleged that Vigue violated the margin requirements set forth in Section 7(d) of the Exchange Act and Regulation T, and failed to implement and maintain internal controls at Firstmark in violation of Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder.  The complaint further alleged that, as the control person of Firstmark's brokerage firm, Vigue is liable under Section 20 of the Exchange Act for the brokerage firm's violations of the antifraud provisions as set forth in Sections 10(b) and 15(c) of the Exchange Act and Rules 10b-3 and 15c1-2 thereunder.  Finally, the complaint alleged that Vigue aided and abetted violations by Firstmark's investment adviser subsidiary of Sections 206(1) and 206(2) of the Advisers Act. 
+
+   The complaint alleged that Gilbert violated Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder, and that she aided and abetted Vigue's violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Sections 206(1) and 206(2) of the Advisers Act.  
+
+   The Commission wishes to thank the State of Maine Securities Division for its assistance with this matter. 
+
+ For further information, see Lit. Rel. No. 16586.  
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diff --git a/raw/aaer/2001/AAER-1376.txt b/raw/aaer/2001/AAER-1376.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2516f7c453d0a09e53ace03e71ab004aa18824b6
--- /dev/null
+++ b/raw/aaer/2001/AAER-1376.txt
@@ -0,0 +1,1473 @@
+
+
+ 
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+              Kevin E. Orton, CPA
+           
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+        Kevin E. Orton, CPA
+       
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+                        
+              UNITED STATES OF AMERICA  Before the  SECURITIES AND EXCHANGE 
+
+      COMMISSION 
+
+      
+
+
+ SECURITIES EXCHANGE ACT OF 1934
+
+ Release No.  44064 / March 12, 2001 
+
+ ACCOUNTING AND AUDITING ENFORCEMENT
+
+ Release No.  1376 / March 12, 2001 
+
+ ADMINISTRATIVE PROCEEDING
+
+ File No. 3-10439
+  
+
+     
+        In the Matter of 
+        KEVIN E. ORTON, CPA,   
+      	      Respondent.
+              
+         
+     
+       : : : : : : : :   
+    
+      ORDER OF SUSPENSION PURSUANT TO RULE 102(e)(2) OF THE COMMISSION'S RULES OF PRACTICE      I.  
+
+   The Securities and Exchange Commission deems it appropriate and in the public interest to issue an order of forthwith suspension of Kevin E. Orton ("Orton") pursuant to Rule 102(e)(2) of the Commission's Rules of Practice [17 C.F.R. § 200.102(e)(2)].   1   
+
+ II.  
+
+   The Commission finds that: 
+
+   1. Orton is a certified public accountant. 
+
+   2. On March 7, 2001, a judgment of conviction was entered against Orton in  United States v. Orton , CR-S-96-288-PMP-(RJJ), in the United States District Court for the District of Nevada, finding him guilty of securities fraud, wire fraud, money laundering, racketeering, conspiracy and racketeering conspiracy.   
+
+   3.  As a result of this conviction, Orton was sentenced to 108 months in a federal penitentiary. 
+
+ III. 
+
+   In view of the foregoing, the Commission finds that Orton has been convicted of a felony within the meaning of Rule 102(e)(2) of the Commission's Rules of Practice. 
+
+   Accordingly, IT IS ORDERED, that Kevin E. Orton is forthwith suspended from appearing or practicing before the Commission. 
+
+   By the Commission.
+
+              Jonathan G. Katz
+
+             Secretary 
+  Footnotes  
+   1     Rule 102(e)(2) provides in pertinent part:  Any ... person who has been convicted of a felony or a misdemeanor involving moral turpitude shall be forthwith suspended from appearing or practicing before the Commission.   
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diff --git a/raw/aaer/2001/AAER-1377.txt b/raw/aaer/2001/AAER-1377.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6c3e8cd4e82260e16e7d32f270d4c2c3feb86fe8
--- /dev/null
+++ b/raw/aaer/2001/AAER-1377.txt
@@ -0,0 +1,1509 @@
+
+
+ 
+ 
+   
+     
+ 
+ 
+ 
+ 
+ 
+ 
+
+     
+     
+     SEC.gov | Kevin E. Orton, CPA, and Orton & Company 
+     
+     
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+     
+     
+         !function(){var e=navigator.userAgent,a=document.documentElement,n=a.className;n=n.replace("no-js","js"),/iPad|iPhone|iPod/.test(e)&&!window.MSStream&&(n+=" ua-ios"),a.className=n}(); 
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+              Kevin E. Orton, CPA, and Orton & Company
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+        Kevin E. Orton, CPA, and Orton & Company
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+              UNITED STATES OF AMERICA  Before the  SECURITIES AND EXCHANGE 
+
+      COMMISSION 
+
+      
+
+    
+     SECURITIES EXCHANGE ACT OF 1934
+
+     Release No. 44072 / March 14, 2001 
+
+     ACCOUNTING AND AUDIT ENFORCEMENT
+
+     Release No. 1377 / March 14, 2001 
+
+     ADMINISTRATIVE PROCEEDING
+
+     FILE NO. 3-9872
+      
+         
+        In the Matter of 
+        KEVIN E. ORTON, CPA,   
+       and ORTON & COMPANY   
+      	    
+              
+         
+     
+       : : : : : : :   
+    
+      ORDER ENTERING DEFAULT, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS        The Securities and Exchange Commission (Commission) issued its Order Instituting Proceedings (OIP) on April 14, 1999.  A hearing is scheduled for March 19-23, 2001, in Salt Lake City, Utah.  On March 9, 2001, Wallace T. Boyack, Esq., renewed an earlier motion seeking leave to withdraw as counsel for Respondents.  In support, counsel stated that Respondent Kevin E. Orton (Orton) had directed him to cease any and all further representation in this matter and that Orton had no objection to Mr. Boyack's withdrawal as counsel.         
+
+     The renewed motion to withdraw was accompanied by a statement from Respondent Orton.  Orton stated that Respondents would not appear at the hearing scheduled to commence on March 19, 2001, either in person or through counsel.  He further advised that they would not request the issuance of any subpoenas, present any expert witness report or testimony, or submit any witness or exhibit lists.  On March 12, 2001, Orton telephoned this Office to state that Respondents would not participate in the telephonic prehearing conference scheduled for March 14, 2001. 
+
+       On March 12, 2001, I granted Mr. Boyack's renewed motion to withdraw as counsel for Respondents, pursuant to Rule 102(d)(4) of the Commission's Rules of Practice. 
+
+       Based on Orton's statements of March 9 and March 12, 2001, the Division of Enforcement (Division) filed a motion for summary disposition on March 13, 2001.  In light of all the circumstances, however, I will treat the Division's motion as a request to hold Respondents in default.  1    Given Respondents' failure to appear at the March 14, 2001, prehearing conference, and their determination not to participate further in these proceedings, I now find that Respondents are in default under Rule 155(a)(1) of the Commission's Rules of Practice. 
+
+       Based on the OIP and the record of this proceeding, I find that: 
+
+     PanWorld Minerals International, Inc. (PanWorld) is a Nevada corporation that was formed in Utah in June 1984 under the name Ridgtop Resources, Inc. 
+
+     On or about July 10, 1995, PanWorld filed with the Commission an annual report on Form 10-KSB, which contained its financial statements for the year ending December 31, 1994.  The certified public accounting firm of Orton & Company (ORCO) issued an unqualified audit report on PanWorld's financial statements stating, among other things, that its audit was conducted in accordance with generally accepted auditing standards (GAAS) and that the consolidated balance sheet presented fairly the financial position of PanWorld in conformity with generally accepted accounting principles (GAAP). 
+
+     Respondent Orton, a resident of Midvale, Utah, is a certified public accountant (CPA) and was engaged in public accounting at all relevant times.  Orton was the engagement partner on the audit of the financial statements of PanWorld for the year ended December 31, 1994. 
+
+     Respondent ORCO, an accounting firm, is a Utah professional corporation formed in 1988.  ORCO's registration as a professional corporation lapsed on June 21, 1993, and was not reinstated until June 4, 1996.  Orton is the sole director, shareholder, officer, and employee of ORCO.  The audit report on PanWorld's 1994 financial statements, dated May 26, 1995, was printed on ORCO letterhead and signed by Orton.  The letterhead contained several misrepresentations concerning the professional affiliations of ORCO. 
+
+     PanWorld was headquartered in Salt Lake City, Utah.  PanWorld was a reporting company pursuant to Section 15(d) of the Securities Exchange Act of 1934 (Exchange Act) from 1989 through October 8, 1994.  On October 9, 1994, PanWorld became a Section 12(g) reporting company.  PanWorld's primary business activity was acquiring mining properties, mainly in the western United States and South America.  On June 2, 1997, the Commission filed a civil injunctive action against PanWorld and several of its officers and employees, charging violations of the antifraud, registration, and periodic reporting provisions of the federal securities laws.  That proceeding has been stayed pending the outcome of criminal charges against certain of the defendants named in the injunctive action. 
+
+      Summary  
+
+     This Order finds that Respondents Orton and ORCO engaged in improper professional conduct in connection with the audit of PanWorld's financial statements for the year ended December 31, 1994.  PanWorld's financial statements for that year were not prepared in conformity with GAAP.  Among other deficiencies, the consolidated balance sheet reported mining assets at substantially inflated book values derived from arbitrary par values assigned to unregistered and unmarketable preferred stock issued by PanWorld in exchange for those assets.  Nevertheless, Respondents stated in their audit report that PanWorld had prepared its financial statements in conformity with GAAP.  Respondents also recklessly disregarded applicable professional standards under GAAS in their conduct of the audit in that they failed to:  obtain sufficient, competent evidential matter; exercise due professional care and appropriate professional skepticism; and adequately plan the audit. 
+
+      Respondents Failed To Ensure That PanWorld's Financial Statements Were Prepared In Conformity With GAAP.  
+
+       As of December 31, 1994, mining properties carried at $10,367,924 represented over 99% of total assets on PanWorld's consolidated balance sheet.  PanWorld valued at $6.2 million, the same valuation given in the prior year, certain placer mining assets and alleged proprietary technology which PanWorld allegedly acquired for one million shares of PanWorld convertible preferred stock with a par value of $6 per share and the assumption of certain liabilities.  PanWorld claimed that its valuation of the assets was supported by an appraisal at $10.5 million, although the appraisal was performed by a PanWorld consultant who was not independent and was not a qualified appraiser. 
+
+       PanWorld claimed a 70% interest in an iron ore property in southern Peru and carried the interest on its balance sheet at $3,286,081.  PanWorld valued the project based upon the purchase price of $40,000 cash and 321,000 shares of convertible preferred stock that the company valued at $10 per share.  PanWorld acquired its interest in the iron ore property through a series of related party transactions that inflated the price from its initial cost of $21,000. 
+
+       PanWorld claimed a 30% net revenue interest in three Bolivian gold mines that PanWorld carried at $900,000 in 1994.  For the 30% interest, PanWorld issued thirty million shares of Regulation S stock to an affiliate of the seller.  PanWorld had no credible appraisal or geological study to support any valuation at all for the gold mining interest. 
+
+       Valuation of assets based solely on the par value of preferred stock given in exchange is not acceptable under GAAP.  PanWorld never had a reasonable basis for establishing a fair value for its unregistered preferred stock in that no trading market existed for those securities.  Moreover, PanWorld failed to deliver the full amount of cash and stock required under the contracts.  Finally, PanWorld never obtained sufficient geological data concerning the mineral reserves on the properties, economic data concerning the technology and equipment, or an appraisal by an independent qualified expert to support the assigned carrying values. 
+
+      Respondents Failed To Comply With GAAS.  
+
+       Orton and ORCO failed to gather competent evidential matter sufficient to provide reasonable support for ORCO's audit report that contained an unqualified opinion that PanWorld's financial statements were presented in conformity with GAAP.  ORCO's audit work papers show that Orton inappropriately relied on PanWorld's management representations and the 1993 audit report issued by a predecessor auditor to conclude that the placer mining assets carried over from the prior year were accounted for properly.  Although requested by Orton, PanWorld was unable to produce a finalized purchase agreement at the time of the audit, and Orton took no steps to determine whether the purchase agreement for the placer mining assets had ever been consummated.  Orton took no documented steps to obtain an updated appraisal, other corroborating evidence, or independent verification of the company's initial valuation or carrying value at December 31, 1994, of the placer assets.  Orton either did no research, or failed to document what research he might have done to determine whether, under GAAP, nonmonetary assets could be booked at the par value of preferred stock with limited marketability issued for such assets.  In support of the accounting treatment, Orton accepted at face value a memorandum written more than five years prior to ORCO's audit by former PanWorld auditors who in 1991 withdrew their audit report on PanWorld's 1989 financial statements.  Orton failed to acquire an understanding of the unusual and unorthodox valuation method employed by a PanWorld consultant in preparing an appraisal or report in which, among other things, equipment was valued based upon its weight and complexity, and he failed to obtain sufficient information regarding the professional qualifications or independence of the consultant who prepared the report.  Finally, Orton failed to reconcile the alleged appraised value of the placer mining assets with what PanWorld recorded on the books.  The foregoing references to the documentation used by PanWorld in the original capitalization are relevant to this analysis because the carrying value of the placer mining assets did not change from 1993 to 1994. 
+
+       The material additions to PanWorld's mining properties in 1994 consisted of the iron ore project and the net revenue interest in the Bolivian gold mines valued at more than $4.1 million.  ORCO's work papers contain no documentation of audit procedures that should have been planned and applied to a geological report used by PanWorld to support the value of the iron ore deposit.  Orton and ORCO failed to gather any evidential material that could form the basis for a reasoned professional judgment on the reliability of the geological report.  As a result, Orton failed to discover that the author of the report had a direct financial interest in the appraised property.  Moreover, Orton was aware that PanWorld never acquired sufficient geological data to support booking the Bolivian mining interest at any value.  The uncertainties regarding the existence, extraction, and sale of gold ore created an accounting recognition problem such that, under GAAP, the net revenue interest could not be booked as an asset.  Orton failed in his professional obligation to gather sufficient, competent evidence addressing the valuation or the likelihood of future economic benefit from either the iron ore project or the Bolivian properties. 
+
+       Orton also failed to maintain appropriate professional skepticism and exercise due professional care, as required by GAAS.  Orton failed to consider the auditing implications of severe management and accounting problems at PanWorld, including the resignation or discharge of four predecessor auditors between 1990 and 1995.  There is no documentation in ORCO's audit work papers that Orton considered the internal control weaknesses at PanWorld resulting from the small employee group, lack of an accounting department, and total control of PanWorld's financial matters by two corporate officers. 
+
+       Orton failed properly to plan the audit of PanWorld's 1994 financial statements.  Orton used a set of generic audit work programs to develop his audit plan.  There is no documentation on ORCO's audit work papers to suggest that Orton tailored his audit program to address areas of greatest audit exposure.  Most pages of Orton's audit program are blank, and those pages where Orton's initials appear are not dated.  ORCO's audit work papers contain no notations of any audit work performed and no cross-references to supporting schedules or work papers. 
+
+       The audit report on PanWorld's 1994 financial statements, dated May 26, 1995, was printed on ORCO's letterhead, which contained a legend stating that ORCO was a member of the Utah Association of Certified Public Accountants and a member of the SEC Practice Section of the American Institute of Certified Public Accountants' Division for CPA Firms.  Both representations were false on that date. 
+
+      Respondents Engaged In Improper Professional Conduct.  
+
+     Orton and ORCO engaged in improper professional conduct in connection with their examination of PanWorld's 1994 financial statements in that they intentionally, knowingly, or recklessly violated applicable professional standards. 
+
+     The improper professional conduct of Orton and ORCO included:  (1) falsely representing in an audit report that the examination had been performed in accordance with GAAS and that PanWorld's financial statements were prepared in conformity with GAAP; (2) failing to exercise due professional care and maintain appropriate professional skepticism in the conduct of the examination of PanWorld's financial statements; (3) failing to gather sufficient, competent evidential matter in the course of the examination sufficient to afford a reasonable basis for the conclusions expressed in the audit report; and (4) failing to plan the audit in a manner that would result in an effective audit program, which would reflect the auditor's reasoned inquiries about areas of special concern and heightened audit risk. 
+
+      Public Interest  
+
+     Pursuant to Rule 102(e)(1)(ii) of the Commission's Rules of Practice, Kevin E. Orton and Orton & Company are denied the privilege of appearing or practicing before the Commission. 
+
+                   _________________________________
+
+                   James T. Kelly
+
+                   Administrative Law Judge 
+  Footnotes  
+   1     On March 12, 2001, the Commission issued an Order summarily suspending Orton from appearing and practicing before it.  The Commission's Order was issued under Rule 102(e)(2) of the Commission's Rules of Practice.  It was based on a judgment of conviction entered against Orton on March 7, 2001, in an unrelated matter.  The Commission's Order was limited to Orton, and did not address Orton & Company.  The Commission's Order did not dismiss this proceeding.    
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diff --git a/raw/aaer/2001/AAER-1382.txt b/raw/aaer/2001/AAER-1382.txt
new file mode 100644
index 0000000000000000000000000000000000000000..885e1d12118fff3b07ee64ff29812c1b659b8e51
--- /dev/null
+++ b/raw/aaer/2001/AAER-1382.txt
@@ -0,0 +1,1355 @@
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+              SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No.  16964 / April 17, 2001 
+ Accounting and Auditing Release No. 1382 / April 17, 2001 
+  SEC v. Excal Enterprises, Inc., et al .,  Civil Action No. 95-1583-CIV-T-23B (M.D.Fla.) 
+   On January 17, 2001, the Commission announced settlements with the remaining three defendants in this long-standing federal court litigation.  In its original complaint, the Commission alleged that Excal misled the investing public by concealing the loss of three material customers, in six quarterly, one annual and one current report on Form 8-K filed in 1991 and 1992.  The alleged misconduct involved the company's failure to disclose and its materially false statements with respect to the loss of Western Auto, Winston Tire and Sears, Roebuck & Co.; falsely recording an advance payment as a sale; and falsely recording revenue for Western Auto and offsetting that revenue with falsely recorded expenses.  
+   Without admitting or denying the Commission's allegations, the remaining defendants settled as follows:  Excal Enterprises, Inc. (final judgment permanently enjoining it from violating Sections 10(b), 13(a), and 13(b)(2)(A) of the Securities Exchange Act of 1934 and Rules 10b-5, 13a-1, 13a-11, 13a-13, and 12b-20 thereunder); R. Park Newton, III (final judgment (i) permanently enjoining him from violating Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5, 13b2-1, 13b2-2, 16a-2 and 16a-3 thereunder; (ii) ordering disgorgement of $80,000 plus prejudgment interest of $75,000; and (iii) ordering payment of a $250,000 penalty); Frederic S. Schadt (final judgment (i) permanently enjoining him from violating Sections 10(b) and 13(d) of the Exchange Act and Rules 10b-5 and 13d-1 thereunder; (ii) ordering disgorgement of $30,305, plus prejudgment interest of $22,617; and (iii) ordering payment of a $30,305 penalty).  These settlements conclude the Commission's litigation in this matter. 
+   [See the following related releases:  LR No. 14651 (September 26, 1995); In the Matter of Terry R. Kuntz and Richard J. Scheer, Admin. Proc. 3-8831, In the Matter of Richard D. Russell, Administrative Proceeding 3-8830; LR No. 16226 (July 30, 1999); In the Matter of Richard Brewer, Admin. Proc. No. 3-9943 (July 30, 1999)]   
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diff --git a/raw/aaer/2001/AAER-1385.txt b/raw/aaer/2001/AAER-1385.txt
new file mode 100644
index 0000000000000000000000000000000000000000..cc5e49255a50c7e20b02cd837096e3dcce9cc8f3
--- /dev/null
+++ b/raw/aaer/2001/AAER-1385.txt
@@ -0,0 +1,1378 @@
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+        Alexandra Elizabeth Montgomery, William Kenneth Nestor and Harriet Gluck
+       
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+
+ Litigation Release No. 16975 / April 26, 2001
+
+ Accounting and Auditing Enforcement Release No. 1385 / April 26, 2001 
+
+  Securities and Exchange Commission v. Alexandra Elizabeth Montgomery, William Kenneth Nestor and Harriet Gluck,  Civil Action No. CV 97-4219 (E.D.N.Y.)
+
+   FINAL JUDGMENTS ENTERED AGAINST DEFENDANTS IN SETTLED CASE INVOLVING FALSIFICATION OF GOLD REFINERY'S INVENTORY AND INSIDER TRADING  
+
+  The Honorable Eugene H. Nickerson, United States District Court Judge for the Eastern District of New York, recently entered final judgments against Alexandra Elizabeth Montgomery, the former executive vice president, chief financial officer and a director of International Nesmont Industrial Corporation, William Kenneth Nestor, the former president, chief executive officer and chairman of the board of Nesmont, and Montgomery's mother, Harriet Gluck, pursuant to their settlement of civil charges brought by the Securities and Exchange Commission.  This brings to a close the Commission's civil action, filed on July 24, 1997, which stemmed from a deliberate scheme to falsify the financial statements of Nesmont, a Canadian processor of precious metals, by, among other things, falsifying Nesmont's gold inventory.  
+
+  The Commission alleged in its complaint that Montgomery, Nestor and Frederick Burgess, the former head assayer and a director of Nesmont, deliberately sought to overstate the company's income and inflate its reported assets by, for example, including brass bars in gold inventory.  The fraudulent scheme involved creating phony documents falsely representing the volume of gold in inventory, falsifying assets and earnings on the company's books and records, and making false representations in press releases and materials filed with the Commission.  As a result, Nesmont reported net earnings of $219,923 (Cdn) in its audited financial statements for the year ended December 31, 1992, when it should have reported a net loss of $1,656,836 (Cdn).  In its unaudited financial report for the year ended December 31, 1993, Nesmont reported net earnings of $751,592 (Cdn), when it should have reported a net loss of $4,047,726 (Cdn).
+
+  The complaint alleged that Montgomery, Nestor and Burgess violated the antifraud and books and records provisions of the federal securities laws, and knowingly circumvented Nesmont's system of internal accounting controls and, in the case of Montgomery and Burgess, knowingly falsified or caused to be falsified Nesmont's books, records and accounts.  The complaint further alleged that Montgomery and Burgess made materially false and misleading statements to Nesmont's independent auditors and, in the case of Montgomery, lied to Nesmont's controller, thereby causing him to generate false financial statements.  The complaint also alleged that Montgomery, Nestor and Burgess aided and abetted Nesmont's reporting violations by making material misstatements and omissions in annual and periodic reports filed with the Commission.
+
+  The Commission's complaint further alleged that Montgomery and her mother, Gluck, violated the antifraud provisions of the federal securities laws by engaging in insider trading in Nesmont securities during June 1994, when both women knew about the inventory fraud, which had not been disclosed to the public.  The Nesmont shares were sold through brokerage accounts held in Gluck's name, netting total proceeds of approximately $297,200 (U.S.).  After Nesmont's new management publicly disclosed the inventory fraud, and the stock was delisted from the Nasdaq in August 1994, Nesmont stock became virtually worthless.  By trading while in possession of material nonpublic information, Gluck and Montgomery avoided losses of approximately $282,400 (U.S.).  
+
+  Montgomery, Nestor and Gluck, without admitting or denying the allegations of the complaint, agreed to the entry of final judgments that enjoin them from violating the Section 10(b) antifraud provisions of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  The judgments against Montgomery and Nestor further enjoin them from violating Exchange Act Section 13(b)(5) and from aiding and abetting violations of Exchange Act Section 13(a) and Rules 13a-1 and 13a-16 thereunder.  Montgomery is further enjoined from violating Exchange Act Rules 13b2-1 and 13b2-2.  The final judgments bar Montgomery and Nestor from serving as an officer or director of any publicly traded company.  
+
+  The judgments against Montgomery and Gluck further provide that each is jointly and severally liable for disgorgement of $282,400 in illicit profits, each is liable for payment of an insider trading penalty, and the judgment against Montgomery provides that she is liable for a separate civil penalty stemming from her involvement in the financial fraud.  The judgments waive payment of disgorgement and prejudgment interest and do not impose insider trading or civil penalties based on Montgomery's and Gluck's demonstrated inability to pay.  The final judgment entered against Nestor requires him to pay a $35,000 civil penalty.  
+
+  The final judgments against Montgomery and Gluck were entered on January 11, 2001, and the final judgment against Nestor was entered on April 9, 2001.  The action against Frederick Burgess, who was named as a defendant in the original action, was dismissed following his death in 1999.  
+
+  For further information see  Litigation Release No. 15419.  
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diff --git a/raw/aaer/2001/AAER-1387.txt b/raw/aaer/2001/AAER-1387.txt
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index 0000000000000000000000000000000000000000..6a6f8ef487dd7f329552bea418aab40b7b44d6c2
--- /dev/null
+++ b/raw/aaer/2001/AAER-1387.txt
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+ 
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+     SEC.gov | Aura Systems Inc., Zvi Kurtzman, Francis T. Phalen andJoseph Bevacqua 
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+              Aura Systems Inc., Zvi Kurtzman, Francis T. Phalen andJoseph Bevacqua
+           
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+        Aura Systems Inc., Zvi Kurtzman, Francis T. Phalen andJoseph Bevacqua
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+                        
+              UNITED STATES OF AMERICA  Before the  SECURITIES AND EXCHANGE 
+
+      COMMISSION 
+
+      
+
+  
+
+ SECURITIES EXCHANGE ACT OF 1934
+
+ Release No. 44240 / May 1, 2001 
+
+ ACCOUNTING AND AUDITING ENFORCEMENT
+
+ Release No.  1387 / May 1, 2001 
+
+ ADMINISTRATIVE PROCEEDING File No. 3-9138 
+ 
+     
+         
+  In the Matter of 
+ Joseph Bevacqua, CPA 
+    
+   
+     
+       : : : : : : : :   
+    
+      ORDER GRANTING APPLICATION  FOR REINSTATEMENT TO PRACTICE  AS AN ACCOUNTANT RESPONSIBLE FOR  THE PREPARATION OR REVIEW OF  FINANCIAL STATEMENTS OF A PUBLIC  COMPANY TO BE FILED WITH  THE COMMISSION      On October 2, 1996, Joseph Bevacqua ("Bevacqua") was suspended from appearing or practicing as an accountant before the Commission as a result of settled public administrative proceedings instituted by the Commission against Bevacqua pursuant to Section 8A of the Securities Act of 1933, Section 21C of the Securities Exchange Act of 1934 and Rule 102(e)(1)(iii) of the Commission's Rules of Practice.  1    This order is issued in response to Bevacqua's application for reinstatement to practice before the Commission as an accountant responsible for the preparation or review of financial statements of a public company to be filed with the Commission. 
+
+   During its 1993 and 1994 fiscal years, Aura Systems Inc. ("Aura") filed with the Commission annual and quarterly reports that described, in false or misleading terms, its success in developing new commercial markets for products using its proprietary electromagnetic technology.  During the relevant time period, Bevacqua, Aura's former vice president of finance and chief accounting officer, was a consultant to John Jory Company ("Jory") and participated in structuring and facilitating a sham transaction between Aura and Jory that materially overstated Aura's revenues for its third quarter of fiscal 1994. 
+
+   The sham transaction involved an arrangement with Jory, a construction contractor, which was contrived in order for Aura to recognize revenue.  The transaction involved the "sale" of engineering services and materials for $1.5 million by Aura to Jory.  However, the transaction lacked substance since Aura, with the assistance of Bevacqua, subsequently arranged for Jory to pay for these engineering services and materials by routing the necessary funds to Jory through a related construction company which was owned by a friend of Bevacqua.  The revenue recorded by Aura on this transaction accounted for 11% of the Company's fiscal 1994 revenues, and was included in Aura's financial statements included in the Company's Form 10-Q for the nine months ended November 30, 1993.  Bevacqua participated in a meeting with certain officers of Aura in October 1993 in which the Jory transaction was discussed, and in which fictitious purchase orders related to the transaction were drafted.  Bevacqua further participated in drafting a fictitious invoice from the construction company owned by Bevacqua's friend to Aura, and in facilitating the flow of funds from Aura to Jory to pay for the purported engineering services and materials provided to Jory by Aura.  The suspension order alleges that Bevacqua knew, or was reckless in not knowing that the Jory transaction was a sham. 
+
+   In his capacity as an accountant responsible for the preparation or review of financial statements of a public company to be filed with the Commission, Bevacqua has undertaken to have his work reviewed by the independent audit committee of any future employer, or in some other manner acceptable to the Commission, while practicing before the Commission in this manner.  Bevacqua is not, at this time, seeking to practice before the Commission as an independent accountant and has represented to the Commission staff that if he should ever seek to resume practicing before the Commission as an independent accountant, he will submit an application to the Commission showing that he has complied and will comply with the terms of the original suspension order in this regard.  Therefore, Bevacqua's suspension from practice before the Commission as an independent accountant continues in effect until the Commission determines that a sufficient showing has been made in this regard in accordance with the terms of the original suspension order. 
+
+   On the basis of information supplied, representations made, and undertakings agreed to by Bevacqua, it appearing that Bevacqua has complied with the terms of the October 2, 1996 order suspending him from practice before the Commission as an accountant responsible for the preparation or review of financial statements of a public company to be filed with the Commission, that no information has come to the attention of the Commission relating to his character, integrity, professional conduct or qualifications to practice before the Commission that would be a basis for adverse action against Bevacqua pursuant to Rule 102(e) of the Commission's Rules of Practice, that Bevacqua's undertaking to have his work reviewed by the independent audit committee of any future employer, or in some other manner acceptable to the Commission, in his practice before the Commission as a preparer or reviewer of financial statements of a public company to be filed with the Commission is in the public interest, it is accordingly, 
+
+   ORDERED pursuant to Rule 102(e)(5)(i) of the Commission's Rules of Practice that Joseph Bevacqua, CPA is reinstated to appear and practice before the Commission as an accountant responsible for the preparation or review of financial statements of a public company to be filed with the Commission. 
+
+ By the Commission.
+
+                    Jonathan G. Katz
+
+                   Secretary 
+  Footnotes  
+
+   1    See Accounting and Auditing Enforcement Release No. 839, dated October 2, 1996.  Bevacqua was permitted, pursuant to the order, to apply for reinstatement after three years upon making certain showings.   
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diff --git a/raw/aaer/2001/AAER-1390.txt b/raw/aaer/2001/AAER-1390.txt
new file mode 100644
index 0000000000000000000000000000000000000000..b2441c786125e2e4640a650e6b9b5acc7b04e9de
--- /dev/null
+++ b/raw/aaer/2001/AAER-1390.txt
@@ -0,0 +1,1514 @@
+
+
+ 
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+        R. Gordon Jones, CPA and Mark F. Jensen, CPA
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+              UNITED STATES OF AMERICA  Before the  SECURITIES AND EXCHANGE 
+
+      COMMISSION 
+
+      
+
+
+
+ SECURITIES EXCHANGE ACT OF 1934
+
+ Release No.  44265 / May 4, 2001 
+
+ ACCOUNTING AND AUDITING ENFORCEMENT
+
+ Release No.  1390 / May 4, 2001 
+
+ ADMINISTRATIVE PROCEEDING
+
+ File No.  3-10210
+  
+     
+        
+        In the Matter of 
+         R. GORDON JONES, CPA and MARK F. JENSEN, CPA,
+        Respondents.
+     
+         
+     
+       : : : : : : : : :   
+    
+      OPINION AND ORDER  AGAINST R. GORDON JONES PURSUANT TO RULE 102(e) OF THE COMMISSION'S RULES OF PRACTICE      I. 
+
+ In connection with a public administrative proceeding instituted against him on May 25, 2000, R. Gordon Jones ("Jones") has submitted an Offer of Settlement that the Commission has determined to accept.  Solely for the purpose of these proceedings, and without admitting or denying the allegations, facts, findings, or conclusions, herein, except the jurisdiction of the Commission over him and over the matters set forth herein, which he admits, Jones has consented to the entry of this Opinion and Order Against R. Gordon Jones Pursuant to Rule 102(e) of the Commission's Rules of Practice.  1   
+
+ II.  
+
+ On the basis of this Order and the Offer submitted by Jones, the Commission finds that:   2   
+
+  Background 
+
+  Dynamic American Corporation ("Dynamic") was at all relevant times a Utah corporation headquartered in Salt Lake City, Utah.  Dynamic's common stock became registered with the Commission pursuant to Section 12(g) of the Exchange Act in March 1972.  The Exchange Act registration of Dynamic's shares was revoked on November 1, 1999.
+
+  R. Gordon Jones is a CPA licensed in Utah and at all relevant times practiced through the Utah accounting firm of Jones, Jones & Co., LLC.  He was the engagement partner in charge of the 1995 audit of Dynamic. 
+
+  Background  
+
+ Dynamic American Corporation ("Dynamic") was at all relevant times a Utah corporation headquartered in Salt Lake City, Utah.  Dynamic's common stock became registered with the Commission pursuant to Section 12(g) of the Exchange Act in March 1972.  The Exchange Act registration of Dynamic's shares was revoked on November 1, 1999.
+
+  R. Gordon Jones is a CPA licensed in Utah and Oklahoma and at all relevant times practiced through the Utah accounting firm of Jones, Jensen & Co., LLC.  He was the engagement partner in charge of the 1995 audit of Dynamic. 
+
+  Facts 
+
+  Jones engaged in improper professional conduct in that he intentionally, knowingly or recklessly violated applicable professional standards in performing the audit of Dynamic's financial statements for the year ended September 30, 1995 and expressing an unqualified opinion concerning those financial statements.  The audit was not conducted in accordance with GAAS and the financial statements were not prepared in conformity with GAAP. There was insufficient evidence for Jones to express an opinion concerning the financial statements as set forth below.
+
+  Dynamic's financial statements for the year ended September 30, 1995 were not prepared in conformity with GAAP in that Dynamic's balance sheet improperly listed as an asset certain Bolivian mining properties which were materially overvalued at $36,600,000, or 91% of Dynamic's total consolidated assets reported at December 31, 1995.  
+
+  In fiscal 1995 Dynamic entered into a contract to acquire these properties in exchange for its Class A preferred stock.  By the terms of the contract, this preferred stock was to have been converted to restricted common stock and transferred to the owner of the properties, Fernando Pero.  However, the Class A preferred stock was not converted until after the 1995 fiscal year-end, and the restricted common stock was never issued to Pero.  Thus, Dynamic should not have recorded the properties as an asset in fiscal 1995 or any other period because the conditions of the contract were never satisfied. 
+
+  Because the common stock referenced above was restricted, its value was significantly less than the value Dynamic wished to record for the Bolivian properties on its balance sheet.  Accordingly, after the fiscal 1995 year-end, Dynamic's board of directors authorized issuance of Class B preferred stock as supposed additional payment for its purchase of the properties.  Dynamic then used the arbitrary redemption value of this Class B preferred stock to assign a significant value to the properties on its 1995 financial statements, which was an improper accounting treatment under GAAP. 
+
+  In performing the audit of Dynamic's 1995 financial statements, Jones also did not act in accordance with GAAS in that he:
+
+  1) Failed to adequately plan the audit by not: (i) obtaining an appropriate level of knowledge of Dynamic's business, and (ii) developing appropriate audit programs.
+
+  2) Failed to obtain sufficient competent evidential matter concerning: (i) the valuation of the Bolivian mineral properties, and (ii) the professional reputation and independence of other auditors that performed audits of the Bolivian properties' financial statements before the properties were acquired by Dynamic.
+
+  3) Failed to maintain an attitude of professional skepticism by: (i) not responding to information suggesting that Dynamic's valuation of the Bolivian properties was inflated and that the acquisition of the properties was improperly recorded as a fiscal 1995 transaction, (ii) failing to question or adequately verify certain representations made by Dynamic's management; and (iii) failing to obtain a letter of representation from the other auditors of the Bolivian properties' financial statements.
+
+  4) Failed to exercise due professional care in the performance of the audit. 
+
+  5) Failed to issue a properly worded audit report with respect to the work performed by other auditors.
+
+  6) Failed to obtain sufficient competent evidential matter to determine that a proper test had been done of the present value of certain "ore concentrates" valued at approximately $4.3 million. 
+
+ III. 
+
+ Based on the foregoing, the Commission finds it appropriate and in the public interest to accept the Offer of Jones and impose the sanctions consented to therein.  Accordingly, IT IS HEREBY ORDERED that, effective immediately, 
+
+  1. Jones is denied the privilege of appearing or practicing before the Commission as an accountant. 
+
+  2. After 3 years from the effective date of this order, Jones may request that the Commission consider his reinstatement by submitting an application (attention: Office of the Chief Accountant) to resume appearing or practicing before the Commission as:
+
+  a) preparer or reviewer, or a person responsible for the preparation or review, of any public company's financial statements that are filed with the Commission.  Such an application must satisfy the Commission that Jones's work in his practice before the Commission will be reviewed either by the independent audit committee of the public company for which he works or in some other acceptable manner, as long as he practices before the Commission in this capacity; and/or
+
+  b) an independent accountant.  Such an application must satisfy the Commission that:  (i) Jones, or the firm with which he is associated, is a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms ("SEC Practice Section"); (ii) Jones, or the firm, has received an unqualified report relating to his, or the firm's, most recent peer review conducted in accordance with the guidelines adopted by the SEC Practice Section; and (iii) As long as Jones appears or practices before the Commission as an independent accountant he will remain either a member of the SEC Practice Section or associated with a member firm of the SEC Practice Section, and will comply with all applicable SEC Practice Section requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education.
+
+  3. The Commission's review of an application by Jones to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to Jones's character, integrity, professional conduct, or qualifications to appear or practice before the Commission.   
+
+ By the Commission.
+            Jonathan G. Katz
+
+           Secretary 
+  Footnotes  
+
+   1     Paragraph 1 of Rule 102(e) provides, in relevant part, that:  The Commission may . . . deny, temporarily or permanently, the privilege of appearing or practicing before it in any way to any person who is found by the Commission after notice and opportunity for hearing in the matter:  . . . (ii) [t]o be lacking in character or integrity or to have engaged in unethical or improper professional conduct; or (iii) [t]o have willfully violated, or willfully aided and abetted the violation of any provision of the Federal securities laws or the rules and regulations thereunder. 
+
+   2     The findings herein are made pursuant to Jones's offer of settlement and are not binding on any other person or entity named as a respondent in this or any other proceedings.   
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diff --git a/raw/aaer/2001/AAER-1391.txt b/raw/aaer/2001/AAER-1391.txt
new file mode 100644
index 0000000000000000000000000000000000000000..4bdbbcda81da79276df51791b0dfce8db342486e
--- /dev/null
+++ b/raw/aaer/2001/AAER-1391.txt
@@ -0,0 +1,1502 @@
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+              Craig R. Clark, CPA
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+        Craig R. Clark, CPA
+       
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+              UNITED STATES OF AMERICA  Before the  SECURITIES AND EXCHANGE 
+
+      COMMISSION 
+
+      
+
+      
+
+ Securities Exchange Act of 1934
+
+ Release No.  44270 / May 7, 2001 
+
+ Accounting and Auditing Enforcement
+
+ Release No.  1391 / May 7, 2001 
+
+ Administrative Proceeding
+
+ File No.  3-10476
+  
+     
+        
+        In the Matter of 
+         CRAIG R. CLARK,  CPA,
+  Respondent
+      	                    
+         
+     
+       : : : : : : : :   
+    
+      ORDER INSTITUTING PUBLIC  ADMINISTRATIVE PROCEEDINGS  PURSUANT TO RULE 102(e) OF THE  COMMISSION'S RULES OF PRACTICE, MAKING FINDINGS, AND IMPOSING  REMEDIAL SANCTIONS       I.  
+
+ The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Craig R. Clark ("Respondent" or "Clark") pursuant to Rule 102(e)(3) of the Commission's Rules of Practice.  1   
+
+  II.  
+
+   Clark has submitted an Offer of Settlement ("Offer") to the Commission in anticipation of the institution of this administrative proceeding.  The Commission has determined that it is appropriate to accept Clark's Offer.  Solely for the purposes of these proceedings and any other proceeding brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except that Clark admits the jurisdiction of the Commission over him and over the subject matter of these proceedings, and admits the Commission's finding that a Final Judgment of Permanent Injunction ("Final Judgment") has been entered against him as set forth in Section III.C., Clark consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions ("Order"). 
+
+   Accordingly, IT IS ORDERED that proceedings pursuant to Rule 102(e) of the Commission's Rules of Practice be, and hereby are, instituted. 
+
+  III.  
+
+   On the basis of this Order and the Respondent's Offer, the Commission makes the following findings: 
+
+ A. Craig R. Clark, age 51, was at all relevant times a certified public accountant licensed in the States of California and Texas.  During 1996, Clark served as the CFO of Unison HealthCare Corporation ("Unison"), as well as a board member.  He resigned from his positions at the board's request in March 1997.   
+
+ B. Unison, a Delaware corporation with principal executive offices in Scottsdale, Arizona, owned and operated more than 50 health care facilities during 1996.  Unison's stock was, at all relevant times, registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 ("Exchange Act") and Unison was required to file periodic reports with the Commission pursuant to Section 13(a) of the Exchange Act.  During the relevant period, Unison's common stock was listed for trading on the NASDAQ National Market System.  Unison filed for bankruptcy reorganization in May 1998, and subsequently changed its name to Raintree HealthCare Corporation.   
+
+ C. On September 27, 1999, the Commission filed a complaint in the United States District Court for the District of Arizona against Clark,  Securities and Exchange Commission v. Jerry M. Walker and Craig R. Clark,  Civ. 99-1737-PHX-ROS (" SEC v. Walker ").  On March 16, 2001, Clark consented to the entry of the Final Judgment against him in  SEC v. Walker , without admitting or denying the allegations of the Complaint, except subject matter jurisdiction, which Clark admitted.  On April 11, 2001, the United States District Court for the District of Arizona entered a Final Judgment of Permanent Injunction which: (1) permanently enjoined Clark from violating Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder, and aiding and abetting violations of Section 13(a) of the Exchange Act and Rule 13a-13 thereunder; and (2) ordered Clark to pay a civil penalty of $15,000. 
+
+ D. The Commission's Complaint alleged that Clark and other officers of Unison made unsupported adjustments in financial accounting records that materially inflated Unison's net income figure that was included in Unison's financial statements for the quarter ended September 30, 1996.   
+
+ The Complaint alleged that Clark, the CEO, and the controller created unsupported journal entries that, among other things, materially increased Medicare receivables and materially decreased expenses for the third quarter of 1996.  The Complaint alleged that the adjustments to Unison's third quarter financial statements artificially inflated net income by material amounts.  The Complaint alleged that adjustments of $3.391 million to revenues and $1.7 million to expenses were material because they enabled Unison to report positive net income of $1.2 million, or $.30 per share, rather than a loss of almost $4 million. 
+
+ The Complaint alleged that the adjustments of $3.391 million and $1.7 million, respectively, lacked support in the company's records and that the unsupported adjustments to net income enabled Unison to publicly report positive earnings in line with its previously announced estimates for the third quarter of 1996.  As a result, Unison's Form 10-Q for the third quarter of 1996, which was filed with the Commission, was materially false and misleading.  Unison later restated its results of operations, which included the third quarter of 1996, to report a pretax loss of nearly $15 million for the nine-month period ended September 30, 1996.  Finally, the Complaint alleged that Clark knew or was reckless in not knowing that Unison's Form 10-Q filed for the third quarter of 1996 contained materially false and misleading information because Unison's financial statements included unsupported accounts receivable, revenues, and expenses. 
+
+ The Complaint alleged that, as a result of the foregoing conduct, Unison failed to make and keep books, records and accounts that accurately and fairly reflected their transactions and dispositions of assets, and Unison failed to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions were recorded as necessary to permit preparation of financial statements in conformity with GAAP or other criteria applicable to such statements 
+
+  IV.  
+
+   In view of the foregoing, the Commission deems it appropriate to accept the Offer of Settlement submitted by Clark; and 
+
+   ACCORDINGLY IT IS HEREBY ORDERED, effective immediately, that: 
+
+   A. Clark be, and hereby is, denied the privilege of appearing or practicing before the Commission as an accountant; 
+
+ B. After three (3) years from the date of the Order, Clark may request that the Commission consider his reinstatement by submitting an application (attention: Office of Chief Accountant) to resume appearing or practicing before the Commission as:  
+
+ 1. a preparer or reviewer, or a person responsible for the preparation or review, of any public company's financial statements that are filed with the Commission.  Such an application must satisfy the Commission that Clark's work in his practice before the Commission will be reviewed either by the independent audit committee of the public company for which he works or in some other acceptable manner as long as he practices before the Commission in this capacity; and/or 
+
+     2. an independent accountant.  Such an application must satisfy the Commission that:  (a) Clark, or any firm with which he is or becomes associated is a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms ("SEC Practice Section"); (b) Clark, or the firm, has received an unqualified report relating to his, or the firm's, most recent peer review conducted in accordance with the guidelines adopted by the SEC Practice Section; and (c) as long as Clark appears or practices before the Commission as an independent accountant, he will remain either a member of the SEC Practice Section or associated with a member firm of the SEC Practice Section, and will comply with all applicable SEC Practice Section requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education.   
+
+   C. The Commission's review of any request or application by Clark to resume appearing or practicing before the Commission may include consideration of, in addition to the matter referred to above, any other matters relating to Clark's character, integrity, professional conduct, or qualifications to appear or practice before the Commission. 
+
+                 By the Commission.
+
+                  _______________________
+
+                 Jonathan G. Katz
+
+                 Secretary 
+  Footnotes  
+   1     Rule 102(e)(3)(i), provides in relevant part:  
+
+ The Commission, with due regard to the public interest and without preliminary hearing, may, by order, temporarily suspend from appearing or practicing before it any ... accountant ... who has been by name ... permanently enjoined, by any court of competent jurisdiction, by reason of his or her misconduct in an action brought by the Commission, from violating or aiding and abetting the violation of any provision of the federal securities laws or of the rules and regulations thereunder.     
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diff --git a/raw/aaer/2001/AAER-1393.txt b/raw/aaer/2001/AAER-1393.txt
new file mode 100644
index 0000000000000000000000000000000000000000..7b7395d8eb0f40e1a42c6e1c2e00baba6e80db9e
--- /dev/null
+++ b/raw/aaer/2001/AAER-1393.txt
@@ -0,0 +1,1743 @@
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+              Sunbeam Corporation
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+        Sunbeam Corporation
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+              UNITED STATES OF AMERICA  Before the  SECURITIES AND EXCHANGE 
+
+      COMMISSION 
+
+      
+
+
+  SECURITIES ACT OF 1933    
+Release No.   7976 / May 15, 2001 
+
+   SECURITIES EXCHANGE ACT OF 1934    
+Release No. 44305 / May 15, 2001  
+
+   ACCOUNTING AND AUDITING ENFORCEMENT 
+
+  Release No.  1393 / May 15, 2001 
+
+   ADMINISTRATIVE PROCEEDING    
+File No. 3-10481  
+ 
+     
+    In the Matter of  
+  SUNBEAM CORPORATION,    
+    Respondent.  
+     
+ 
+   : 
+: : 
+: 
+: 
+: 
+: 
+: 
+:  
+ 
+   ORDER INSTITUTING PUBLIC  
+ADMINISTRATIVE PROCEEDINGS,  
+PURSUANT TO SECTION 8A OF THE  
+SECURITIES ACT OF 1933 AND  
+SECTION 21C OF THE SECURITIES  
+EXCHANGE ACT OF 1934, MAKING  
+FINDINGS, AND IMPOSING A  
+CEASE-AND-DESIST ORDER   
+     I.   
+
+ The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be, and hereby are, instituted with respect to Sunbeam Corporation ("Sunbeam" or the "Company") pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Section 21C of the Securities Exchange Act of 1934 ("Exchange Act"). 
+
+  II.  
+
+ In anticipation of the institution of these administrative proceedings, Sunbeam has submitted an Offer of Settlement ("Offer") that the Commission has determined to accept.  Solely for the purpose of these proceedings, and any other proceeding brought by or on behalf of the Commission, or to which the Commission is a party, without admitting or denying the findings or conclusions of law   as set forth below, except as to jurisdiction of the Commission over Sunbeam and over the subject matter of these proceedings, which Sunbeam admits, Sunbeam consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, Making Findings, and Imposing a Cease-and-Desist Order ("Order") set forth below. 
+
+  III.  
+
+ The Commission makes the following findings:  1   
+
+  Respondent  
+
+  Sunbeam Corporation  is a Delaware corporation headquartered in Boca Raton, Florida, that manufactures household appliances and outdoor products.  At all relevant times, its common stock was registered with the Commission pursuant to Section 12(b) of the Exchange Act and traded on the New York Stock Exchange.  On February 5, 2001, Sunbeam petitioned the U.S. Bankruptcy Court for the Southern District of New York for reorganization proceedings under Chapter 11 of the U.S. Bankruptcy Code.   
+
+  Summary  
+
+ From the last quarter of 1996 until June 1998, Sunbeam Corporation's senior management created the illusion of a successful restructuring of Sunbeam in order to inflate its stock price and thus improve its value as an acquisition target.  2    To this end, management employed numerous improper earnings management techniques to falsify the Company's results and conceal its deteriorating financial condition.  Specifically, senior management created $35 million in improper restructuring reserves and other   "cookie jar" reserves  3   as part of a year-end 1996 restructuring, which were reversed into income the following year.  Also in 1997, Sunbeam's management engaged in guaranteed sales, improper "bill and hold" sales, and other fraudulent practices.  At year-end 1997, at least $62 million of Sunbeam's reported income of $189 million came from accounting fraud.  The undisclosed or   inadequately disclosed acceleration of sales through    "channel-stuffing" also materially distorted the Company's reported results of operations and contributed to the inaccurate picture of a successful turnaround.  4    When these measures did not lead to a sale of the Company by year-end 1997, senior management took increasingly desperate measures to conceal Sunbeam's mounting financial problems, meanwhile attempting to finance the acquisition of three other companies in part through the public sale of debt securities.  Management engaged in additional accelerated sales and sales for which revenue was improperly recognized, deleted certain corporate records to conceal pending returns of merchandise, and misrepresented the Company's performance and future prospects in press releases and in meetings with analysts and lenders.  
+
+  In June 1998, negative statements in the press about the Company's sales practices prompted Sunbeam's Board of Directors to begin an internal investigation.  This resulted in the termination of certain members of senior management, including Sunbeam's chief executive officer and chief financial officer, and, eventually, in an extensive restatement of the Company's financial statements from the fourth quarter of 1996 through the first quarter of 1998.  5    As a result, Sunbeam's restated 1997 income was approximately one-half of the amount previously reported.  The company is presently in a reorganization proceeding under Chapter 11 of the U.S. Bankruptcy Code. 
+
+  FACTS  
+
+ Sunbeam retained new management in July of 1996 to restructure the financially ailing Company.  Sunbeam's new CEO and CFO implemented an aggressive restructuring plan in an attempt to quickly improve Sunbeam's reported financial performance and thus increase its value as an acquisition target.  Based on market optimism that new management could accomplish these goals, the share price of Sunbeam stock rose from $12 to a high of $52 during the period   from July 1996 to March 1998. 
+
+    Sunbeam Created $35 Million in Improper Reserves at Year End 1996 .   
+
+ Sunbeam took a total restructuring charge of $337.6 million at year-end 1996.  6    However, management padded this charge with at least $35 million in improper   restructuring and other reserves and accruals,  7   excessive write-downs, and prematurely recognized expenses that materially distorted the Company's reported results of operations for fiscal year 1996, and would materially distort its reported results of operations in all quarters of fiscal year 1997, as these improper   reserves were drawn into income. 
+
+  The most substantial contribution to Sunbeam's improper reserves came from $18.7 million in 1996 restructuring costs that management knew or was reckless in not knowing were not in conformity with Generally Accepted Accounting Principles ("GAAP").  8    Sunbeam also created a $12 million litigation reserve against its potential liability for an environmental remediation.  However, this reserve amount was not established in conformity with GAAP and improperly overstated Sunbeam's probable liability in that matter by at least $6 million.   See   Statement of Financial Accounting Standards No. 5  ("FAS 5").
+
+  In connection with its restructuring, Sunbeam planned to eliminate half of its household product lines.  Its inventory of eliminated products was to be sold to liquidators at a substantial discount.  In adjusting the capitalized variances  9   associated with    its inventory of household products at year-end 1996, however, Company management knowingly or recklessly failed to distinguish excess and obsolete inventory from "good" inventory from continuing product lines.  As a result, Sunbeam understated the balance sheet value of its good household inventory at year-end 1996 by $2.1 million.  This caused Sunbeam's 1996 loss to be overstated by $2.1 million, and improved Sunbeam's profitability by the same amount when household products were sold at inflated margins during the first quarter of 1997.
+
+  Sunbeam had contracted to pay its advertising agency a total of approximately $2.7 million in fees and (potential) bonus to cover services rendered from late 1996 through the end of 1997.  However, Sunbeam management knowingly or recklessly recognized this entire amount as a 1996 expense, including $2.3 million that related to services to be performed in 1997.  (In 1996 this amount was dwarfed by the losses incurred through the Company's year-end restructuring and special charges.)  This enabled Sunbeam to improperly improve its net income in all quarters of 1997, as described below.      
+
+  Finally, in addition to buying national advertising to create demand for its products, Sunbeam funded a portion of its retailers' costs of running local promotions.  At year-end 1996, Sunbeam set its "cooperative advertising" reserve at $21.8 million without performing any test of the reasonableness of that amount.  Therefore, this amount was neither probable nor arrived at by reasonable estimation, in contravention of FAS 5.  10   
+
+    Sunbeam's Results of Operations Were Materially Misstated for Each Quarter of 1997.  
+
+ Throughout 1997, Sunbeam management manipulated the Company's sales, expenses and profits to create the false appearance of quarter after quarter improvements in financial performance.  To this end, management used 1996 reserves to boost Sunbeam's earnings and margins, and engaged in improper bill and hold sales and aggressive and undisclosed or inadequately disclosed accelerated sales.  Improper earnings management significantly affected each of the four quarters of 1997. 
+
+      In the first quarter of 1997, Sunbeam inflated reported earnings and failed to make required disclosure concerning certain sources of its income.   
+
+ In the first quarter of 1997, Sunbeam used $4.3 million of its non-GAAP restructuring reserves to reduce current period expenses.  This improved Sunbeam's income by approximately 13%.  Even had these reserves been properly retained on Sunbeam's books at year-end 1996, the reduction of first quarter expenses through their release constituted a material "infrequent item," and should have been so disclosed in the Company's quarterly filing.  Regulation S-K, Item 303(b); Accounting Principles Board Opinion ("APB") Nos. 28, ¶31; and 30, ¶26.  It was not.    
+
+  As noted above, Sunbeam management improperly failed to adjust capitalized variances associated with non-impaired inventory in connection with its 1996 restructuring, which predictably boosted income in the first quarter of 1997 when the inventory was sold.  In fact, this factor improved quarterly income by approximately $2.1 million (6%).     
+
+  Further, Sunbeam's first quarter sales included $19.6 million in deeply discounted products, which Sunbeam disposed of as part of its restructuring.  This represented an infrequent event, which, absent adequate disclosure, distorted the Company's reported financial results.  Regulation S-K, Item 303.  Although Sunbeam had announced its intention to divest certain non-core product lines in its 1996 Form 10-K, Sunbeam made no disclosure of the effect on revenues of this one-time sales event in reporting its first quarter 1997 results.  
+
+  Sunbeam should have recognized first quarter advertising expenses of $330,000.  However, by moving these expenses into 1996, as described above, Sunbeam understated first quarter 1997 expenses by that amount. 
+
+      In the first quarter of 1997, additionally, Sunbeam improperly recognized revenue on a contingent sale to a wholesaler.  
+
+ At the end of March 1997, just before the quarter closed, Sunbeam booked $1.5 million in revenue and $400,000 in income from a purported sale of barbecue grills to a wholesaler.  The wholesaler held Sunbeam merchandise over a quarter end, without accepting any of the risks of ownership; the agreement provided that the wholesaler could return all of the merchandise if it did not sell it, and that Sunbeam would pay all costs of shipment (in both directions) and storage. Incurring no expenses in this transaction, the wholesaler in fact returned all of the grills to Sunbeam during the third quarter of 1997.  GAAP does not permit the recognition of revenue on transactions lacking economic substance.   See  FAS 5; and Statement of Financial Accounting Concepts No. 5 ("Con. 5"), ¶83.  In total, non-GAAP accounting increased Sunbeam's reported earnings for the first quarter of 1997 by $7.1 million (21.8%).  
+
+      Sunbeam begins a pattern of accelerating its sales . 
+
+ Beginning with the first quarter of 1997, moreover, Sunbeam achieved its sales goals, in large part, by offering its customers discounts and other incentives to place their purchase orders before the period when they would otherwise have done so.  This practice of accelerating expected sales from later periods into the present quarter provided a misleading impression of the Company's results of operations for the present period.  It also resulted in the erosion of the Company's profit margins and impoverished sales in later periods.  11    Sunbeam, however, failed to disclose this practice in its quarterly filing on Form 10-Q, as required under Regulation S-K, Items 101 and 103. 
+
+      Sunbeam's first quarter 1997 press release was materially false and misleading . 
+
+ The Sunbeam press release announcing its first quarter 1997 results represented the Company's sales to be a 10% improvement over the same quarter of 1996.  Sunbeam touted this purported sales growth as evidence of the success of its restructuring.  In truth, without the one-time sale of eliminated product lines and the guaranteed sale of grills discussed above, sales growth would have been only 1.1% over the first quarter of 1996.  With respect to earnings, the press release stated, "[t]he substantially higher earnings in the quarter from ongoing operations were due to increased sales coupled with the successful implementation of our restructuring efforts."  12    The day following the earnings announcement, Sunbeam's stock price increased 5.9% over the previous day's close.
+
+  There is no mention in that press release of the various forms of earnings management practiced by Sunbeam and their contribution to the first quarter results.  As members of Sunbeam management knew or were reckless in not knowing, these misstatements and omissions rendered Sunbeam's press release materially false and misleading. 
+
+      Sunbeam overstated its second quarter income by more than 50%.  
+
+ In the second quarter of 1997, in order to exceed the prior quarter's improperly inflated results of operations,   management again resorted to various earnings management techniques.  At least $23.7 million of Sunbeam's reported second quarter income of $40.5 million did not comply with GAAP requirements.
+
+  First, Sunbeam did not present fairly its results of operations because it offset, without required disclosure, $8.2 million in second quarter costs against the non-GAAP restructuring and other   reserves created at year-end 1996.    An additional $5.8 million of Sunbeam's second quarter net income came from the excess in the cooperative advertising reserve.  Sunbeam also recognized $700,000 in revenue and $280,000 in income from another guaranteed sale.  13    All of these practices, as members of Sunbeam management knew or were reckless in not knowing, were not in conformity with GAAP and hence rendered Sunbeam's second quarter 1997 financial statements false and misleading.  Regulation S-X, Rule 401(a)(1); APB No. 28, ¶31. 
+
+    Sunbeam's improper bill and hold sales . 
+
+ In the second quarter of 1997, moreover, Sunbeam began using "bill and hold sales" to improve earnings.  Specifically, the Company began offering its customers financial incentives to write purchase orders before they needed the goods.  Thus, Sunbeam sold goods in the second quarter that it would normally have sold in later periods.  Since many customers who wished to take advantage of these inducements could not burden their warehouses with out-of-season merchandise, Sunbeam offered to hold product for its customers until delivery was requested.  Sunbeam typically also paid the costs of storage, shipment and insurance on the product.  Moreover, the customers often retained the right, through explicit agreement or established practice, to return unsold product to Sunbeam.  14    Bill and hold sales are unusual transactions subject to stringent accounting criteria.  The Commission has previously articulated these criteria in  In the Matter of Stewart Parness , Exchange Act Rel. No. 23507, Accounting and Auditing Enforcement Rel. ("AAER") No. 108 (August 5, 1986).  15    The  Parness  criteria relevant to the instant case include: 
+
+        The buyer, not the seller, must request that the transaction be on a bill and hold basis;
+
+         The buyer must have a substantial business purpose for ordering the goods on a bill and hold basis; and
+
+         The risks of ownership must have passed to the buyer.
+
+   Other relevant factors include: "whether [the seller] has modified its normal billing and credit terms for this buyer" and "the seller's past experiences with and pattern of bill and hold transactions."
+
+  Sunbeam's bill and hold transactions did not meet the above criteria.  Sunbeam procured these sales by offering price, credit and other concessions to induce customers to write purchase orders before they would otherwise have done so.  Thus, it would be inaccurate to claim that the buyer had requested "the transaction be on a bill and hold basis."   See   In the Matter of Cypress Bioscience, Inc. et al. , Exchange Act Rel. No. 37701, AAER No. 817 (Sept. 19, 1996) (bill and hold treatment improper where orders resulted from sales promotion offered by seller).  It is also not the case that the buyer has "a substantial business purpose for ordering the goods on a bill and hold basis," when its only motive is to obtain the various inducements offered by the seller.  Such an interpretation would substitute the seller's business purpose ( e.g. , to accelerate recognition of sales revenue) for the buyer's.  16    Sunbeam paid the costs of insuring, storing and shipping the product, and in many instances was willing to accept the return of the product.  Therefore, the customers did not accept the risks of ownership.     See   SEC v. Electro-Catheter Corp., et al ., Lit. Rel. No. 11803, AAER No. 196 (July 15, 1988) (seller's payment for insuring and warehousing product is evidence ownership risk did not pass).  In summation, these transactions were little more than projected orders disguised as sales.  17   
+
+      Sunbeam's improper accounting treatment for supplier rebates . 
+
+ Beginning during the second quarter of 1997,  18   Sunbeam began recording   as income rebates obtained from suppliers that properly related to later period purchases.  As a result of aggressive negotiation by Sunbeam, four suppliers paid rebates in the second quarter in the total amount of $2.75 million.  Under GAAP, a rebate should normally be recorded as a reduction in cost of sales in the period in which its associated sale is made.  Con. 5, ¶85.  That the supplier rebates obtained by Sunbeam beginning in the second quarter of 1997 were made in contemplation of future purchases, and therefore should have been recognized on a pro rata basis as the related sales were made, is confirmed by the following facts: 
+
+         16 of the 31 rebates obtained by Sunbeam during all quarters of 1997 were incorporated in contracts that provided exclusive supply provisions, contract period extensions, expanded supply arrangements, or other terms going to future obligations of Sunbeam; 
+
+        three of the four rebates obtained in the second quarter were connected with contract extensions that covered more than one year;  
+
+     in one case, the rebate was specifically identified as an up-front payment of future volume discounts; and
+     another agreement provided that, if the contract was terminated, a pro-rated portion of the rebate was to be returned to the supplier.      
+
+    Sunbeam's misleading disclosure about its Second Quarter 1997 results.  
+
+ In its filing on Form 10-Q for the second quarter of 1997, Sunbeam reported net sales of $287.6 million, a 13.3% increase over the same quarter of the previous year.  It further stated that the Company's operating margin had increased by 7.3% over the second quarter of 1996.  The Company attributed these improvements to the success of its restructuring.  Without the improper earnings management described above, however, Sunbeam's net sales and operating margins would have shown a substantial decline relative to the same quarter of 1996.  19    Sunbeam failed to disclose material information, as described above, about the quality of its earnings and the implications of its accounting and sales practices for future results of operations.   See  Regulation S-K, Items 101, 303. 
+
+      In the third quarter of 1997, Sunbeam relied on improper accounting and further   accelerated sales to achieve its earnings targets .   
+
+ Sunbeam reported income of $53.4 million for the third quarter of 1997.  This allowed the Company to surpass analysts' estimates of 38¢ per share by 1¢.  The offset of $2.9 million in current period expenses against non-GAAP restructuring reserves, the improper recognition of $705,000 in additional supplier rebates and the failure to recognize $663,000 in period advertising expenses provided approximately $4.3 million (or almost 8%) of that amount.
+
+  Primarily, however, Sunbeam met its third quarter earnings targets by capturing revenue from later periods through additional discounting.     Having previously initiated the process of discounting to accelerate sales, Sunbeam was forced to continue doing so or experience a major earnings shortfall.   
+
+  Nevertheless, Sunbeam management continued to tout the Company's income growth without disclosing the temporary expedients through which it had been achieved.  In addition, management publicly denied the contention of certain analysts that Sunbeam relied on channel stuffing to achieve its revenue targets.  Compounding this looming crisis of unmet expectation, management told analysts, without apparent basis in fact, that it expected sales growth of 20% for the full year and margin growth of 30% for the second half of the year.  Management knew or was reckless in not knowing that the above disclosure failures were materially false and misleading. 
+
+      Sunbeam's earnings management reached its highest level in the last quarter of 1997.  
+
+ During the fourth quarter of 1997, Sunbeam management knew or recklessly disregarded facts indicating   that price concessions used to accelerate sales in the third quarter were negatively affecting current period sales and profit margins.  To bolster Sunbeam's reported performance for the quarter, management again used the Company's overstated restructuring and other   reserves, offsetting $1.5 million of fourth quarter expenses.  Sunbeam obtained an additional $1.9 million in supplier rebates in the fourth quarter that, as in previous quarters, related to future sales by Sunbeam and so should have been recorded as price discounts in the periods when the sales occurred, not as price discounts in the current period.  In addition, the $12 million litigation reserve established at year-end 1996 contributed $9 million to income when the company settled for $3 million the claim to which the reserve related.  At the conclusion of the fourth quarter of 1996, Sunbeam management knew or recklessly disregarded facts indicating that the $12 million reserve was at least $6 million in excess of Sunbeam's probable liability on this claim.  Thus Sunbeam's fourth quarter 1997   results were knowingly or recklessly inflated by at least $6 million when that excess was released into income.  20    These measures, however, did not directly address the problem of lagging sales.  Therefore, management renewed its efforts to push additional product into its sales channels.  After "early buy" incentives failed to generate sufficient sales, Sunbeam accelerated additional sales through a bill and hold program.  Sunbeam bore all costs associated with the product until the customers requested delivery.  These sales contributed $29 million in sales and $4.5 million in income to the fourth quarter's reported results.  These sales, however, failed to comply with GAAP for the same reasons as Sunbeam's second quarter bill and hold sales.  Indeed, that the fourth quarter bill and hold sales were not made at the request of the customer, as  Parness  requires, is particularly apparent in that these sales derived from a Sunbeam marketing program.   See   Cypress Bioscience.   
+
+      The Company's "distributor program" further distorted its reported results of operations.  
+
+ Sunbeam launched a "distributor program" in December 1997, offering discounts, favorable payment terms, guaranteed mark-ups, and (consistently) the right to return or exchange unsold product to distributors willing to accept Sunbeam product before year-end in order to generate additional purported "sales."  21    These "sales" were largely without economic substance.  For example, Sunbeam booked $2.9 million in revenue from a year-end transaction with one distributor to which it had previously sold goods on a consignment basis.  To induce the customer to provide a conventional purchase order, Sunbeam agreed to pay for storage of the product and help the customer solicit business.  The customer was also permitted to cancel the order if it could not sell the product.  22    Therefore, this arrangement transferred no greater economic risk to the customer than the previous consignment arrangement.  As a second example, a sale to another distributor, upon which Sunbeam booked $4.3 million in revenue, consisted of blankets custom packaged for two of Sunbeam's largest retail customers.  The distributor had, in exchange for a guaranteed mark-up, in essence agreed to park this merchandise until Sunbeam's retail customer was ready to accept delivery.  
+
+  In total, $24.7 million in fourth quarter sales to distributors were subject to rights of return.  Even if these sales were otherwise in conformity with GAAP, which many were not, they represented a significant change from Sunbeam's previous approach to marketing and distributing its product.  Therefore, Sunbeam had insufficient information to set an appropriate level of reserves for returns and, consequently, could not satisfy GAAP requirements for recognizing revenue on these sales.  Statement of Financial Accounting Standards No. 48, ¶8. 
+
+      Sunbeam   improperly recognized revenue on a purported sale of parts inventory.  
+
+ Also in the fourth quarter of 1997, Sunbeam recorded $11 million in revenue and almost $5 million in income from a  " sale "  of its spare parts inventory to a fulfillment house that did not comply with GAAP requirements.  Its "customer" had previously satisfied the spare parts and warranty requests of Sunbeam customers on a fee basis.  The sale price had no practical relationship to any payment Sunbeam might obtain; by its terms, the contract would terminate in January 1998, absent agreement between the parties on the value of the inventory.  Moreover, Sunbeam agreed to pay certain fees to its "customer" and guaranteed a 5% profit on the resale of the inventory.  Sunbeam's auditors determined that the profit guarantee and indeterminate value of the contract rendered revenue recognition on this transaction improper.  Sunbeam agreed to reserve $3 million against its putative profit margin on the transaction, but declined to eliminate the remaining income effect.  Its auditors then passed the related proposed adjustment as immaterial.  23    Sunbeam's auditors, in connection with their year end 1997 audit, proposed additional adjustments to reverse $3.5 million related to inventory overvaluation and various other accounting errors.  Management deemed these items, which added 5.4% to Sunbeam's earnings for the fourth quarter, immaterial, and declined to make the proposed adjustments.  Given the demonstrated sensitivity of Sunbeam's stock price to even minor earnings shortfalls, these items were not in fact immaterial.   See  SAB 99.  Moreover, they contributed to the cumulative effect of Sunbeam's numerous accounting improprieties, which in total were material, both to the quarter and the year. 
+
+    Sunbeam's Year-End 1997 Disclosure Was Materially False.  
+
+ On January 28, 1998, Sunbeam issued a press release announcing its "record" fourth quarter and fiscal 1997 results.  24    The Company claimed that its sales increase was a "clear indication that [Sunbeam's] strategy is working."  It also touted its "remarkable improvement in operating margins, year over year."  In fact, at least $62 million of Sunbeam's reported $189 million in income for the year did not comply with GAAP requirements.  25    Significantly, 16% of Sunbeam's 1997 income came from items its auditors had determined to be improper and proposed for adjustment in either 1996 or 1997.  26    Thus this press release and the associated conference call between Sunbeam management and various analysts communicated substantially   overstated results of operations.  
+
+  This materially inaccurate financial information was also included in Sunbeam's annual report on Form 10-K, filed on March 6, 1998, contrary to the requirements of Regulation S-K, Item 303(a); and APB Nos. 28 ¶31, and 30, ¶26.  Moreover, that filing contained no disclosure about the various forms of earnings management practiced by the Company and their implications for future sales and liquidity, except that it revealed (for the first time) the existence of Sunbeam's "early buy" program and that the Company had engaged in bill and hold sales.  
+
+  The filing suggested, however, that Sunbeam was engaged only in a limited attempt to smooth, across different selling seasons, sales from certain seasonal items, rather than (as was the case) a broad program of acceleration of revenue   that would predictably lead to an earnings shortfall the following year.  The filing stated, "the amount of [the] bill and hold sales at December 29, 1997 was approximately 3% of consolidated revenues."  It did not disclose that bill and hold sales had been booked primarily in the final quarter, thus pulling revenue into 1997 from 1998, and had contributed approximately 10% to that quarter's sales revenue.  The disclosure concerning bill and hold sales was also misleading in stating, "at the customer's request the Company may sell seasonal product on a bill and hold basis provided that ... the risk of ownership and legal title have passed to the customer."  As discussed above, Sunbeam's bill and hold sales were not exclusively of seasonal product, were not made at the customer's request and did not transfer risk.    
+
+    In the First Quarter of 1998, Sunbeam Adopted Additional Expedients to Forestall an Earnings Shortfall.     
+
+ As Sunbeam entered 1998, channel stuffing though price discounting and contingent and bill and hold sales had borrowed heavily against futures sales revenue and left the Company with no options to satisfy that debt.    Reports to senior management showed customers holding as much as 80 weeks of inventory of specific products.  Senior management was also repeatedly informed of projected earnings shortfalls for the quarter.  In brief, the Company was experiencing the results of a short-term approach to earnings management that had outlived its efficacy.  
+
+  Against this background, Sunbeam negotiated to purchase three other companies, Coleman, First Alert, and Signature Brands, which would allow the Company to conceal its accounting irregularities in another restructuring charge.  To conclude these acquisitions, however, Sunbeam needed to raise $700 million through a Zero Coupon Bond offering and arrange a $1.7 billion revolving credit line.  Indications of problems with Sunbeam's financial condition would have jeopardized these transactions.  
+
+  To avoid reporting a sales decline in the first quarter of 1998, Sunbeam again used   bill and hold sales.  The $35 million in such sales booked in the first quarter of 1998 again resulted from a program of inducing customers, already overloaded with Sunbeam inventory, to sign purchase orders well in advance of their actual need for product by offering discounts, extended payment terms and storage.  Hence, they did not comply with GAAP requirements for revenue recognition.   
+
+   In addition, in late January, former Chief Financial Officer Russell Kersh ordered the deletion of all return authorizations from the Company's computer system.  27    Although Sunbeam had little option but to accept authorized returns,  28   deleting the authorization file delayed acceptance of some quantity of pending returns long enough so that they did not count against net sales for the first quarter.  As a result, Sunbeam's   return reserve remained inadequate.    At year-end 1997, that reserve was reduced from $6.5 million to $2.5 million, without reasonable justification, improving 1997 income.  As of February 8, 1998, Sunbeam had approximately $18 million in pending returns, requiring at least $4.5 million in reserves under its established approach to setting reserves.  Sunbeam nevertheless reduced its sales return reserve by another $1 million at the end of February.    
+
+ In addition, Sunbeam changed its quarter end date from March 29 to March 31 to capture additional revenue.  On March 29, Sunbeam was $29 million short of the $253.4 million in net sales it had promised to exceed in a March 19 press release. Changing Sunbeam's fiscal year to a calendar year, thereby extending the quarter by two days, permitted the Company to record another $5 million in net sales from Sunbeam's operations and almost $15 million in net sales from Coleman.  29    The change in quarter-end date, although not improper in itself, led to additional disclosure failures by Sunbeam, as described below.  30   
+
+      The March 19 Press Release   
+
+ As part of its due diligence on Sunbeam's $700 million Zero Coupon debt offering, its lead underwriter learned Sunbeam might not meet analysts' expectations for the first quarter.  It therefore proposed that the Company issue a press release to that effect.  The following day, the Company issued a release stating: 
+
+    [It] is possible that [Sunbeam's] net sales for the first quarter of 1998 may be lower than the range of Wall Street analysts' estimates for $285 million to $295 million, but net sales are expected to exceed 1997 first quarter net sales of $253.4 million....  The shortfall from analysts' estimates, if any, would be due to changes in inventory management and order patterns at certain of the Company's major retail customers.   
+
+  The release inaccurately implied that Sunbeam's lower sales to retailers stemmed from a generalized effort among retailers to reduce inventory levels, rather than from Sunbeam's 1997 accelerated sales.  In addition, information available to Sunbeam management did not provide any basis for projecting net sales in excess of those achieved in the first quarter of 1997.  The release also made no mention of expected deterioration in earnings stemming from certain non-recurring increases in the first-quarter 1998 costs.  Sunbeam's stock dropped by almost 9%, the first in what was to be a series of declines.  31   
+
+    The April 3 Press Release  
+
+ By the first week in April, Sunbeam could no longer contend that its results for the first quarter would reach the level it had predicted in its March 19 press release.  On April 3, 1998, two days after the loan was funded and one day after the Signature Brands and First Alert acquisitions were completed, Sunbeam issued a release announcing that Sunbeam expected to show a loss for the quarter.  It attributed the earnings shortfall to disappointing sales due to customers "continuing to manage down their inventories" and one-time charges related to the three acquisitions.  On this news, Sunbeam's stock price dropped by over 24%.     
+
+  A statement from Sunbeam's CEO Albert J. Dunlap   sought to gloss over the first quarter repercussions of its 1997 earnings management, and in particular its late December accelerated sales, as a surprising slowdown after "an excellent Holiday season."  In the release and the related conference call, Sunbeam management did not disclose: 
+
+         the inadequacy of Sunbeam's reserves for returns;
+
+         bill and hold sales that pulled $35 million in net sales into the quarter; and  
+
+         the extension of the quarter-end date by two days, which added $20 million in net sales to the quarter. 
+
+   Moreover, the   statement by Dunlap in the press release that Sunbeam believed "until the very end of the quarter" that it would exceed results from the first quarter of 1997 was without any reasonable basis in fact, given the alarming sales reports provided to senior   management throughout the quarter. 
+
+      The May 11, 1998, Earnings Release and Press Conference.  
+
+ On May 11, 1998, Sunbeam issued its first quarter 1998 earnings release.  The release disclosed a loss of 52¢ per share for the quarter, compared to earnings of 8¢ for the same quarter of the prior year.  32    The release attributed the earnings shortfall, cryptically, to "lower price realization and unit volume declines."  Again there was no mention of the negative effect on the first quarter of the acceleration of sales in the fourth quarter of 1997, or the positive effect of the first quarter bill and hold sales and the failure to adequately reserve for returned product.  Further, the Company predicted $1 earnings per share for the year, and promised annual growth in revenues and operating margins of 10-12% and 15-18%, respectively.  These predictions were without factual basis and were, in fact, contrary to internal analyses predicting earnings of approximately 60¢ per share.  
+
+  Also on May 11, 1998, management held a press conference in which it addressed the earnings shortfall.  First, the CEO and another executive denied categorically that the Company had engaged in channel stuffing.  In addition, Sunbeam's CFO reiterated the $1 per share earnings projection for the full year, and added that the Company expected to earn 5-10¢ per share in the second quarter.  The quarterly number, too, was unsupportable; the prior week, internal forecasters had provided management with an earnings estimate for the second quarter of 1.9¢ per share. 
+
+      Sunbeam's Filing on Form 10-Q for the First Quarter of 1998.   
+
+   Sunbeam's Form 10-Q for the first quarter of 1998 reported net sales of $244.3 million, a decrease of $9.2 million from the comparable period in 1997.  The reported net sales figure was overstated, however, because of the improper bill and hold sales and failure to reserve adequately for product returns.  In the 10-Q filing, Sunbeam disclosed the existence of bill and hold sales in the first quarter but misleadingly described them as a means of accomplishing "improved customer service levels," rather than another exercise in accelerating sales to improve reported results.  
+
+  The Scheme Unravels. 
+
+  In June 1998, after an article in the financial press accused Sunbeam of accounting irregularities, its board of directors initiated an investigation.  The information it obtained led it to terminate various members of management, including its chief executive officer and chief financial officer.  Also in June, Sunbeam announced that its prior financial statements should not be relied upon.  
+
+  In November 1998, the Company issued substantially restated financial statements for the six quarters from the fourth quarter of 1996 through the first quarter of 1998.  As a result of the restatement, for 1997, Sunbeam reported $93 million in income, approximately one half of the amount it had previously reported. 
+
+  The price of Sunbeam's stock declined from approximately $52 in early March 1998 to approximately $7 after the Company issued its restated financial statements.  Sunbeam is presently in a reorganization proceeding under Chapter 11 of the U.S. Bankruptcy Code.   
+
+  VIOLATIONS  
+
+     A. Sunbeam violated Section 17(a) of the Securities Act   and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder . 
+
+    Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder ("the anti-fraud provisions") proscribe fraudulent practices in connection with the offer, purchase or sale of securities.  An issuer and its management violate these provisions by, intentionally or with reckless disregard for the truth, making material misstatements or omissions in Commission filings.   SEC v. Great American Industries, Inc. , 407 F.2d 453 (2d Cir. 1968);  SEC v. Geotek , 426 F. Supp. 715, 718 (N.D. Cal. 1976),  affirmed , 590 F.2d 785 (9th Cir. 1979).  
+
+    Sunbeam violated Section 10(b) and Rule 10b-5 when it filed materially false and misleading periodic reports with the Commission and disseminated false and misleading public statements.  It also violated Section 17(a) in the offer and sale of its Zero Coupon Bonds by means of the above-mentioned false and misleading filings and public statements and a materially false and misleading offering memorandum.  Sunbeam's annual filing on Form 10-K for 1996 did not fairly present its results of operations and financial condition because the loss for that year was materially increased by the inclusion of non-GAAP cookie jar reserves, expenses and accruals.  Further, in each of its periodic filings for 1997, its quarterly filing for the first quarter of 1998, and its Offering Memorandum for the Zero Coupon Bonds, Sunbeam intentionally did not fairly present its results from operations due to,  inter alia , its practice of booking sales that did not comply with GAAP requirements, its improper release into income of non-GAAP reserves, and its failure to recognize period expenses, as described in detail above.  In each of those documents Sunbeam also failed to disclose, in the MD&A section or otherwise, that it had accelerated income from later periods through channel stuffing, and the significance to the Company's future results of operations of that practice.  Finally, Sunbeam's disclosure in its Form 10-Q filing for the first quarter of 1997 was misleading because the Company's income had been materially increased through an unusual item, the sale of inventory from discontinued product lines.  Sunbeam's management repeated much of this misinformation in press releases and statements to Wall Street analysts.   
+
+    Sunbeam senior management knew or was reckless in not knowing that the Company's results from operations and public disclosure had been rendered materially false and misleading by the above practices.  Management's scienter may be attributed to the company for purposes of liability under the anti-fraud provisions.   Vento & Co. v. Metromedia Fiber Network , 1999 U.S. Dist. LEXIS 3020, Fed. Sec. L. Rep. (CCH) ¶90460 (S.D.N.Y. Mar. 17, 1999) (the principal is liable for a 10b-5 violation if its agent violated 10b-5),  citing   AT&T v. Winback & Conserve Program , 42 F.3d 1421 (3d Cir. 1994),  cert. denied  514 U.S. 1103 (1995).   See also SEC v. Manor Nursing Centers Inc. , 458 F.2d 1082, 1096-97 (2d Cir. 1972) (corporate representatives' knowledge renders corporation liable for violating § 10(b) and Rule 10b-5). 
+
+    B. Sunbeam violated Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-13 thereunder . 
+
+    Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder require issuers of registered securities to file with the Commission accurate annual and quarterly reports.   See ,  e.g .,  SEC v. Savoy Industries, Inc. , 587 F.2d 1149, 1165 (D.C. Cir 1978),  cert. denied , 440 U.S. 913 (1979).  In addition, Exchange Act Rule 12b-20 requires that periodic reports contain all information necessary to ensure that statements made in such reports are not materially misleading.  No showing of  scienter  is necessary to establish a violation of Section 13(a).   Savoy Industries , 587 F.2d at 1167.  Financial statements incorporated in Commission filings must comply with Regulation S-X, which in turn requires conformity with GAAP.   
+
+ As described in detail above, Sunbeam violated these provisions by filing annual and quarterly reports with the Commission that included materially false financial statements, and by failing to make required disclosure concerning its business practices and the significance of those practices for Sunbeam's future results of operations.   
+
+     C. Sunbeam violated Section 13(b)(2)(A) and 13(b)(2)(B)   of the Exchange Act.  
+
+  Section 13(b)(2) of the Exchange Act requires an issuer: (A) to make and keep books, records, and accounts which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of its assets, and (B) to devise and maintain a system of internal accounting controls which provide reasonable assurances that, among other things, transactions are recorded as necessary to permit preparation of financial statements in conformity with Generally Accepted Accounting Principles.   
+
+   As described above, Sunbeam's books and records were manifestly inaccurate on so many items and over such an extended period of time as to indicate complete failure of internal controls.  As noted also, certain records were removed from the Company's computer system.  Thus, Sunbeam violated Sections 13(b)(2)(A) and 13(b)(2)(B).   
+
+  FINDINGS  
+
+   Based upon the foregoing, the Commission finds that Sunbeam violated Section 17(a) of the Securities Act and Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, and 13a-13 thereunder. 
+
+  ORDER  
+
+   In view of the foregoing, the Commission deems it appropriate to accept the Respondent's Offer of Settlement.
+
+    Accordingly, IT IS HEREBY ORDERED, pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, that Sunbeam cease and desist from committing or causing any violations, and any future violations, of Section 17(a) of the Securities Act and Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, and 13a-13 thereunder. 
+
+   By the Commission.
+
+                    Jonathan G. Katz
+                   Secretary 
+  Footnotes  
+   1     The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.   
+
+   2     All references to "management" or "senior management" refer to Sunbeam management at the time of the events described in this order .   As noted below, on or about June 13, 1998, the Company's outside directors terminated Chief Executive Officer Albert Dunlap and shortly thereafter terminated Chief Financial Officer Russell Kersh.  The Company's outside directors and its new senior management advised the public that its 1997 published financial statements should not be relied upon.  The Company undertook an internal investigation, with the aid of its outside auditors and its accounting and legal advisors, and filed restated financial statements upon completion of the investigation.  The Commission, in fashioning the appropriate sanction in this matter, considered Sunbeam's prompt remedial actions. 
+
+   3     The term "cookie jar reserves" refers to inflated or wholly improper reserves posted to provide a cushion against earnings shortfalls in later periods, when those reserves can be drawn into income. 
+
+   4      "Channel stuffing "  denotes the pulling forward of revenue from future fiscal periods by inducing customers -- through price discounts, extended payment terms or other concessions -- to submit purchase orders in advance of when they would otherwise do so.  Material undisclosed channel stuffing may cause a company's reported results of operations to be misleading. 
+
+   5     This Order is not intended to and does not contain findings regarding the scope or accuracy of matters contained in the Company's restated financials.  The staff, in its independent investigation, was not limited to those sources of information available to Company management at the time of its internal investigation.  Moreover, in its restatement, Sunbeam reversed certain revenue items not addressed in this Order.     
+
+   6     Unless otherwise indicated, numbers are given as approximations.  "Income" refers to earnings from continuing operations before income taxes.  
+
+   7     "Big bath" restructuring charges may provide a method for companies to manage earnings in later periods when excess reserves are taken into income. 
+
+   8     Emerging Issues Task Force ("EITF") Issue No. 94-3 (Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)).  The Company's auditors proposed an adjustment to reverse these expenses but agreed to pass on them as immaterial for the 1996 fiscal year.  However, see SEC Staff Accounting Bulletin No. 99, 64 Fed. Reg. 45150, 45152 (to be codified at 17 C.F.R. pt. 211, subpt. B) (1999) on materiality of accounting errors.   
+
+   9      Capitalizing variances is a method used to assign cost basis to inventory.  
+
+   10      The Company's auditors issued an unqualified opinion with respect to the Company's financial statements for its 1996 fiscal year.  The auditors identified, during the year-end 1996 audit, certain charges as improper.  Nevertheless, they advised Sunbeam's audit committee that their proposed adjustments were not material in amount.  
+
+   11      Thus, having begun the process of discounting to accelerate the recognition of sales revenue, Sunbeam was required to continue doing so or experience a major earnings shortfall.  One Sunbeam officer candidly referred to this approach to earnings management as a "doom loop."  
+
+   12     Sunbeam reported earnings of 24¢ per share for the quarter, surpassing the consensus estimate by 2¢.  
+
+   13     Although this transaction was in an amount not in itself material, it adds to the cumulative effect of the other improper accounting practices in the second quarter.   See also  SEC Staff Accounting Bulletin No. 99 (1999) on the materiality of intentional errors.   
+
+   14     In the second quarter of 1997, Sunbeam recognized $14 million in sales revenue and over $6 million in income from bill and hold sales, with no disclosure of this practice in its quarterly filing on Form 10-Q.   
+
+   15      That opinion cautioned, however, that the specified criteria did not constitute a checklist; "[i]n some circumstances, a transaction may meet all the factors listed... but not meet the requirements for revenue recognition."   Parness .  
+
+   16      Obviously, the simple fact that a buyer has entered into a bill and hold transaction indicates that it found some advantage in doing so.  However, the "substantial business purpose" criterion contemplated by  Parness  would be meaningless unless this purpose was independent of inducements created by the seller.  
+
+   17      Even had Sunbeam's second quarter and later period bill and hold sales met the  Parness  criteria, they pulled revenue into an earlier period.  A company that accelerates material amounts of sales revenue must disclose this as a business practice and discuss its financial implications for future periods.  Regulation S-K, Items 101, 303.  
+
+   18     Sunbeam continued this practice during later quarters .  
+
+   19     The Company announced earnings for the second quarter 1997 of 30¢ per share.  Sunbeam missed the consensus estimate of 31¢ per share by one penny and its stock dropped 3.5% from the previous day's close.  Had the shortfall been more dramatic, it is apparent the share price would have been punished even more severely.  
+
+   20      Nor did Sunbeam ever disclose the impact of the release of this litigation reserve on its financial results.  
+
+   21      Previously, Sunbeam had made only limited use of distributors in marketing and distributing its products.  
+
+   22      The customer, in fact, cancelled the order in April 1998.  
+
+   23     The actual net pre-tax income recorded by Sunbeam as a result of this transaction was almost $5 million.  First, the $7 million profit margin (the difference between the $11 million "sale" price and the $4 million carrying value of the inventory) minus the $3 million reserve, left $4 million in profit.  Second, the removal of this inventory from Sunbeam's books necessitated an adjustment of inventory ledgers that added at least another $900,000 to the income statement.     
+
+   24      The release stated that sales for the fourth quarter were $338 million, a 30.6 % improvement over the prior year period.  The press release reported that revenue for 1997 was $1.168 billion, a 22.4% increase from 1996.  The Company also announced that earnings per share from continuing operations of  $1.41 were $1.51 above the loss of 10¢ reported in 1996 (excluding special charges).  Nevertheless, Sunbeam missed the full-year 1997 consensus estimate by 3¢.  On that news, in further confirmation of the risk inherent in missing estimates, Sunbeam's stock fell 9.5%.  As detailed above, however, approximately 50% of Sunbeam's fourth quarter income did not comply with GAAP requirements.   
+
+   25     This figure reflects only the issues addressed in this Order and not certain additional accounting issues addressed by the Company in its restatement.  It includes income derived from overstated reserves and accruals taken at year-end 1996, conditional sales, all fourth quarter bill and hold sales, and the sham sale of spare parts.  It does not include instances of "pure" channel stuffing (revenue pulled from later periods, but without GAAP failure) or conduct that caused revenue to be improperly recognized in one quarter of 1997 that would otherwise have been properly recognized in another, for example the second quarter bill and hold sales.  
+
+   26        The Company's auditors issued an unqualified opinion with respect to the Company's financial statements for its 1997 fiscal year.  During their 1997 year-end audit, the auditors identified certain charges as improper.  The auditors nevertheless advised Sunbeam's audit committee, as they had with respect to their 1996 proposed adjustments, that the 1997 proposed adjustments were not material in amount.  
+
+   27     As a consequence of the sales arrangements described above, Sunbeam customers began returning large amounts of product early in the first quarter of 1998.    
+
+   28     In the summer of 1997, Sunbeam purported to adopt a policy against accepting returns of non-defective merchandise from its customers, unless approved by authorized managers.  This policy was not communicated to customers and was almost certainly unenforceable, given that many of its customers had enjoyed a long-standing right of return.  Moreover, as described above, Sunbeam had specifically granted rights of return to certain customers, including distributors, in the fourth quarter of 1997.   
+
+   29     The acquisition was completed March 30, 1998.    The Company never disclosed that its gross sales for those two days were $38 million (a substantial amount of which derived from the non-GAAP bill and hold sales described above) and that its reported $5 million net sales figure was arrived at by doubling an amount representing a daily sales average for March.   
+
+   30     Sunbeam disclosed the change in the quarter-end date in an 8-K filing on April 13, 1998.  It first quantified the impact of the extension in its first quarter 10-Q, filed on May 15, 1998.   
+
+   31     The Zero Coupon Bond Offering Memorandum distributed to potential investors on or about March 25, 1998, contained a reprint of this press release but mirrored the results of operations disclosure contained in the Company's 1997 10-K in all other relevant respects.   
+
+   32    The Company's stock price declined another 7.42% following this release.    
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diff --git a/raw/aaer/2001/AAER-1394.txt b/raw/aaer/2001/AAER-1394.txt
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@@ -0,0 +1,1528 @@
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+              David C. Fannin
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+              UNITED STATES OF AMERICA  Before the  SECURITIES AND EXCHANGE 
+
+      COMMISSION 
+
+      
+
+
+
+  SECURITIES ACT OF 1933    
+Release No. 7977 / May 15, 2001 
+
+   ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No.   1394 / May 15, 2001 
+
+   ADMINISTRATIVE PROCEEDING    
+File No. 3-10482  
+ 
+     
+  In the Matter of   
+  DAVID C. FANNIN,    
+    Respondent.  
+  
+ 
+   : 
+: 
+: 
+: 
+: 
+: 
+: 
+:  
+ 
+   ORDER INSTITUTING PUBLIC  
+ADMINISTRATIVE PROCEEDINGS,  
+PURSUANT TO SECTION 8A OF THE  
+SECURITIES ACT OF 1933, MAKING  
+FINDINGS, AND IMPOSING A  
+CEASE-AND-DESIST ORDER  
+     I.   
+
+ The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be, and hereby are, instituted with respect to David C. Fannin ("Respondent") pursuant to Section 8A of the Securities Act of 1933 ("Securities Act"). 
+
+  II.  
+
+ In anticipation of the institution of these administrative proceedings, Respondent has submitted an Offer of Settlement ("Offer") that the Commission has determined to accept.  Solely for the purpose of these proceedings, and any other proceeding brought by or on behalf of the Commission, or to which the Commission is a party, without admitting or denying the findings as set forth below, except as to jurisdiction of the Commission over Respondent and over the subject matter of these proceedings, which Respondent admits, Respondent consents to the entry of this Order Instituting Public Administrative Proceedings, Pursuant to Section 8A of the Securities Act of 1933, Making Findings and Imposing a Cease-and-Desist Order ("Order") set forth below. 
+
+  III.  
+
+ The Commission makes the following findings:  1   
+
+  Respondent  
+
+    David C. Fannin    was Executive Vice President, General Counsel, and Secretary of Sunbeam Corporation ("Sunbeam" or "Company") from January 1994 until August 1998.  He was also a member of Sunbeam's Operating Committee. 
+
+  Summary  
+
+ From the last quarter of 1996 through the first quarter of 1998, Sunbeam engaged in a program of earnings management that resulted in the misrepresentation of its results of operations and the inflation of its stock price.  2    Respondent, the Company's Executive Vice President, General Counsel, and Secretary, contributed to Sunbeam's disclosure failures by drafting, together with others, press releases in early 1998 that provided a false and misleading picture of the Company's results of operations.  
+
+  FACTS  
+
+  The March 19 Press Release  
+
+  In late 1997 and early 1998, members of Sunbeam senior management, including Respondent, received information indicating that the Company's reported sales revenue was heavily dependent upon pulling forward sales from later fiscal periods.  This undisclosed approach to earnings management  3   would predictably lead to a future earnings shortfall when customers could no longer be induced, through price discounts and other concessions, to accept additional inventory.  In the first quarter of 1998 the company faced a looming earnings shortfall, as reports to members of senior management showed customers holding as much as 80 weeks of inventory of specific products.  Moreover, members of senior management,   including Respondent, were informed of projected earnings shortfalls for the quarter.  
+
+  Against this background, members of Sunbeam management negotiated to purchase Coleman, First Alert, and Signature Brands.  To conclude these acquisitions, however, Sunbeam needed to raise $700 million through a private offering of Zero Coupon Bond and arrange a $1.7 billion revolving credit facility.  Indications of problems with Sunbeam's financial condition and results of operations would have jeopardized these transactions.  
+
+  During this period, members of Sunbeam senior management caused to be issued several press releases that omitted any mention of the Company's acceleration of sales revenue and, therefore, presented a misleading picture of the Company's true situation.  First, on March 19, 1998, the Company issued a press release, prompted by concerns of the Company's underwriters about the Company's quarterly sales to date, stating:   
+
+    [It] is possible that [Sunbeam's] net sales for the first quarter of 1998 may be lower than the range of Wall Street analysts' estimates for $285 million to $295 million, but net sales are expected to exceed 1997 first quarter net sales of $253.4 million....  The shortfall from analysts' estimates, if any, would be due to changes in inventory management and order patterns at certain of the Company's major retail customers.   
+
+  Although this release, which Respondent participated in drafting, went beyond the Company's previous public disclosure, it nevertheless was materially misleading in that it implied that Sunbeam's lower sales stemmed from a generalized effort among retailers to reduce inventory levels, rather than from Sunbeam's 1997 acceleration of sales revenue.  In addition, information available to Sunbeam management did not provide any basis for projecting net sales in excess of those achieved in the first quarter of 1997.  The release also made no mention of expected deterioration in earnings stemming from certain non-recurring increases in the first-quarter 1998 costs.  The March 19 press release was included in the final version of the offering memorandum for Sunbeam's $700 million zero coupon bond offering.  
+
+   The April 3 Press Release 
+
+  By the first week in April, Sunbeam could not longer plausibly contend that its results for the first quarter would reach the level it had predicted in its March 19 press release.  On April 3, 1998, Sunbeam issued a release, which Respondent assisted in drafting, announcing that Sunbeam expected to show a loss for the quarter. The release attributed the earnings shortfall, in part, to a decline in sales resulting from customers "continuing to manage down their inventories."  Thus Sunbeam again failed to disclose the first quarter repercussions of Sunbeam's 1997 acceleration of sales revenue.  In this release, Sunbeam also failed to disclose that its earnings shortfall for the quarter would have been greater had it not pulled forward additional  revenue in the first quarter of 1998.  Moreover, the statement in the press release that Sunbeam believed "until the very end of the quarter" that it would exceed results from the first quarter of 1997 was without any basis in fact, given the reports of deteriorating sales provided to members of senior management, including Respondent, throughout the quarter. 
+
+      The May 11, 1998, Earnings Release  
+
+ On May 11, 1998, Sunbeam issued its first quarter 1998 earnings release.  The release, which Respondent participated in drafting, disclosed a loss of 52¢ per share for the quarter, compared to earnings of 8¢ for the same quarter of the prior year.  The release attributed the earnings shortfall to "lower price realization and unit volume declines."  Again there was no mention of the negative effect on the first quarter's results of the Company's 1997 acceleration of sales revenue, or the positive effect of its first quarter 1998 acceleration of sales revenue and its implications for future period results of operations.  4    Further, the Company predicted $1 earnings per share for the full year, and promised annual growth in revenues and operating margins of 10-12% and 15-18%, respectively.  On the basis of information provided to him, Respondent knew or should have known that the above statements in the May 11 release were false and misleading. 
+
+  VIOLATIONS  
+
+       Violations of Section 17(a)(3) of the Securities Act . 
+
+    Section 17(a)(3) of the Securities Act proscribes "any transaction, practice, or course of business, which operates or would operate as a fraud or deceit...", in the offer or sale of securities.  A violation of this section may be established by a showing of negligence.   Aaron v. SEC , 448 U.S. 680, 697 (1980);  SEC v. Hughes Capital Corp ., 124 F.3d 449, 453-54 (3d Cir. 1997).  When Respondent participated in the drafting of press releases that misleadingly characterized the Company's results of operations, as described above, he violated Section 17(a)(3) of the Securities Act. 
+
+  FINDINGS  
+
+   Based upon the foregoing, the Commission finds that Respondent violated Section 17(a)(3) of the Securities Act. 
+
+  ORDER  
+
+   In view of the foregoing, the Commission deems it appropriate to accept the Respondent's Offer of Settlement.
+
+    Accordingly, IT IS HEREBY ORDERED, pursuant to Section 8A of the Securities Act, that David C. Fannin cease and desist from committing or causing any violations, and any future violations, of Section 17(a)(3) of the Securities Act. 
+
+   By the Commission.
+
+                    Jonathan G. Katz
+
+                   Secretary 
+  Footnotes  
+   1     The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding. 
+
+
+
+    2     See   In the Matter of Sunbeam Corporation , Securities Act Release No. 7976; Accounting and Auditing Enforcement Release No. 1393 (May 15, 2001); and   SEC v. Albert J. Dunlap, et al ., Litigation Release No. 17001 (May 15, 2001). 
+
+   3     This practice is sometimes referred to as "channel stuffing" and denotes the pulling forward of revenue from future fiscal periods by inducing customers -- through price discounts, extended payment terms or other concessions -- to submit purchase orders in advance of when they would otherwise do so.  Material undisclosed channel stuffing may cause a company's reported results of operations to be misleading. 
+
+   4     In fact, Sunbeam's sales declined drastically in the following quarter.  Sunbeam is presently in a reorganization proceeding under Chapter 11 of the U.S. Bankruptcy Code.     
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diff --git a/raw/aaer/2001/AAER-1399.txt b/raw/aaer/2001/AAER-1399.txt
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+              Prime Capital Corporation
+           
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+        Prime Capital Corporation
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+ Securities Exchange Act of 1934
+ Release No. 44346 / May 24, 2001
+  Accounting and Auditing Enforcement Release No. 1399 / May 24, 2001
+  Administrative Proceeding
+ File No. 3-10490
+  
+       In the Matter of
+
+  PRIME CAPITAL CORPORATION,
+  Respondent. 
+    
+  : : : : : : :   
+  ORDER INSTITUTING PROCEEDINGS, 
+MAKING FINDINGS AND REVOKING 
+REGISTRATION OF COMMON STOCK  
+PURSUANT TO SECTION 12(j) OF THE  
+SECURITIES EXCHANGE ACT OF 1934      I.
+
+  The Commission deems it appropriate for the protection of investors that proceedings be, and hereby are, instituted pursuant to Section 12(j) of the Securities Exchange Act of 1934 ("Exchange Act") against Prime Capital Corporation ("Prime Capital"), a corporation whose stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act, to determine whether it is necessary and appropriate for the protection of investors to revoke the registration of Prime Capital's common stock for failure to file timely and in proper form Annual and Quarterly reports of Prime Capital as required by Section 13(a) of the Exchange Act and the rules and regulations thereunder.
+
+  II.
+
+  In anticipation of these administrative proceedings, Prime Capital has submitted an Offer of Settlement, which the Commission has determined to accept.  Solely for the purposes of this proceeding and any other proceeding brought by or on behalf of the Commission or to which the Commission is a party, Prime Capital admits the jurisdiction of the Commission over this proceeding and the findings of the Commission as set forth in Section III of this Order Instituting Proceedings, Making Findings, and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of the 1934 ("Order"), and consents to the entry of this Order.
+
+  III.
+
+  Based on the foregoing, the Commission finds that:
+
+  The common stock of Prime Capital is registered pursuant to Section 12(g) of the Exchange Act and has been registered since at least August 19, 1986.
+
+  At all relevant times herein, Prime Capital was required, pursuant to Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder, to file timely and in proper form, its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q.  Prime Capital has failed to file such required reports since at least the year ended December 31, 1999.  The last filing with the Commission of any kind made by Prime Capital was a Form 8-K filed on September 15, 2000.  As a result of the foregoing, Prime Capital failed to comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder. 
+
+    In or about July 2000, Prime Capital transferred all of its assets for the benefit of creditors in lieu of a bankruptcy petition.  On or about September 15, 2000, all of the officers and directors of Prime Capital resigned their posts.  Since that time, Prime Capital had no operations, assets or employees.
+
+  Notwithstanding the foregoing, Prime Capital's stock is still listed in the "Pink Sheets" published by the National Quotations Bureau, Inc. and is still traded in the over the counter market.  As of February 26, 2001, Prime Capital stock was quoted at $0.004 per share.  
+
+  IV.
+
+  Section 12(j) of the Exchange Act provides as follows:
+
+    The Commission is authorized, by order, as it deems necessary or appropriate for the protection of investors to deny, to suspend the effective date of, to suspend for a period not exceeding twelve months, or to revoke the registration of a security, if the Commission finds, on the record after notice and opportunity for hearing, that the issuer of such security has failed to comply with any provision of this title or the rules and regulations thereunder. No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked pursuant to the preceding sentence.
+
+  In view of the foregoing, it is necessary and appropriate for the protection of investors to revoke the registration of the common stock of Prime Capital pursuant to Section 12(j) of the Exchange Act.
+
+  ACCORDINGLY, IT IS ORDERED that the registration of the common stock of Prime Capital Corporation be, and it hereby is, revoked pursuant to Section 12(j) of the Exchange Act.  
+
+  By the Commission.  
+
+                Jonathan G. Katz
+               Secretary
+  
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diff --git a/raw/aaer/2001/AAER-1401.txt b/raw/aaer/2001/AAER-1401.txt
new file mode 100644
index 0000000000000000000000000000000000000000..e889a7dd114823fb612b9a1f9738abbf7f80afcd
--- /dev/null
+++ b/raw/aaer/2001/AAER-1401.txt
@@ -0,0 +1,1444 @@
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+              Am-Pac International, Inc.
+           
+     
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+   
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+      
+             
+        Am-Pac International, Inc.
+       
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+                        
+              UNITED STATES OF AMERICA  Before the  SECURITIES AND EXCHANGE 
+
+      COMMISSION 
+
+      
+
+
+
+ Securities Exchange Act of 1934
+
+ Release No.  44389 / June 5, 2001 
+
+ Accounting and Auditing Enforcement
+
+ Release No. 1401 / June 5, 2001 
+
+ Administrative Proceeding
+
+ File No.  3-10503 
+
+ In the Matter of Am-Pac International, Inc. 
+
+   On June 5, 2001, the Commission issued an Order Instituting Public Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934 against Am-Pac International, Inc.  In the Order, the Division of Enforcement ("Division") alleges that Am-Pac's annual reports on Forms 10-KSB for the six-month transition period ended December 31, 1996, and for 1997, were materially false and misleading because they failed to disclose that Am-Pac's auditors lacked professional independence and that Jeffrey D. Martin was an Am-Pac principal and control person.  It is also alleged that Am-Pac engaged in a sham sale-leaseback transaction in which its principals, Thomas L. Tedrow and Martin, "sold" certain real property Am-Pac owned to themselves at an inflated price and "leased" it back, then recognized a material gain on the transaction.  The Division alleges that Am-Pac touted the gain in a press release and in reports with the Commission for the 1997 second and third quarter.  The Division further alleges that Am-Pac has failed to file any quarterly or annual reports since the quarter ended September 30, 1998, and its quarterly reports for the second and third quarter of 1997 and 1998 were filed late. 
+
+   As a result of the foregoing, the Division alleges that Am-Pac failed to comply with Sections 10(b), 13(a) and 13(b)(2)(A) of the Exchange Act, and Rules 10b-5, 13a-1 and 13a-13 thereunder. 
+
+   A hearing before an administrative law judge will be scheduled to determine whether the allegations against Am-Pac are true and, if so, to determine whether the registration pursuant to Section 12(g) of the Exchange Act of the common stock of Am-Pac should be revoked.   
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diff --git a/raw/aaer/2001/AAER-1403.txt b/raw/aaer/2001/AAER-1403.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ecfb323b39fdc79bdf1796fd55f85677131eb065
--- /dev/null
+++ b/raw/aaer/2001/AAER-1403.txt
@@ -0,0 +1,1378 @@
+
+
+ 
+ 
+   
+     
+ 
+ 
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+     SEC.gov | Am-Pac International, Inc. 
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+              Am-Pac International, Inc.
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+        Am-Pac International, Inc.
+       
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+              SECURITIES AND EXCHANGE COMMISSION 
+
+
+
+ Litigation Release No.  17024 / June 5, 2001   
+
+ Accounting and Auditing Enforcement Release No. 1403 / June 5, 2001 
+
+ SECURITIES AND EXCHANGE COMMISSION v. AM-PAC INTERNATIONAL, INC., THOMAS L. TEDROW AND JEFFREY D. MARTIN,
+
+  U.S. District Court for the District of Columbia, 
+
+ Civil Action Number 01-1222 (CKK) (June 5, 2001) (D.D.C.) 
+
+ SEC CHARGES AM-PAC INTERNATIONAL, INC., THOMAS L. TEDROW AND JEFFREY D. MARTIN WITH INDEPENDENCE AND OTHER ACCOUNTING VIOLATIONS; PROCEEDING INSTITUTED TO DEREGISTER AM-PAC'S STOCK  
+
+   The Securities and Exchange Commission today filed a Complaint in the United States District Court for the District of Columbia against Am-Pac International, Inc. ("Am-Pac"), a Nevada corporation headquartered in Hong Kong, Thomas L. Tedrow ("Tedrow"), 50, the former president of Am-Pac, of Winter Park, Florida, and Jeffrey D. Martin ("Martin"), age 41, a former stockbroker from Orlando, Florida.   
+
+   The Complaint alleges the following: 
+
+   Am-Pac's annual reports for the transition period July 1, 1996 to December 31, 1996, and for 1997, were materially false and misleading because they failed to disclose that the financial statements they contained were not audited by independent accountants.  Am-Pac's auditors lacked independence because they maintained certain of Am-Pac's books and records, generated Am-Pac's financial statements, then audited their own work.  Am-Pac's annual reports also failed to disclose Martin's control-person status. 
+
+   Am-Pac's quarterly reports for the quarters ended June 30, and September 30, 1997, also were false because they included a gain from a sham sale-leaseback transaction.  Am-Pac purportedly "sold" a tavern located in Orlando, Florida known as "Headlightz," to an entity owned by Tedrow and Martin at an inflated price and "leased" it back.  Am-Pac touted the gain in a press release and Commission filings. 
+
+   Before they caused Am-Pac to file the false quarterly reports, Tedrow and Martin were warned by an accountant that it would be inappropriate to recognize any gain on the transaction.  Attorneys representing Am-Pac likewise told Tedrow that gain recognition would be improper.  However, Tedrow and Martin disregarded this and caused the false quarterly reports to be filed. 
+
+   In the month after August 21, 1997, when Am-Pac issued its press release announcing second quarter results, Martin on his own behalf, and on behalf of an entity whose trading he controlled, sold 12,300 shares of Am-Pac for $40,069.50.  He and the entity thereby avoided losses of $18,544.50. 
+
+   Tedrow and Martin, without admitting or denying the allegations contained in the Complaint, consented to the entry of final judgments enjoining them from future violations of Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 13b2-1 thereunder, and aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act.  Additionally, Martin consented to an injunction against future violations of Section 17(a) of the Securities Act of 1933, and to a five-year officer and director bar. Tedrow agreed to pay a civil penalty of $15,000, and Martin agreed to disgorge $18,544.50, pay prejudgment interest of $6,065.38, and to pay a penalty of $18,544.50, for a total payment of $43,154.38. 
+
+   In a related matter, the Commission instituted administrative proceedings against Am-Pac to determine if the registration of its stock should be revoked.  (File No. 3-10503)  
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diff --git a/raw/aaer/2001/AAER-1405.txt b/raw/aaer/2001/AAER-1405.txt
new file mode 100644
index 0000000000000000000000000000000000000000..e8230e4c998187005b552c4c28699d01d69500e7
--- /dev/null
+++ b/raw/aaer/2001/AAER-1405.txt
@@ -0,0 +1,1743 @@
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+ SECURITIES EXCHANGE ACT OF 1934
+ Release No. 44444 / June 19, 2001
+  ACCOUNTING AND AUDITING ENFORCEMENT
+ Release No.  1405 / June 19, 2001
+  ADMINISTRATIVE PROCEEDING 
+ File No.  3-10513         
+  
+      In the Matter of 
+  ARTHUR ANDERSEN LLP
+                         Respondent. 
+    
+  :
+ :
+ :
+ :
+ :
+ :
+ :
+ :
+  
+  ORDER INSTITUTING PUBLIC  ADMINISTRATIVE PROCEEDINGS, MAKING  FINDINGS AND IMPOSING REMEDIAL  SANCTIONS PURSUANT TO RULE 102(e) OF  THE COMMISSION'S RULES OF PRACTICE  
+     I. 
+
+  The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Arthur Andersen LLP ("Andersen," the "Firm" or "Respondent") pursuant to paragraphs (1) and (3) of Rule 102(e) of the Commission's Rules of Practice [17 C.F.R. § 201.102(e)(1) and (3)] ("Rule 102(e)").  1     II. 
+
+  In anticipation of the institution of these administrative proceedings, Respondent has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept.  Solely for the purpose of these proceedings, and any other proceeding brought by or on behalf of the Commission or in which the Commission is a party, and prior to a hearing and without admitting or denying the Commission's findings contained herein, except for the jurisdiction of the Commission over it and over the subject matter of these proceedings, which Respondent admits, Respondent consents to the entry of the findings and the imposition of the remedial sanctions set forth in this Order Instituting Public Administrative Proceedings, Making Findings, and Imposing Remedial Sanctions Pursuant to Rule 102(e) of the Commission's Rules of Practice ("Order").
+
+               III. 
+
+      The Commission makes the following findings:  2     A.   SUMMARY  
+
+  This action arises out of Andersen's issuance of materially false and misleading audit reports on Waste Management, Inc.'s ("Waste Management" or "Company") financial statements for the period 1993 through 1996.  During this period, the Company engaged Andersen to audit its financial statements included in its Annual Reports on Form 10-K filed with the Commission pursuant to the Securities Exchange Act of 1934 ("Exchange Act").  For each year 1993 through 1996, Andersen issued an audit report on Waste Management's financial statements in which it stated that the Company's financial statements were presented fairly, in all material respects, in conformity with generally accepted accounting principles ("GAAP") and that Andersen had conducted its audit of those financial statements in accordance with generally accepted auditing standards ("GAAS"). Andersen's representations were materially false and misleading.
+
+  Waste Management's financial statements were not presented fairly, in all material respects, in conformity with GAAP for 1993 through 1996.  The Company used improper accounting to inflate its operating income and other measures of success, primarily by deferring the recognition of current period operating expenses into the future and by netting one-time gains against current and prior period misstatements and current period operating expenses.  For each year 1993 through 1996, Andersen, as a result of the conduct of certain of its partners as described herein, knew or was reckless in not knowing that the Company's financial statements were not presented fairly, in all material respects, in conformity with GAAP but nonetheless approved the issuance of an unqualified audit report on the financial statements each year.  Six Andersen partners were involved, at various times during the relevant period, in the issuance of unqualified audit reports on Waste Management's annual financial statements.  Those partners were:  Robert E. Allgyer ("Allgyer"), the engagement partner; Edward G. Maier ("Maier"), the concurring partner and the risk management partner for the Firm's Chicago office; Walter Cercavschi ("Cercavschi"), originally a manager and, as of September 1, 1994, an audit partner on the engagement, (Allgyer, Maier, and Cercavschi are hereinafter collectively referred to as the "Engagement Partners"); Robert G. Kutsenda ("Kutsenda"), the Practice Director for Andersen's Central Region  3   ("Practice Director");  4   the Managing Partner of the Firm ("Managing Partner") and the advisory partner to the engagement team; and the Audit Division Head for the Chicago office ("Audit Division Head") (Kutsenda, the Managing Partner, and the Audit Division Head are hereinafter collectively referred to as the "Consulted Partners").  5    In February 1998, Waste Management announced that it was restating its financial statements for the five-year period 1992 through 1996 and the first three quarters of 1997 (the "Restatement").  To date, the Restatement is the largest in the Commission's history.  In the Restatement, the Company admitted that through 1996 it had materially overstated 
+
+  its reported pre-tax earnings  6   by $1.43 billion and that it had understated certain elements of its tax expense by $178 million as follows:  7        Vehicle, equipment and container depreciation expense   $ 509
+    Capitalized interest    192
+    Environmental and closure/post-closure liabilities    173
+    Purchase accounting related to remediation reserves    128
+    Asset impairment losses    214
+    Software impairment reversal   (85)
+    Other       301 
+         Pre-tax total   $  1,432 
+     
+    Income tax expense restatement  8     $     178     Andersen audited and issued an unqualified audit report on each of Waste Management's original financial statements and on the financial statements in the Restatement.  By issuing an unqualified audit report on the financial statements in the Restatement, Andersen acknowledged that the Company's original financial statements for the periods 1992 through 1996 were materially misstated and that its prior unqualified audit reports on those financial statements should not be relied upon.  9    In the Restatement, the Company admitted that it had overstated its net after tax income as follows:
+  
+     Year Ending  
+ Originally Reported ( in thousands ) 
+ As Restated ( in thousands ) 
+  % Overstated     12/31/92 
+ $850,036 
+ $739,686 
+ 14.9%    12/31/93 
+ $452,776 
+ $288,707 
+ 56.8%    12/31/94 
+ $784,381 
+ $627,508 
+ 25.0%    12/31/95 
+ $603,899 
+ $340,097 
+ 77.6%    12/31/96 
+ $192,085 
+ $(39,307) 
+ 100+%    The Andersen engagement teams that performed audits of the Company's financial statements in the late 1980s first discovered several of the accounting practices resulting in certain of these misstatements.  In the course of its original audits for 1993 through 1996, the engagement team had identified and documented numerous accounting issues underlying misstatements that the Restatement ultimately addressed, and had brought certain of those issues to the attention of the Consulted Partners.  Because Andersen failed to ensure that all known misstatements were quantified and all likely misstatements were estimated, Andersen knew or was reckless in not knowing that the audits of the financial statements on which the Firm issued unqualified audit reports during those years were not conducted in accordance with GAAS.  
+
+  As a result of the conduct of its partners, as described herein, Andersen knew or was reckless in not knowing that the unqualified audit reports that it had issued were materially false and misleading because the audits did not conform with GAAS and the financial statements did not conform with GAAP.  Andersen, thereby engaged in improper professional conduct within the meaning of Rule 102(e).
+
+       B.  RESPONDENT  
+
+    Arthur Andersen LLP   is a national public accounting firm and, during the relevant period, maintained a principal office in Chicago, Illinois.
+
+       C.  ISSUER  
+
+    Waste Management, Inc.   was a Delaware corporation with its principal place of business in Oak Brook, Illinois.  Through its subsidiaries, Waste Management provided comprehensive solid and hazardous waste services, energy recovery services, and environmental technologies, engineering and consulting services.  10    On July 16, 1998, Waste Management merged with USA Waste Services, Inc.  The newly formed company retained the Waste Management name.  11    At all times pertinent to the period covered by this Order, the common stock of Waste Management was registered with the Commission pursuant to Section 12(b) of the Exchange Act and traded on the New York Stock Exchange.
+
+     D.  FACTS  
+
+         1.  Background  
+
+  Andersen audited Waste Management's annual financial statements since before Waste Management became a public company in 1971.  Andersen regarded Waste Management as a "crown jewel" client.  Until 1997, every chief financial officer ("CFO") and chief accounting officer ("CAO") in Waste Management's history as a public company had previously worked as an auditor at Andersen.  12    During the 1990s, approximately 14 former Andersen employees worked for Waste Management, most often in key financial and accounting positions.  13    As early as 1988, members of Andersen's audit engagement team recognized that Waste Management employed "aggressive" accounting practices to enhance its earnings.  In fact, certain of these practices violated GAAP.  They included, among other things, Waste Management's repeated fourth quarter adjustments to reduce depreciation expense on its vehicles, equipment and containers cumulatively from the beginning of the year.  Over time, the Waste Management engagement team identified other non-GAAP accounting practices.  These practices included, among other things, the Company's adoption of a non-GAAP method of capitalizing interest on landfill development costs, its failure properly to accrue for its tax and self-insurance expenses, its improper use of purchase accounting to increase its environmental remediation reserves (liabilities), its improper charges of operating expenses to the environmental remediation reserves (liabilities), and its refusal to write-off permitting and/or project costs on impaired or abandoned landfills.  These accounting practices together increased reported operating income primarily by understating operating expenses.  In most instances, the Company deferred recognition of current operating expenses to future periods in order to inflate its current period income.  Andersen's audit engagement teams identified and documented each of these practices at various times between 1989 and 1992.
+
+  In 1991, Andersen assigned Allgyer to become the audit engagement partner for the Waste Management engagement.  Cercavschi, who had been on the Waste Management engagement team since at least as early as 1988, remained as the senior manager and continued on the engagement after he became a partner in 1994.  In 1993, Maier became the concurring partner on the engagement.
+
+  Allgyer became a partner at Andersen in 1976, and thereafter served as the engagement partner on the audits of several large public companies.  Between 1988 and the time he became the engagement partner on the Waste Management engagement in 1991, Allgyer had no public company engagement partner responsibilities, though he continued to serve as the advisory partner on several large public engagements during this period and thereafter.  Andersen regarded Allgyer as one of its top "client service" partners.  Andersen selected Allgyer to become the engagement partner because, among other things, Allgyer had "extensive experience in Europe" and demonstrated a "devotion to client service" and had a "personal style that . . . fit well with the Waste Management officers."  During this time (and continuing throughout his tenure as engagement partner for Waste Management), Allgyer held the title of "Partner in Charge of Client Service" for Andersen's Chicago office and served as "marketing director."  In this position, Allgyer coordinated the marketing efforts of Andersen's entire Chicago office including, among other things, cross-selling non-attest services to audit clients.
+
+  Shortly after Allgyer's appointment as engagement partner, Waste Management capped Andersen's corporate audit fees at the prior year's level but allowed the Firm to earn additional fees for "special work."  As reported to the audit committee, between 1991 and 1997, Andersen billed Waste Management corporate headquarters approximately $7.5 million in audit fees.  14    Over this seven-year period, while Andersen's corporate audit fees remained capped, Andersen also billed Waste Management corporate headquarters $11.8 million in other fees, much of which related to tax, attest work unrelated to financial statement audits or reviews, regulatory issues, and consulting services.  15    A separate but related entity, Andersen Consulting, also billed Waste Management corporate headquarters approximately $6 million in additional non-audit fees.  16    In setting Allgyer's compensation, Andersen took into account, among other things, the Firm's billings to the Company for audit and non-audit services.  17    Earnings growth became more difficult for Waste Management in the late 1980s and early 1990s.  In quarterly reviews, the engagement team observed that the Company had made adjustments to certain reserves (liabilities) by "borrowing" amounts from future quarters or by making unsupported and undisclosed changes in estimates to reduce operating expenses.  In 1993, the Audit Division Head determined that Waste Management was a "high risk client."  An unsigned report generated by Andersen's WinSMART system, a computerized risk management classification program using data input by the engagement team, classified Waste Management as a "high risk client" and indicated, among other things, that Waste Management "actively managed reported results," had a "history of making significant fourth quarter adjustments" to its financial statements, and was in an industry that required "highly judgmental accounting estimates or measurements."  Andersen's Chicago office placed the Company on its "monitored client list" - a list that it used to monitor clients that posed a significant audit risk to the Firm.
+
+         2.  The 1993 Audit  
+
+  Against this background, in 1993 and early 1994, Andersen audited Waste Management's 1993 financial statements.  By February 1, 1994, the engagement team quantified current and prior period misstatements totaling $128 million, which, if recorded, would have reduced net income before special items by 12%.  The engagement team prepared Proposed Adjusting Journal Entries  18   ("PAJEs") in that amount for the Company to record in 1993.  19    The engagement team also identified accounting practices that gave rise to other known and likely misstatements involving understatements of operating expenses for which it did not prepare PAJEs.  20    The engagement team informed Maier of the PAJEs and accounting practices giving rise to the other known and likely misstatements.  21    The Company refused to record the PAJEs or to correct the accounting practices giving rise to the PAJEs and other misstatements and likely misstatements.
+
+  Andersen's Audit Objectives and Procedures Manual (the "AOP Manual") required that Allgyer consult with partners having firmwide responsibilities when cumulative PAJEs exceeded 8% of net income from continuing operations.  As a result, on February 1, 1994, Allgyer and Maier consulted with the Practice Director  22   and the Audit Division Head.  23    These partners reviewed and discussed the unrecorded PAJEs and what the engagement team identified as "continuing audit issues."  24    They determined that Andersen would nonetheless issue an unqualified audit report on Waste Management's 1993 financial statements.  Applying an analytical procedure for evaluating the materiality of audit findings referred to as the "roll-forward" method, these partners determined that, because the majority of PAJEs concerned prior period misstatements, the impact of the PAJEs relating to current period misstatements on the Company's 1993 income statement was not material.  25    They instructed Allgyer to inform the Company that Andersen would issue an unqualified audit report.  In addition, they instructed Allgyer to emphasize that Andersen expected the Company to change its accounting practices and   to reduce the cumulative amount of the PAJEs in the future.  26    On February 3, 1994, Allgyer conferred with the Managing Partner of the Firm who, as noted above, also served as the advisory partner assigned to the Waste Management engagement.  27    They reviewed the PAJEs and the "continuing audit issues," and the Managing Partner concurred in the decision to issue an unqualified audit report on the Company's 1993 financial statements.  The Managing Partner further concurred in the decision that Allgyer should discuss with the Company changing its accounting practices and reducing the cumulative amount of the PAJEs in the future.
+
+  Following his consultations, Allgyer approached Waste Management and proposed a plan - in the form of a "Summary of Action Steps ("Action Steps") - to reduce, going forward, the cumulative amount of the PAJEs and to change, among other things, the accounting practices that gave rise to the PAJEs and to the other known and likely misstatements.  For each accounting issue, the Action Steps identified the minimum steps Waste Management "must do" to correct the problem while also proposing two additional approaches - "reasonable" and "conservative" - to which the Company should aspire.  The "must do" column specified the steps that the Company must do to write off the cumulative amount of the PAJEs over time - typically between five and seven years - and to change certain, but not all, of the accounting practices underlying the PAJEs and the other known and likely misstatements.
+
+  The accounting issues for which the Action Steps provided "must do" corrective steps were as follows:  Self-insurance reserve; Closure/Post-closure reserve; Deferred Project Costs; Unamortized Land (NRV); Deferred Systems Costs; Income Tax Reserve; Environmental Reserve; Depreciation/Salvage Value; Landfill Capitalized Interest; and Discount Rates.  28    This list included items that gave rise to PAJEs and other known and likely misstatements (although none of these items were specifically identified as such).
+
+  Prior to the Company's public announcement of its 1993 earnings, the Company's CEO agreed to the terms of the Action Steps.  Allgyer then reviewed the Action Steps with Waste Management's CFO and CAO, both of whom (together with Allgyer) signed the Action Steps and initialed certain changes they had negotiated, including an extension of time to write off one misstatement that had been quantified as a PAJE.  Allgyer then met with the Company's President and separately with its General Counsel to discuss Andersen's PAJEs and the Company's agreement to the Action Steps.
+
+  At Allgyer's direction, Cercavschi prepared a more detailed memorandum on February 11, 1994 (the "February 11th Memorandum"), memorializing their discussions with senior Company officials.  The February 11th Memorandum discussed the PAJEs, certain of the other known and likely misstatements (though not identified as such), and various changes in estimate that contributed $100 million ($50 million of which resulted from reductions to the Company's depreciation expense and unsupported increases to salvage values) to earnings in 1993.  The February 11th Memorandum also specifically discussed the Action Steps and described them as the "minimum changes we have concluded are necessary for WMX to implement immediately" and concluded that the Company's compliance with the "must do" items "brings the Company to a minimum acceptable level of accounting . . . ."  Many of these "must do" items did not require immediate or complete correction of the misstatement or change of the accounting practice at issue but allowed Waste Management several years to correct the misstatement or to change the practice.  The February l1th Memorandum noted that Allgyer would discuss the Action Steps and the other issues he had raised in the memorandum with the Company's audit committee.
+
+  Andersen's audit report on the Company's 1993 financial statements is dated February 16, 1994.  The engagement team prepared a February 16, 1994 Final Engagement Memorandum, which described the Action Steps as an "action plan" that was "designed to improve the client's accounting methods" that "should result in more conservative accounting practices and lessen the amount of audit adjustments required in future audits."  The memorandum further noted that the Company "has   agreed to implement the `must do' action steps in 1994."
+
+  On February 21, 1994, Allgyer distributed the February 11th Memorandum and its attachments, including the signed Action Steps, to Maier and others.  On March 14, 1994, Allgyer met with the Waste Management audit committee to review the results of the 1993 audit.  The Office Managing Partner for Andersen's Chicago Office accompanied Allgyer to the meeting.  Allgyer reported to the committee the amount of the passed adjustments and that discussions among senior management and Andersen had resulted in a "plan" to reduce the shortfalls over the next several years in a manner satisfactory to Andersen.  Allgyer did not provide a copy of the Action Steps to the audit committee.  On March 30, 1994, the Company filed with the Commission its 1993 Form 10-K enclosing Andersen's unqualified audit report.
+
+         3.  The 1994 Audit  
+
+  In 1994 and early 1995, Andersen audited Waste Management's 1994 financial statements.  During the audit, the engagement team quantified current and prior period misstatements for which it prepared PAJEs of $163 million,  29   calculated on a "pre-tax equivalent basis," which it represented was equal to 11.7% of pre-tax income before special gains and accounting changes.  30    In 1994, the Company continued to engage in the accounting practices that gave rise to the PAJEs and the other known and likely misstatements.  The engagement team informed Maier of the PAJEs and the accounting practices underlying the other known and likely misstatements (for which the engagement team did not prepare PAJEs).  The Firm's AOP Manual required Allgyer to consult with other partners.  On January 19, 1995, Allgyer, Maier, and Cercavschi and two managers met with the Practice Director and the Audit Division Head to discuss the 1994 audit.  They discussed their disappointment with the progress the Company had made to reduce the overall level of the PAJEs and questioned whether Waste Management had "taken the pill" yet.
+
+  At the meeting, the participants also discussed the Company's method of capitalizing interest on landfill development costs.  31    Andersen had previously concluded that the Company's existing methodology violated GAAP  32   and urged the Company to adopt a new one that conformed with GAAP, which the Company agreed to do in the Action Steps.  In 1994, the engagement team reviewed the Company's proposed capitalized interest methodology that the Company planned to implement in 1995, and determined that the new method conformed with GAAP.  Andersen concurred with the Company's characterization of the adoption of the new methodology as a prospective change in accounting estimate and the Company's determination to phase-in its adoption of the new methodology over a three-year period beginning in 1995.  Andersen also concurred with the Company's plan to change from a non-GAAP method to a GAAP method without any disclosure of the change in the Company's financial statements because Andersen incorrectly concluded that this involved a change in estimate that was immaterial.  The engagement team consulted with Maier, the Practice Director, and the waste industry expert in Andersen's Accounting Principles Group.  All three partners concurred in the Company's treatment of the change in methodology as a change in accounting estimate and in the Company's non-disclosure of the change in its financial statements.  33    The Practice Director further recognized that the phase-in did not conform with GAAP, but accepted it provided the amounts were not material.
+
+  In this meeting, the partners applied the roll-forward method to the 1994 PAJEs and concluded that the current period misstatements for which PAJEs had been prepared were not material.  As a result, the partners determined that Andersen would issue an unqualified audit report on the Company's 1994 financial statements.  In reaching this determination, the Engagement Partners did not seek quantification and estimation of the other known and likely misstatements (for which no PAJEs were prepared) that resulted from accounting practices previously noted in the Action Steps.  Following the meeting, Allgyer consulted with the Managing Partner who concurred in the decision to issue an unqualified audit report.  On March 13, 1995, Allgyer, Cercavschi and the Managing Partner attended the audit committee meeting to review the results of the 1994 audit.  Again, no one from Andersen provided a copy of the Action Steps to the audit committee, but during the Firm's private session with the committee, Allgyer and the Managing Partner reported the amount of the passed adjustments and complained to the committee members that management had not performed the "plan" to reduce the shortfalls and change its accounting practices as it had agreed to do in the previous year.  On March 30, 1995, the Company filed with the Commission its 1994 Form 10-K enclosing Andersen's unqualified audit report.
+
+         4.  The 1995 Audit  
+
+  During 1995, the engagement team closely monitored the Company's implementation of the Action Steps by generating quarterly scorecards reflecting the Company's progress or, as was often the case, lack of progress in changing its accounting practices.  In many instances, the Company continued to utilize accounting practices that did not conform with GAAP and did not implement the Action Steps.
+
+  On December 31, 1995, Waste Management exchanged its interest in a privately held subsidiary of ServiceMaster Master Limited Partnership ("ServiceMaster") known as Consumer Services for an interest in ServiceMaster itself, a publicly traded entity.  This transaction resulted in a $160 million gain to Waste Management.  In its 1995 financial statements, the Company used the gain to offset $160 million in unrelated operating expenses and misstatements that, in most instances, had been the subject of PAJEs in 1994 and earlier.  34    The Company offset the misstatements and expenses against the gain in Sundry Income, Net.  The amount netted represented 10% of 1995 pre-tax income before special charges.  The Company made no disclosure of the netting in the notes to its financial statements or in management's discussion and analysis ("MD&A").
+
+  Waste Management consulted Allgyer and Cercavschi with respect to the accounting treatment for the ServiceMaster transaction, and informed them of its intent to net the expenses against the gain without disclosure in the financial statements.  Allgyer and Cercavschi recognized that the Company's proposed treatment did not conform with GAAP and that "theoretically, the gain and the provisions [i.e. the current and prior period misstatements] should be reported separately in the consolidated income statement with discussion in the MD&A and footnotes."  Nevertheless, they reached a preliminary determination that the matter was not material but recognized the need to consult with Kutsenda.  Allgyer and Cercavschi consulted Kutsenda about the netting and whether Andersen would be required to qualify or withhold its audit report if the Company netted the ServiceMaster gain against the misstatements and did not disclose it.  Kutsenda concluded that, although the netting did not conform with GAAP and the netted items would not be disclosed, Andersen did not need to qualify or withhold its audit report.  He reasoned that the netting and the non-disclosure of the misstatements and the unrelated gain did not prevent the issuance of the unqualified audit report because he concluded, for various reasons, that they   were not material to the Company's 1995 financial statements taken as a whole.  In fact, these items were material.  For example, the misstatements represented 10% of pre-tax income.  Kutsenda did insist that, with respect to the gain and the charges, the Company "book [them] broad" on its general ledger, that is, record the gain and expenses to their respective categories for internal record keeping purposes, and that offsetting should only occur in the reported financial statements.  Kutsenda agreed that Andersen could issue an unqualified audit report on Waste Management's 1995 financial statements.
+
+  By netting $160 million of current and prior period misstatements against the ServiceMaster gain, the Company reduced its 1995 misstatements.  As a result, the engagement team proposed PAJEs at $67 million (on a pre-tax equivalent basis).  35    Because the aggregate PAJEs were less than 8% of net income from continuing operations, Allgyer did not consult with the Practice Director and the Audit Division Head as he had in 1993 and 1994.  Allgyer did consult, however, with Maier and the Managing Partner, both of whom, based on Kutsenda's determination with respect to the netting, concurred in the decision to issue an unqualified audit report on the Company's 1995 financial statements.  On March 11, 1996, the Managing Partner accompanied Allgyer and Cercavschi to the audit committee meeting, at which Allgyer reviewed the results of the 1995 audit, including netting, with the audit committee.  Included within the written agenda that Andersen furnished to the committee was a schedule of the misstatements which were netted against the ServiceMaster gain.  The agenda also contained a scorecard identified under the heading "1993 Agreed-Upon Action Items Still in Process of Completion" which reflected the Company's failure to implement certain of the changes called for by the Action Steps.  On March 29, 1996, the Company filed with the Commission its 1995 Form 10-K enclosing Andersen's unqualified audit report.
+
+  Several months after the completion of the 1995 audit and the Company's filing of its 1995 Form 10-K with the Commission, Andersen prepared a memorandum articulating its disagreement with the Company's use of netting gains and the lack of disclosure.  The memorandum discussed the ServiceMaster transaction of 1995 and gains from other transactions in 1996 that were netted without disclosure.  According to the memorandum, Andersen recognized that "[t]he Company has been sensitive to not use special charges [to eliminate balance sheet errors and misstatements that had accumulated in prior years] and instead has used  `other gains'  to bury charges for balance sheet clean ups."  [Emphasis in original] Andersen memorialized its "position" by stating "[w]e disagree with management's netting of the gains and charges and the lack of disclosures.  We have communicated strongly to WMX management that this is an area of SEC exposure.  We will continue to monitor this trend, and assess in all cases the impact of non-disclosure in terms of materiality to the overall financial statement presentation and effect on current year earnings."  Despite its concerns about the Company's use of netting, Andersen did not withdraw or modify its 1995 audit report or take steps to prevent the Company from continuing to use netting in 1996 to eliminate current period expenses and prior period misstatements from its balance sheet.
+
+         5.  The 1996 Audit  
+
+  In 1996, the engagement team ceased monitoring the Company's implementation of the Action Steps.  The Company continued to employ many of the non-GAAP accounting practices that it had previously used to manipulate its earnings and meet analysts' expectations.  For instance, in its second quarter 1996 review, Andersen documented what became known as the "Second Quarter Sweep."  After the field offices had closed their books, senior Company management canvassed the field controllers and requested that they identify any excess reserves (liabilities and asset valuations) that the Company could (and ultimately did) reverse into income.  36    As a result of the "sweep," on July 16, 1996, one day before it released its second quarter earnings, the Company improperly recorded a $29 million reduction of various reserve accounts (liabilities and asset valuations), which improved reported earnings of $.45 per share by approximately four cents per share.  37    In 1996 and early 1997, Andersen conducted its audit of Waste Management's 1996 financial statements.  Allgyer again served as the engagement partner for the 1996 Waste Management audit, and Cercavschi became the engagement partner for the Waste Management Groups.  During the audit, Andersen quantified current and prior period misstatements of $105 million on a pre-tax equivalent basis, which equaled 7.2% of pre-tax income from continuing operations before special charges, and prepared PAJEs in that amount.  38    Because the PAJEs fell below Andersen's 8% consultation threshold, Allgyer and Cercavschi did not consult with their senior partners.
+
+  Although Andersen disagreed with the Company's use of netting and the lack of disclosures, Waste Management continued to use netting.  In 1996, the Company offset current period expenses and prior period misstatements against a portion of the gains realized from the sale of two discontinued operations, the effect of which was to boost income from continuing operations.  The Company netted and misclassified gains and profits of approximately $85.1 million on the sales of the two subsidiaries.  The engagement team prepared a Proposed Reclassification Journal Entry ("PRJE")  39   in this amount, which, if recorded, would have further reduced pre-tax income from continuing operations before special charges by 5.9%.  40    The Company refused to record the PRJE.
+
+  In addition to its PAJEs and PRJE, the engagement team once again identified accounting practices that gave rise to additional known and likely misstatements for which it prepared no PAJEs.  In 1996, Waste Management inflated income by making unsupported changes to its salvage values, improperly accounting for insurance recoveries and incorrectly applying purchase acquisition accounting principles to its environmental remediation reserves (liabilities) in order to reduce current period operating expenses.  As a result of both not recording the PRJE and these known and likely misstatements, the Company reported operating income that was $114 million (after tax) more than its actual operating income - resulting in what the engagement team termed a "one-off" accounting problem.  41    Allgyer and Cercavschi determined that Andersen would issue an unqualified audit report on the Company's 1996 financial statements.  After conducting his concurring partner review, Maier concurred in their decision.  On March 10, 1997, Allgyer presented the results of Andersen's 1996 audit to Waste Management's audit committee.  Allgyer identified the "one-off, non-recurring income" problem and distributed an agenda in which he told the audit committee that "gains from sales of discontinued operations were improperly recorded through continuing operations" and that "the 1996 difference between reported ($857 million) and actual ($776 million) income from continuing operations of $81 million [or 16 cents a share] will have to be "replaced" through other sources in 1997."  On March 29, 1997, the Company filed with the Commission its 1996 Form 10-K enclosing Andersen's unqualified audit report.
+
+         6.  Subsequent Events  
+
+  In late 1997, after top management had departed the Company, new management instituted a review of the Company's prior period financial statements.  Based on this review, the Company determined to restate the Company's financial statements for the period 1992 through 1996 and the first three quarters of 1997.  The Company retained Andersen to audit the restated financial statements.  On February 24, 1998, Andersen issued an unqualified audit report on the restated financial statements.
+
+       E.  LEGAL CONCLUSIONS  
+
+  An auditor's "ultimate allegiance" is to the corporation's shareholders and to the investing public, not to the Company's management or to its employment relationship with the client.   United States v. Arthur Young , 465 U.S. 805, 817-818 (1984).  42    When an auditor fails to stand up to management in the face of improper accounting practices but instead issues unqualified audit reports on financial statements that it knows or is reckless in not knowing are materially misstated, the auditor betrays its allegiance to the shareholders.  This conduct elevates management's interests over those of the shareholders and, when publicly revealed, injures not only the shareholders but also the investing public's confidence in the integrity of an auditor's report and the audit process.  Ultimately, it is self-defeating for an auditor to accommodate management's immediate interest in issuing materially misstated financial statements.  Materially misstated financial statements certified by the auditor create false public perceptions of management's current performance and can create misplaced expectations of future results as well.  Such misplaced expectations increase the pressure on management to continue to engage in improper accounting practices.  Unless the auditor stands up to management as soon as it knows that management is unwilling to correct material misstatements, the auditor ultimately will find itself in an untenable position: it either must continue issuing unqualified audit reports on materially misstated financial statements and hope that its conduct will not be discovered or it must force a restatement or qualify its report and thereby subject itself to the liability that likely will result from the exposure of its role in the prior issuance of the materially misstated financial statements.
+
+  In this case, Andersen failed to stand up to management to prevent the issuance of materially misstated financial statements.  Instead, Andersen allowed the Company to establish - and then continue for many years - a series of improper accounting practices.  As a result, Andersen found itself in 1998 in the position of auditing the Restatement and issuing an unqualified audit report in which it acknowledged that the prior financial statements on which it had issued unqualified audit reports were materially misstated.  Under the circumstances set forth in this Order, the Firm must be held responsible for the acts of its partners in the years preceding the Restatement and, accordingly, must be sanctioned.
+
+         1. Andersen's 1993-96 Audit Reports Were Materially False and 
+
+              Misleading  
+
+  During the 1993-96 time period, Andersen expressed its opinion that the Company's financial statements were fairly presented in conformity with GAAP and that the Firm's audits had been conducted in accordance with GAAS.  Both representations were materially false and misleading.
+
+           a.  The Company's 1993-96 Financial Statements Were Not
+          Fairly Presented in Conformity with GAAP  
+
+  As set forth above, prior to the year-end 1997 Restatement, the Company engaged in a broad range of non-GAAP accounting practices that materially understated expenses, did not disclose misstatements by, among other things, improper netting, and overstated income and other measures of financial success.  The Company's financial statements for the period 1993 through 1996 contained numerous material misstatements that resulted from non-GAAP accounting practices that had been identified, if not quantified, during the Firm's audits, as evidenced by the Action Steps.  By issuing an unqualified audit report on the Company's Restatement, Andersen acknowledged that the Company's original financial statements had been materially false and misleading when issued.
+
+           b.  Andersen's 1993-96 Audits Were Not Performed in Accordance with GAAS  
+
+  It has long been settled that an auditor undertaking an examination of financial statements in accordance with GAAS has an affirmative obligation to plan and perform the audit so as to obtain sufficient competent evidential matter to afford a reasonable basis for the opinion on those financial statements.  Statement on Auditing Standards No. 1, AU § 150.02;  see also KMG Main Hurdman , 49 S.E.C. 668 (March 25, 1987) [Release No. 34-24257].  In  Main Hurdman , the Commission observed that:
+
+        Within the inherent limitations of the audit process, the auditor must search for adequate evidence and diligently pursue any evidence suggesting the presence of irregularities and evaluate the evidence developed with an attitude of professional skepticism.
+ 
+ In this case, Andersen, as discussed above, failed to "diligently pursue . . . evidence suggesting the presence of irregularities" before concluding that the PAJEs were not material.
+
+  As the Commission found in  Main Hurdman , the existence of possible irregularities, even if determined not to be material, "reduce[s] the margin for error and should . . . cause[] the engagement team to view [the suspect transactions] in a more skeptical light."   Id.   Where, as here, the auditor has quantified misstatements and has prepared proposed adjusting journal entries, the auditor must include in his or her analysis an "estimate of the total misstatements in the account balances or classes of transactions that he has examined."  Statement on Auditing Standards No. 47 ("SAS 47"), AU §§ 312.27 and 312.28.  43    SAS 47 provided, in pertinent part, as follows:
+
+  In evaluating whether the financial statements are presented fairly, in all material respects, in conformity with generally accepted accounting
+
+       principles, the auditor should aggregate misstatements that the entity has not corrected in a way that enables him [or her] to consider whether, in relation to individual amounts, subtotals, or totals in the financial statements, they materially misstate the financial statements taken as a whole.
+
+        The aggregation of misstatements should include the auditor's best estimate of the total misstatements in the account balances or classes of transactions that he [or she] has examined (hereafter referred to as likely misstatement), not just the amount of misstatements he specifically identifies (hereafter referred to as known misstatement) . . . . If the analytical procedure indicates that misstatement might exist, but not its approximate amount, the auditor ordinarily would have to employ other procedures to enable him [or her] to estimate the likely misstatement in the balance or class.
+  
+     SAS 47, AU § 312.32 further provides, in pertinent part, that:
+
+  If the auditor concludes that the aggregation of likely misstatements does not cause the financial statements to be materially misstated, he [or she] should recognize that they could still be materially misstated due to further misstatement remaining undetected.  As aggregate likely misstatement increases, the risk that the financial statements may be materially misstated also increases... [The auditor] can . . . reduce this risk of material misstatement by modifying the nature, timing, and extent of planned audit procedures on a continuous basis in performing the audit.
+ 
+ GAAS, therefore, does not permit an auditor to avert his or her eyes from accounting practices which he or she knows or has reason to suspect may give rise to misstatements or likely misstatements.  Before evaluating his or her audit findings for materiality, GAAS requires that the auditor estimate the "total misstatements" for the account balances and classes of transactions "that he [or she] has examined" to determine the extent of "likely misstatements."  Even if the auditor determines that the aggregate misstatements are not material to the company's financial statements, he or she must recognize that as the aggregate misstatements increase, the risk of "further misstatement remaining undetected" also increases.  Under these circumstances, the auditor must adopt appropriate audit procedures "on a continuous basis" to assure that the financial statements are free from material misstatement before issuing the audit report.
+
+  In this case, as discussed above, the PAJEs identified in connection with the Firm's 1993-96 audits did not capture the total misstatements and likely misstatements that resulted from non-GAAP accounting practices identified by the Engagement Partners prior to issuing the unqualified audit reports.  In any event, assessments of materiality should never be purely mechanical.  Quantifying, in percentage terms, the magnitude of a misstatement, regardless of size, is only the beginning of an analysis of materiality.  It cannot appropriately be used as a substitute for a full analysis of all relevant, qualitative considerations, particularly where, as here, Waste Management had been assessed as a "high risk client" and there were numerous red flags and other indicia of irregularities in the Company's financial statements.  Instead of ascribing sufficient weight to the other issues that were not listed as PAJEs and requiring additional audit procedures to determine whether there were additional misstatements in the account balances and classes of transactions that were audited, Andersen applied the "roll-forward" analysis to only those misstatements for which the engagement team listed PAJEs.
+
+  GAAS also makes clear that all auditors, not just those on the engagement team, must perform their work with due care:  "Due care imposes responsibility upon each person within an independent auditor's organization to observe the standards of field work and reporting."  AICPA, Codification on Statements of Auditing Standards, AU § 230.02.  Although not part of the engagement team, when he was consulted by Allgyer and Cercavschi, Kutsenda was required under GAAS to exercise due professional care so that an unqualified audit report was not issued on financial statements that were materially misstated.  Kutsenda knew, or should have known, that the netting of the ServiceMaster gain violated GAAP, that prior-period misstatements of which he was aware would not be disclosed to investors, that the impact of the netting on the Company's 1995 financial statements was material, and that an unqualified audit report on those financial statements was not warranted.  
+
+         2.  Andersen's Responsibility  
+
+  Through its partners, Andersen knew or was reckless in not knowing that the audit reports issued on the 1993-96 financial statements were materially false and misleading.  Andersen knew or was reckless in not knowing that (a) the Company's financial statements were not presented in conformity with GAAP and (b) the Firm's audits of those financial statements were not conducted in accordance with GAAS.  Yet, in each of those years, Andersen issued audit reports falsely representing that the financial statements and audits had satisfied the requirements of GAAP and GAAS, respectively.
+
+         3. Through Its Partners, Andersen Engaged in Improper  Professional Conduct Within the Meaning of Rule 102(e)  
+
+  Rule 102(e)(1)(ii) of the Commission's Rules of Practice, 17 C.F.R. § 201.102(e)(1)(ii), authorizes the Commission to sanction any person who is found by the Commission after notice and opportunity for hearing to have engaged in improper professional conduct.
+
+  Under principles of enterprise liability, the conduct of the partners who caused the Firm to issue the materially false and misleading audit reports is imputed to Andersen.  The circumstances of this case, including the positions within the Firm of the partners who were consulted by the engagement team, the gravity and duration of the misconduct, and the nature and magnitude of the misstatements mandate that the Firm be held responsible for the acts of its partners in causing the Firm to issue false and misleading audit reports in the Firm's name.  Accordingly, through its partners, Andersen engaged in improper professional conduct within the meaning of Rule 102(e).
+
+       4.  Settled Injunctive Action  
+
+  On June 19, 2001, the Commission filed a complaint against Andersen and others in the United States District Court for the District of Columbia.   SEC v. Arthur Andersen LLP, et al. , No. 1:01CV01348 (JR) (D.D.C.).  The Commission's complaint alleged, among other things, that (1) Andersen knowingly or recklessly issued materially false and misleading audit reports on Waste Management's financial statements for the period 1993 through 1996, and (2) as a result of this conduct, Andersen violated Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5.  On June 19, 2001 the United States District Court for the District of Columbia entered a final judgment permanently enjoining Andersen from violating Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5.  Andersen consented to the entry of the final judgment without admitting or denying the allegations of the Commission's complaint.
+
+               IV. 
+
+            ORDER IMPOSING SANCTIONS  
+
+  Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer of Settlement and accordingly,
+
+       IT IS HEREBY ORDERED,  effective immediately, that:
+
+      A. Respondent is hereby censured.
+
+              By the Commission.
+
+              Jonathan G. Katz
+             Secretary
+  
+
+
+ 
+ Footnotes 
+     1     Rule 102(e) of the Commission's Rules of Practice, 17 C.F.R. 201.102(e), provides, in pertinent part, as follows:
+
+ (1) The Commission may censure a person or deny, temporarily or permanently, the privilege of appearing or practicing before it in any way to any person who is found by the Commission after notice and opportunity for hearing in the matter: . . . 
+
+     (ii) To be lacking in character or integrity or to have engaged in unethical or improper professional conduct; 
+
+      (3)(i) The Commission, with due regard to the public interest and without preliminary hearing, may, by order . . . suspend from appearing or practicing before it any . . . accountant . . . who . . . has been by name:
+
+  (A) Permanently enjoined by any court of competent jurisdiction by reason of his or her misconduct in an action brought by the Commission, from violating or aiding and abetting the violation of any provision of the Federal securities laws (15 U.S.C. §§ 77a-80b-20) or of the rules and regulations thereunder; . . . 
+ 
+       (3)(iv) . . . A person who has consented to the entry of a permanent injunction . . . without admitting the facts set forth in the complaint shall be presumed for all purposes under this paragraph (3) to have been enjoined by reason of the misconduct alleged in the complaint.
+  
+      2     The findings herein are made pursuant to the Offer that Andersen submitted and are not binding on any other person or entity in this or any other proceeding by the Commission.
+
+      3     Andersen's Central Region included its Chicago, Omaha, Kansas City and Indianapolis offices.
+
+      4     Other conduct by Andersen and certain of its partners relating to the audits of Waste Management's financial statements for the years 1992 through 1996 is described in the Commission's Complaint in  SEC v. Arthur Andersen LLP, et al. , No. 1:01CV01348 (JR) (D.D.C.) [Release No. LR-17039] (June 19, 2001) and the Commission's Order Instituting Public Administrative Proceedings, Making Findings, and Imposing Remedial Sanctions Pursuant to Rule 102(e) of the Commission's Rules of Practice in  Robert G. Kutsenda, CPA,  [Release No. 34-44448] (June 19, 2001).
+
+      5     The engagement team also consulted with and relied upon Andersen's waste industry expert in its 
+Accounting Principles Group (a unit within Andersen available for consultation on significant accounting issues) concerning certain of the Company's accounting practices discussed herein.  This partner's duties included responding "to inquiries [from the engagement team] concerning the appropriate interpretation of accounting principles and SEC rules and regulations."
+
+      6     Additionally, Waste Management restated its financial statements for the first three quarters of 1997 to correct a $250 million overstatement of pre-tax earnings.  In the fourth quarter of 1997, Waste Management further recorded approximately $1.7 billion in impairment losses and other charges.  All amounts in this Order are pre-tax unless otherwise noted.
+
+      7     Of these amounts, $1.17 billion of the pre-tax overstatement and $130 million of the tax expense understatement related to 1992 through 1996.  In addition, approximately $260 million of the pre-tax overstatement and $48 million of the tax expense understatement related to 1991 and earlier periods.
+
+
+      8     This restatement related to the Company's understatement of its tax reserve and the overstatement of certain tax credits.  As a result of restating prior period earnings, the Company also realized a tax benefit of approximately $517 million, which was offset against the restated tax expense in the Restatement.
+
+      9     Although the Restatement covered Waste Management's annual financial statements issued for 1992 through 1996, this Order concerns the Firm's audit reports for the periods 1993 through 1996.  For the Commission's action relating to, among other things, Allgyer's conduct relating to Andersen's 1992 audit,  see   SEC v. Arthur Andersen LLP, et al. , No. 1:01CV01348 (JR) (D.D.C.) [Release No. LR-17039] (June 19 2001).
+
+      10     On May 14, 1993, the Company changed its name from "Waste Management, Inc." to "WMX Technologies, Inc."  On May 9, 1997, the Company changed its name back to "Waste Management, Inc."
+
+      11     On June 21, 2000, the Commission instituted and simultaneously settled administrative proceedings imposing a cease and desist order against the newly formed company.   See   In the Matter of Waste Management, Inc.  [Release No. 34-42968] (June 21, 2000).  The facts and circumstances giving rise to the order in that matter related to the new company's false and misleading earnings projections issued in 1999. The facts and circumstances giving rise to this Order relate solely to "old Waste Management," that is, to Waste Management as it existed prior to its merger with USA Waste Services, Inc.
+
+      12     In 1990, a former Andersen audit engagement partner for the Waste Management account became the CAO and Controller at the Company, a position that he held until mid-1997.  At the time he left Andersen, he was the head of the division within Andersen responsible for conducting Waste Management's annual audit (but was not the engagement partner).  After he left the Firm, responsibility for the audit shifted to a different division within Andersen.  Similarly, a former Andersen manager who left the Firm in 1972 served as Waste Management's CFO until 1990, and also served as a member of the Company's Board of Directors between 1981 and 1997 and as a member of the audit committee between 1993 and 1997.  Another former Andersen auditor who left the Firm in 1973 succeeded him as CFO in 1990 and served in that position until early 1997.
+
+      13     While at Andersen, most of these individuals worked in Andersen's "enterprise" group, the group responsible for auditing Waste Management's financial statements prior to 1991.  All but a few of these individuals left Andersen more than ten years before the 1993 audit commenced.
+
+      14     As used herein, "audit fees" is defined as the aggregate fees billed by Andersen for the audit of Waste Management's annual financial statements and the reviews of Waste Management's quarterly financial statements (including certain audits and quarterly reviews of Waste Management's affiliate, Chemical Waste Management).  
+
+      15     The $11.8 million in fees related to the following services:  $4.5 million for "Audit work under ERISA," "Special purpose letters (EPA)," "Franchise audits and other reports," "Registration statements and comfort letters," "International Public Offering (including tax, consulting, domestic filing requirements and financial reporting)," "SFAS 106 and 109 adoption," "Accounting research/discussions," and "Other (Audit Committee meetings)"; $1.7 million for "Tax consultation (state, expatriate, other)"; $4.5 million for various consulting services, including $450,000 for "Information systems consulting"; and $1.1 million for miscellaneous other services.
+
+      16     Of $6 million in Andersen Consulting fees, $3.7 million related to a Strategic Review that analyzed the overall business structure of the Company and ultimately made recommendations on implementing a new operating model designed to "increase shareholder value."  Allgyer was a member of the Steering Committee that oversaw the Strategic Review, and his time for these services was billed to the Company by Andersen Consulting.
+
+      17     Notes from Andersen's firmwide compensation committee reflect comments that since Allgyer "took over [Waste Management] . . . [Andersen and Andersen Consulting] have done . . . millions of [dollars of] work."  These notes also reflect that Allgyer received his greatest increase in partnership compensation units in 1996.  That increase was driven in part by the fact that Allgyer had been "aggressively recruited" by a major Chicago corporation for a Chief Operating Officer position that offered "significant . . . financial rewards."  The increase in Allgyer's compensation also was driven by Allgyer's success that year in obtaining new audit, tax and financial consulting work, expected to generate more than $1 million annually over several years, from a public agency in Chicago.
+
+      18     A proposed adjusting journal entry is an adjustment proposed by the auditor to the company during the audit which, if accepted by the company, would correct a misstatement in an account balance or class of transactions contained in the company's books and records.
+
+      19     During the audit, the PAJEs ranged between 12% and 14.11% of income after taxes but before special items.  The engagement team quantified final cumulative 1993 PAJEs which, if recorded, would have reduced income after taxes but before special items by 13%.
+
+
+      20     These unquantified misstatements included, among other things, amounts for deferred costs of impaired projects that should have been written off, land carrying values in excess of net realizable value, the Company's improper purchase acquisition accruals in connection with the establishment of environmental remediation reserves (liabilities), reversals of the environmental remediation reserves (liabilities) to income, and unsupported changes to the salvage values of the Company's waste vehicles and containers.  The engagement team also knew of the Company's capitalized interest methodology, which Andersen knew did not conform with GAAP but which it had determined was not materially inaccurate.   See   infra  note 32.   
+
+      21     Pursuant to the AOP Manual, Maier's responsibilities as concurring partner included, among other things, the duty to read the Company's financial statements; the duty to discuss with the engagement partner significant accounting, auditing or reporting issues including controversial or complex accounting matters; the duty to review certain working papers, including risk analyses, final engagement memoranda, summaries of proposed adjusting and reclassifying entries, and the audit review questionnaire and the duty to inquire concerning "uncompleted audit procedures" and "open matters, if any, that could have a material effect on the financial statements or [the Firm's] auditor's report."  In addition to these procedures, the AOP Manual provided that the concurring partner may be directed to perform "extended concurring partner review procedures on a particular high-risk engagement, such as a detailed review of selected working papers covering a sensitive audit area . . . for the purpose of evaluating the adequacy of the work performed and the documentation thereof."  As risk management partner for the Chicago office, Maier's responsibilities included, among other things, supervising the risk management processes for high-risk clients and ensuring that risk management procedures were followed, participating in client acceptance and retention decisions, ensuring that practice directors were consulted when significant accounting, auditing or reporting issues arose, consulting with engagement teams on significant accounting, auditing and reporting issues, including any outstanding issues relating to the audit and reaching agreement with the engagement team on issuance of the auditor's report.
+
+      22     Pursuant to the AOP Manual, the Practice Director was a member of the "firmwide organization" and had "firmwide responsibilities" for Andersen's Chicago, Omaha, Kansas City and Indianapolis offices.  As set forth in the AOP Manual, these responsibilities included, among other things, oversight of "quality and risk management processes," and consulting on "significant auditing, accounting, financial statement presentation and reporting problems encountered during an audit."  The AOP Manual instructed the engagement partner to include practice directors "among those consulted on significant problems," such as when "the aggregate effect of passed adjustments was greater than 8% of net income from continuing operations."
+
+
+
+      23     The Audit Division Head's responsibilities included, among other things, reviewing and approving client acceptance and retention decisions, overseeing the quality of audits, managing client risk to the Firm, approving risk assessments, implementing firm policies and procedures and responding to requests to consult on significant, accounting, auditing and reporting issues.  As the senior risk manager in the Chicago office, the Audit Division Head was responsible for ensuring that risk management procedures were followed.  The Audit Division Head delegated the risk management and consultation responsibilities to Maier but retained responsibility for ensuring that Maier complied with all procedures.
+
+      24     The agenda for the meeting listed the following items as "continuing audit issues": "Deferred costs (systems, site/cell development, project costs, deferred start-up/other)," "Environmental and closure/post-closure exposure," "Interest capitalization methodology," "Tax rate," "NRV of Land," and "Discounting rates."  The agenda did not identify these items as PAJEs or other known and likely misstatements (except for deferred costs, which was a PAJE).
+
+      25     The "roll-forward" method -- sometimes referred to as the "roll over" method -- is distinguishable from another analytical procedure for evaluating the materiality of audit findings known as the "iron curtain" method.  Using the "iron curtain" method, the auditor aggregates the total misstatements, consisting of unadjusted misstatements arising in prior periods together with misstatements arising in the current period, and compares the aggregate amount to the income statement to determine whether the income statement is materially misstated.  Andersen's AOP Manual expresses a preference for the "iron curtain" method and states that "reducing the total cumulative effect of current year passed adjustments by the amount passed in the prior year is ordinarily not acceptable when evaluating the materiality of current year passed adjustments."  The AOP Manual further notes that Statement of Financial Accounting Standards (SFAS) No. 16 requires "that adjustments for amounts relating to prior periods be charged or credited  in   their   entirety  to the current period . . . ." (Emphasis added).  During the audit of the Company's 1993 financial statements, Allgyer and Maier conferred with two of the Consulted Partners because the aggregate PAJEs exceeded 8% of net income from continuing operations.  These Consulted Partners were presented with aggregate PAJEs (both current and prior periods) of 12% and then applied the "roll-forward" method to assess the materiality of the PAJEs.  The "roll forward" method compares only the current period misstatements to the income statement.  The partners determined that the current period misstatements were not material to Waste Management's 1993 income statement.  They then compared the aggregate PAJEs (the prior and current period misstatements) to the balance sheet and determined that they were not material to that part of the financial statements.  Regardless of whether the auditor uses the "roll-forward" or "iron curtain" method, Statement on Auditing Standards 47 requires the auditor to quantify all known misstatements and to estimate likely misstatements in the account balances and classes of transactions that the auditor has examined before making a materiality decision.  Here, the additional known and likely misstatements beyond the PAJEs were not quantified, estimated, or even considered by the Engagement Partners in making their materiality decision.
+
+      26     At or shortly after this meeting, despite having learned of cumulative PAJEs of 12% of net income before special charges and other "continuing audit issues," the Audit Division Head signed, and thereby approved, a WinSMART risk assessment form setting Waste Management's risk classification at "moderate risk," in contrast to his prior view that it was a high risk client.
+
+      27     Andersen's AOP Manual advises the engagement partner that the "first source of counsel should be the local office," which "means the advisory partner (if any), the Accounting and Audit Division Head, the office managing partners and others" when significant accounting issues arise during an audit.  Pursuant to the AOP Manual, the advisory partner's responsibilities included, among other things, the duty to provide counsel and advice to the engagement partner on problems that arose during the audit, the duty to remain aware of the client's business and accounting problems and, when considered necessary or otherwise desirable, to join the engagement partner in important meetings with the board of directors, the audit committee and top management, particularly meetings that included discussion of the client's financial statements or significant accounting problems or policies and the scope of the audit and the duty to keep the partners having firmwide responsibility informed when significant problems arise in any area of the Firm's practice.  The Managing Partner of the Firm was responsible for all of the operations of Andersen.  With respect to audits, the Managing Partner was the "final arbiter of any controversy among the partners" and had the ultimate and absolute authority to prevent the Firm from issuing any audit report in the Firm's name.
+
+      28     The Action Steps also instructed the Company to defer "special gains."  In fact, the Company subsequently used one-time gains to offset, or "net," current and prior period misstatements and current period operating expenses as set forth below.  Both the deferral and the netting violate GAAP.
+
+      29     The engagement team proposed a PAJE to correct the misstatement resulting from the Company's under-accrual of its tax liability.  The engagement team grossed up the PAJE for the tax misstatement to a pre-tax equivalent and included the grossed up amount in calculating the $163 million total.    
+
+      30     The engagement team calculated that the final cumulative 1994 PAJEs (both current and prior period) equaled 13.3% of pre-tax income on a pre-tax equivalent basis.  
+
+      31     FAS 34 prohibits a company from continuing to capitalize interest on development costs once the asset becomes substantially ready for its intended use.  Since 1989, the Company had been using a method of capitalizing interest pursuant to which it continued to capitalize interest on certain development costs over the life of the landfill.
+
+      32     Andersen accepted the Company's use of a non-GAAP method because it concluded that the net impact of the method on the Company's income statement was not materially different from what the impact would have been if the Company had been using a method that Andersen believed conformed with GAAP.  Andersen accepted the Company's accounting treatment after comparing two methods of capitalizing interest - the Company's method and the method that Andersen believed conformed with GAAP  - on a few unrepresentative landfills and then accepted the results as representative of the results that would have been obtained had the Company run the comparison on all 100 or more of its landfills.  
+
+      33      In connection with its work on the Restatement, Andersen determined, pursuant to FAS 34 and APB 20, that the Company should have accounted for the change in methodology as a change in accounting principle and that it should have recorded a cumulative adjustment in the amount of $132 million as of January 1, 1995.  Although they had reached materially different conclusions in 1995, both the Practice Director and Andersen's waste industry expert concurred with Andersen's conclusions in the Restatement.
+
+      34     GAAP did not and does not allow current period operating expenses or current or prior period 
+misstatements to be offset against unrelated one-time gains.  GAAP required the Company to record its current period expenses in their proper operating expense categories and not net them against an unrelated gain in "other income and expense."  With respect to the correction of prior period misstatements, GAAP required that these misstatements, if material to the current period, be corrected in their proper expense category in the appropriate period with disclosure.
+
+      35     As it had done in the 1994 audit, the engagement team grossed up the PAJE for the tax misstatement.  During the 1995 audit, the engagement team prepared an analysis reflecting that, in the absence of the netting of certain prior and current period misstatements against the ServiceMaster gain, the Company's cumulative misstatements (on a pre-tax equivalent basis) would have been equal to 13.9% of pre-tax income before special charges.  As noted above, the netting by the Company reduced the misstatements resulting in the PAJEs to below 8% of net income from continuing operations.
+
+      36     A July 12, 1996 memorandum in Andersen's working papers notes that "[the Company] indicated that the quality of the second quarters earnings . . . was good - no adjustments had been made to create them . . . . However, [the Company] indicated that [it] was currently in the process of looking at its balance sheet for more income.  [The Company] indicated that any such adjustments would be recorded . . . in consolidation."
+
+      37      The Company recorded the reduction at the corporate level but the books in the field were never adjusted to reflect the decrease in the reserves.
+
+      38     As it had done in prior audits, the engagement team grossed up the PAJE for the tax misstatement.  
+
+      39      A proposed reclassification journal entry is a correction to an amount misclassified between line items in the financial statements.  Although a PRJE does not affect net income or total shareholders' equity, it may affect certain components of the financial statements depending on where the misclassification occurs - the statement of income, statement of cash flows, or the balance sheet.
+
+      40      In addition to misclassifying gains on the sale of discontinued operations, the Company misclassified certain items to inflate its cash flow from operations.  Andersen's working papers document $142.2 million in misclassifications of the Company's operating cash flow.  The effect of these misclassifications was to overstate cash flow from operating activities by 7%, understate cash flow from investing activity by 14% and understate cash flow from financing activities by 2%.  The engagement team incorrectly determined that these amounts were not material to the statement of cash flows.
+
+      41     The engagement team and senior management at the Company used the term "one-off" accounting generally to describe the Company's practice of making one-time adjustments benefiting reported operating income in the current period that the Company would have to "replace" in the following year in order to maintain the same level of reported earnings.
+
+      42     In  Arthur Young , the Supreme Court observed:
+
+ By certifying the public reports that collectively depict a corporation's financial status, the independent auditor assumes a  public  responsibility transcending any employment relationship with the client. The independent public accountant performing this special function owes ultimate allegiance to the corporation's creditors and stockholders, as well as to [the] investing public.
+
+     This `public watchdog' function demands that the accountant maintain total independence from the client at all times and requires complete fidelity to the public trust.
+  
+     465 U.S. at 817-818, 104 S.Ct. at 1503 (emphasis in original).
+
+       43     Citations to SAS 47 are to those provisions that were in effect during the period that the audits herein were conducted.    
+
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diff --git a/raw/aaer/2001/AAER-1412.txt b/raw/aaer/2001/AAER-1412.txt
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+              Michael J. Becker
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+              UNITED STATES OF AMERICA  Before the  SECURITIES AND EXCHANGE 
+
+      COMMISSION 
+
+      
+
+  
+
+ SECURITIES EXCHANGE ACT OF 1934
+
+ Release No. 44460 / June 21, 2001 
+
+ ACCOUNTING AND AUDITING ENFORCEMENT
+
+ Release No. 1412 / June 21, 2001 
+
+ ADMINISTRATIVE PROCEEDING
+
+ File No. 3-10520 
+ 
+     
+        
+        In the Matter of 
+         MICHAEL J. BECKER        Respondent
+             
+      
+     
+         
+     
+       : : : : : : : :   
+    
+      ORDER INSTITUTING PUBLIC  PROCEEDINGS PURSUANT TO SECTION 21C
+OF THE  SECURITIES EXCHANGE ACT OF 1934, MAKING  FINDINGS AND IMPOSING  A CEASE-AND-DESIST  ORDER     I. 
+
+   The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") be, and they hereby are, instituted against Michael J. Becker ("Becker").  Accordingly, IT IS HEREBY ORDERED that said proceedings be, and hereby are, instituted.  
+
+ II. 
+
+   In anticipation of the institution of these administrative proceedings, Respondent Becker has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept.  Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings herein, except that he admits the jurisdiction of the Commission over him and over the subject matter of these proceedings, Becker consents to the issuance by the Commission of this Order Instituting Public Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing A Cease-and-Desist Order ("Order"). 
+
+   
+
+ III. 
+
+   On the basis of this Order and of the Offer of Becker, the Commission makes the following findings  1  :   
+
+   A.   RESPONDENT  
+
+ Becker, of Marietta, Georgia, served as Vista's vice president-finance and administration from August 8, 1995 until March 8, 1996.   
+
+ B.   ISSUER INVOLVED  
+
+ Vista 2000, Inc. ("Vista"), formerly located in Roswell, Georgia, designed, developed, manufactured and marketed consumer products including trigger guards for firearms and carbon monoxide detectors for homes.  Vista's common stock, which was registered pursuant to Section 12(g) of the Exchange Act, was traded on the NASDAQ SmallCap Market system until it became listed on the NASDAQ National Market system ("NASDAQ") on February 13, 1996.  On May 31, 1996, Vista's stock was delisted from the NASDAQ. 
+
+ C.   IMPROPER ACCOUNTING AND STOCK OWNERSHIP PRACTICES  
+
+   1.   Improper Accounting Practices During Vista's 1995 Third Quarter  
+
+ On November 20, 1995, Vista filed its Form 10-QSB for the quarter-ended September 30, 1995 ("September 1995 Form 10-QSB").  The September 1995 Form 10-QSB was materially misstated because Vista failed to record two acquisitions, and certain revenues, expenses and assets in conformity with generally accepted accounting principles ("GAAP").  For example, Vista's net sales were overstated by 662%, its net income overstated by 138% and its assets overstated by 113%.  Although Becker assisted in the preparation of the September 1995 Form 10-QSB, he refused to sign the report because he did not believe the financial statements included in this report complied with GAAP.   
+
+ On or about July 31, 1995, Vista acquired Alabaster Industries, Inc. ("Alabaster").  Becker participated in the premature consolidation of the financial statements of Vista and Alabaster prior to Vista's acquisition of Alabaster on July 31, 1995.  The results of Alabaster's operations should not have been consolidated with those of Vista until July 31, 1995. As a result, Vista failed to comply with GAAP when it included approximately $2,918,384 and $1,779,425 of Alabaster's net sales and net income, respectively, in Vista's September 30, 1995 financial statements. 
+
+ On or about September 30, 1995, Vista acquired American Consumer Products, Inc. ("ACPI").  Becker participated in the premature consolidation of the financial statements of Vista and ACPI as of September 1, 1995, when he knew that Vista did not acquire ACPI until September 30, 1995.  The results of ACPI's operations should not have been consolidated with those of Vista for this quarter.  As a result, Vista failed to comply with GAAP when it included approximately $11,166,000 and $801,000 of ACPI's net sales and net income, respectively, in Vista's September 30, 1995 financial statements. 
+
+ During the quarter ended September 1995, Vista improperly recorded numerous sales in its books from the purported shipment of products by one of its subsidiaries.  Becker and Vista's then chief executive officer ("Vista's CEO") directed Vista's bookkeeper to record these shipments as sales even though the goods were not shipped until after the quarter had ended.  As a result, Vista failed to comply with GAAP when it reported approximately $604,851 and $287,304 of net sales and net income, respectively, from these transactions during this quarter.  
+
+ During the September 1995 quarter, Becker, at Vista's CEO's direction, recorded an unsubstantiated amount of cost of goods sold on the books of a Vista subsidiary without comparing this estimate to actual costs.  As a result, Vista failed to comply with GAAP when it understated its cost of goods sold by $317,547 during this quarter. 
+
+ Vista's earnings per share ("EPS") was materially overstated in its September 1995 Form 10-QSB because it was calculated using the annual weighted average number of shares outstanding.  This method did not comply with GAAP. Instead, Vista's EPS should have been calculated using the weighted average number of shares of common stock outstanding during each quarter.  ( See  APB Opinion No. 15,  Earnings per Share , ¶ 47).  Additionally, the EPS reported in the September 1995 Form 10-QSB was further materially overstated due to the misstatements of Vista's income as described above.  As a result of all of these misstatements and miscalculations, Vista's EPS was overstated by 154%.  Becker failed to take action to correct the misstated EPS even after having been alerted by Vista's counsel. 
+
+   2.   Failure to file stock ownership reports on Forms 3, 4 and 5  
+
+ Becker never filed any stock ownership reports on Forms 3, 4 or 5 with the Commission although he was obligated to do so and was aware of his responsibility to file such reports.  
+
+   D.   VIOLATIONS OF THE FEDERAL SECURITIES LAWS  
+
+ Section 10(b) of the Exchange Act and Rule 10b-5 prohibit material misrepresentations and misleading omissions in connection with the purchase or sale of securities.  To prove a violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, the Commission must prove that the defendants acted with scienter.   Aaron v. SEC , 446 U.S. 680, 691 (1980).  Scienter is a state of mind embracing intent to deceive, manipulate or defraud.   Aaron v. SEC , 446 U.S. at 685 n.5.  Reckless conduct is sufficient to establish scienter.   SEC v. Carriba Air, Inc. , 681 F.2d 1318, 1324 (11th Cir. 1982).  In the Eleventh Circuit, the scienter requirement may be satisfied by a showing of "severe recklessness."  McDonald v. Alan Bush Brokerage Company , 863 F.2d 809, 814 (11th Cir. 1989). 
+
+ To prove a violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder based on misrepresentations and misleading omissions, the Commission must prove that the subject misrepresentations or omissions were material.  SEC v. Texas Gulf Sulfur , 401 F.2d 833, 848-50 (2d Cir. 1968),  cert. denied sub nom. ,  Coates v. SEC , 394 U.S. 976 (1969).  A misrepresentation or omission is material if there is a substantial likelihood that under all the circumstances it would have assumed actual significance in the deliberations of a reasonable investor.  Basic Inc. v. Levinson , 485 U.S. 224, 232 (1988);  TSC Industries, Inc. v. Northway, Inc. , 426 U.S. 438, 449 (1976).  The magnitude of the overstatements of Vista's revenues, income, EPS and assets demonstrate that such overstatements are material.  Becker knowingly participated in the recording and reporting of certain transactions which did not conform with GAAP.  Although he did not sign the September 1995 Form 10-QSB, he assisted in its preparation and failed to halt its dissemination to the public or issue corrective disclosures to the public, thus committing violations of and causing Vista to violate Section 10(b) and Rule 10b-5.  
+
+   Section 13(a) of the Exchange Act and Rule 13a-13 thereunder require certain issuers to file with the Commission quarterly reports containing financial statements prepared in conformity with the requirements of the Commission's rules and regulations.  In addition, Rule 12b-20 under the Exchange Act requires that such reports contain, in addition to disclosures expressly required by statute and rules, such other information as is necessary to ensure that the statements made in those reports are not, under the circumstances, materially misleading.  The requirement that an issuer file reports under Section 13(a) embodies the requirement that such reports be true and correct.   SEC v. IMC International, Inc. , 384 F. Supp. 889, 893 (N.D. Texas),  aff'd , 505 F.2d 733 (5th Cir. 1974),  cert. denied sub nom. ,  Evans v. SEC , 420 U.S. 930 (1975).  Because there is no scienter element involved in these provisions,  see generally ,  SEC v. Wills , 472 F. Supp. 1250, 1268 (D.D.C. 1978), a violation occurs when a materially false statement is filed.   SEC v. Kalvex, Inc. , 425 F. Supp. 310, 316 (S.D.N.Y. 1975).  Becker caused Vista to violate Section 13(a) of the Exchange Act and Rule 13a-13 thereunder through his participation and/or acquiescence in the various misstated transactions.  
+
+ Sections 13(b)(2)(A) and (B) of the Exchange Act require reporting companies to make and keep accounting records which accurately reflect their transactions and the dispositions of their assets, and to devise and maintain internal controls sufficient to allow the preparation of financial statements in conformity with GAAP.  Following from these requirements, Section 13(b)(5) of the Exchange Act prohibits any person from knowingly circumventing or knowingly failing to implement a system of internal accounting controls, and from knowingly falsifying any book, record, or account, required under Section 13(b)(2).  Rule 13b2-1 similarly prohibits any person from directly or indirectly falsifying or causing the falsification of any books, records or accounts required by Section 13(b)(2)(A).  Becker committed violations of or caused Vista to violate these foregoing provisions through his participation and/or acquiescence in the various misstated transactions.   
+
+ In analogous situations, the Commission has found similarly situated respondents to have caused an issuer's violations.   E.g. ,  In the Matter of Raymond J. Bily , Exchange Act Rel. No. 38296 (February 18, 1997), 63 SEC Docket 2599 (chairman and CEO liable for causing company's violations who knew that the company's reports were false and that its internal accounting controls were deficient and its books and records did not fairly reflect transactions relating to contingent purchase orders);  In the Matter of Salant Corporation and Martin Tynan , Exchange Act Rel. No. 34046 (May 12, 1994), 56 SEC Docket 2046 (chief financial officer, vice president of finance and treasurer caused company to violate reporting provisions since he was aware of his company's undisclosed deteriorating financial condition);  In the Matter of P. Andrew Baker , Exchange Act Rel. No. 36260 (September 21, 1995), 60 SEC Docket 0791 (secretary of corporation caused issuer's violation by signing false periodic reports). 
+
+ Section 16(a) and Rules 16a-2 and 16a-3 of the Exchange Act requires directors and officers, and persons who own more than 10% of a registered class of a company's equity securities, to file reports of ownership and changes of ownership with the Commission.  Any person who becomes subject to this requirement must file an initial report on Form 3 within 10 days of acquiring that status.  Once the initial report is filed, any changes in holdings (e.g., purchase, sale, gift, exercise of options, etc.) must be reported on Form 4 by the 10 th  day of the month following the change.  An annual  report on Form 5 must be filed on or before the 45 th  day after the end of the issuer's fiscal year.  Although obligated to do so, Becker never filed any of these reports with the Commission in violation of these provisions. 
+
+ IV. 
+
+   Based on the foregoing, the Commission finds that Becker committed violations of Sections 10(b), 13(b)(5) and 16(a) of the Exchange Act and Rules 10b-5, 13b2-1, 16a-2 and 16a-3 thereunder and was a cause of Vista's violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20 and 13a-13 thereunder.  
+
+ V. 
+
+   In view of the foregoing, the Commission deems it appropriate to accept Becker's Offer. 
+
+   IT IS ORDERED, pursuant to Section 21C of the Exchange Act that Becker cease and desist from committing or causing any violation and any future violation of Sections 10(b), 13(b)(5) and 16(a) of the Exchange Act and Rules 10b-5, 13b2-1, 16a-2 and 16a-3 thereunder and from causing any violation and any future violation of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder.  
+
+   
+
+   By the Commission.
+
+                  Jonathan G. Katz
+
+                 Secretary  
+  Footnotes  
+   1    The findings herein are made pursuant to Becker's Offer and are not binding on any other person or entity named in this or any other proceeding.   
+      
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diff --git a/raw/aaer/2001/AAER-1414.txt b/raw/aaer/2001/AAER-1414.txt
new file mode 100644
index 0000000000000000000000000000000000000000..97b42101b8c0e21baef5f0a43c9b5ea5e2599e2d
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@@ -0,0 +1,1368 @@
+
+
+ 
+ 
+   
+     
+ 
+ 
+ 
+ 
+ 
+ 
+
+     
+     
+     SEC.gov | Richard P. Smyth, Arnold E. Johns, Jr., Michael J. Becker and Alan T. Davis 
+     
+     
+     
+     
+     
+     
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+              Richard P. Smyth, Arnold E. Johns, Jr., Michael J. Becker and Alan T. Davis
+           
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+        Richard P. Smyth, Arnold E. Johns, Jr., Michael J. Becker and Alan T. Davis
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+              SECURITIES AND EXCHANGE COMMISSION 
+
+
+ Litigation Release No. 17044 / June 21, 2001 
+
+ SECURITIES AND EXCHANGE COMMISSION V. RICHARD P. SMYTH, ARNOLD E. JOHNS, JR., MICHAEL J. BECKER AND ALAN T. DAVIS, Civil Action No. 1:01-CV-1344 (N.D. Ga.) 
+
+ SEC SUES FORMER OFFICERS, AUDITOR OF VISTA 2000, INC. 
+
+ The Securities and Exchange Commission announced today that it has filed a complaint and an amended complaint against four men for various violations of the federal securities law.  The four defendants are Arnold E. Johns, Jr. of Atlanta, Georgia, Alan T. Davis of Gainesville, Georgia, Michael J. Becker of Marietta, Georgia, and Richard P. Smyth of Fernandina Beach, Florida.  Johns, Becker and Smyth are former officers of Vista 2000, Inc., a now defunct consumer products company formerly headquartered in Roswell, Georgia.  Smyth was Vista's co-founder, chief executive officer and chairman of its board, Johns was a director of Vista and its president, and Becker was Vista's chief financial officer.  Davis was Vista's outside auditor. 
+
+ The amended complaint alleges a wide-range of securities law violations, including that misstatements were made by Vista in filings with the Commission.  Smyth and Johns are charged with direct violations as control persons of Vista arising from those filings.  The allegations include the following: (1) Vista's revenues, income, earnings per share, and assets were overstated by Smyth from 1994 through 1996, by Johns during 1995 and 1996, and by Davis during 1995 and 1996, (2) Smyth failed to properly and accurately disclose the use of Vista's proceeds from its October 1994 initial public offering, (3) Smyth issued ten false and/or misleading press releases from 1994 through 1996, (4) Smyth misappropriated $481,000 in 1996, (5) Smyth failed to file beneficial stock ownership reports during 1994, 1995 and 1996, (6) Smyth illegally sold short Vista stock during 1996, (7) Smyth, Johns, Davis and Becker engaged in illegal insider selling of Vista common stock during 1995 and 1996, (8) Davis engaged in illegal insider trading and tipping of information regarding a company to be acquired by Vista during 1995, and (9) Davis caused Vista's 1994 Form 10-KSB to be false by his failure to be independent and his failure to conduct his audit in accordance with generally accepted auditing standards. 
+
+ Smyth is charged with violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. He is charged, as a control person, with misstatements in filings with the Commission that violated Sections 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13 thereunder.  Smyth is also charged, as a control person, with internal accounting controls and books and records violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.  He is further charged with books and records violations of Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder.  As a final count against him, Smyth is charged with violations of stock ownership reporting and short selling provisions of Sections 16(a) and 16(c) of the Exchange Act and Rules 16a-2 and 16a-3 thereunder. 
+
+ Johns is charged with violations of the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. He is charged, as a control person, with misstatements in filings with the Commission that violated Section 13(a) of the Exchange Act and Rules 12b-20, 13a-11, 13a-13 thereunder.  Johns is also charged, as a control person, with internal accounting controls and books and records violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.  He is further charged with books and records violations of Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder.        
+
+ As to the remaining defendants, Davis is charged with violations of the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and with books and records violations of Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder.  Davis is also charged with violations of the tender offer provisions of Section 14(e) of the Exchange Act and Rule 14e-3 thereunder.  Becker is charged only with violations of the antifraud provisions of Sections 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 
+
+ The amended complaint asks the Court to issue permanent injunctions and to order disgorgement plus prejudgment interest against each defendant.  The Commission also seeks an order against Smyth barring him from serving as an officer and director in the future.    
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diff --git a/raw/aaer/2001/AAER-1416.txt b/raw/aaer/2001/AAER-1416.txt
new file mode 100644
index 0000000000000000000000000000000000000000..bed6b882f240a771261f59b58cae550526669d5e
--- /dev/null
+++ b/raw/aaer/2001/AAER-1416.txt
@@ -0,0 +1,1516 @@
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+     SEC.gov | American Classic Voyages Co. 
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+              American Classic Voyages Co.
+           
+     
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+   
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+      
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+             
+        American Classic Voyages Co.
+       
+
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+
+ Securities Exchange Act of 1934
+ Release No.   44473 / June 25, 2001
+  Accounting and Auditing Enforcement
+ Release No.    1416 / June 25, 2001     
+  Administrative Proceeding
+ File No. 3-10523
+
+         In the Matter of 
+   AMERICAN CLASSIC VOYAGES CO.
+        Respondent.  
+	      
+    : : : : : : :   
+  ORDER INSTITUTING  
+PROCEEDINGS PURSUANT 
+TO SECTION 21C OF THE 
+SECURITIES EXCHANGE ACT 
+OF 1934, MAKING FINDINGS 
+AND IMPOSING A CEASE- 
+AND-DESIST ORDER      I .
+
+    The Securities and Exchange Commission (Commission) deems it appropriate to institute cease-and-desist proceedings against Respondent American Classic Voyages Co. (American Classic) pursuant to Section 21C of the Securities Exchange Act of 1934 (Exchange Act).  
+
+    In anticipation of the institution of these proceedings, American Classic has submitted an Offer of Settlement (Offer), which the Commission has determined to accept.  Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, prior to a hearing pursuant to the Commission's Rules of Practice, 17 C.F.R. §201.100  et seq. , and without admitting or denying the Commission's findings contained herein, except to the Commission's jurisdiction over it and the subject matter of this proceeding, which are admitted, American Classic consents to the entry of this Order Instituting Proceedings Pursuant to Section 21C of the Exchange Act, Making Findings and Imposing a Cease-and-Desist Order (Order).
+
+   II. 
+
+    On the basis of the Order and American Classic's Offer, the Commission makes the following findings:
+
+    A.  American Classic is a Delaware corporation with its corporate headquarters in Chicago, Illinois, and its operations based in New Orleans, Louisiana and Miami, Florida.  American Classic is a provider of overnight passenger cruises.  Its securities are registered with the Commission pursuant to Section 12(g) of the Exchange Act of and are traded on Nasdaq.  During the relevant period, American Classic filed periodic and other informational reports with the Commission pursuant to Section 13(a) of the Exchange Act.  
+
+    Overview  
+
+    B. In May 1999, American Classic filed with the Commission a quarterly report on Form 10-Q for the three-month period ended March 31, 1999 (the first quarter 1999 Form 10-Q). The first quarter 1999 Form 10-Q was inaccurate and misleading in three material respects, all related to American Classic's decision to capitalize approximately $2.8 million in advertising costs, instead of expensing them as it had in previous periods. Advertising costs were a significant expense for American Classic, and the capitalization of these costs in the first quarter of 1999 reduced American Classic's net loss by 29%.  First, the Management's Discussion and Analysis (MD&A) section of the first quarter 1999 Form 10-Q compared operating results for the first quarters of 1999 and 1998 without disclosing that the capitalization of advertising costs substantially improved reported results for the first quarter of 1999.  Second, the financial statements in the first quarter 1999 Form 10-Q understated American Classic's net loss for the period by 29%, and understated its selling, general and administrative expenses, because the capitalization and deferral to later quarters of certain advertising costs deviated from generally accepted accounting principles (GAAP).  Third, American Classic deviated from GAAP by failing to disclose in its first quarter 1999 Form 10-Q that it had changed accounting treatment for its advertising costs.   
+
+   American Classic's MD&A Section
+  In the First Quarter 1999 Form 10-Q  
+
+  C. In early 1999, American Classic was concerned that its accounting method of expensing its direct marketing costs as they were incurred did not accurately reflect its business, because these expenses generated revenues that were not recognized until later quarters.   Specifically, the expenses associated with the direct marketing for particular cruises were not being matched with revenues being generated by those cruises.
+
+  D. On May 14, 1999, American Classic timely filed with the Commission its Form 10-Q for the first quarter of 1999, ended March 31, 1999, pursuant to Section 13(a) of the Exchange Act and Rule 13a-13 thereunder.  For the first time in this Form 10-Q, American Classic capitalized advertising costs rather than expense such costs at the time they were incurred.
+
+  E. The financial statements in American Classic's Form 10-Q included an income statement for the first quarter of 1999, and a comparative income statement for the first quarter of 1998.  American Classic's capitalization of advertising costs resulted in the deferral of approximately $2.8 million of advertising costs in its financial statements from the first quarter of 1999 into later quarters in 1999, and a corresponding increase in before-tax income in the first quarter of 1999.  American Classic reported a loss of  $4.5 million, or ($0.32) per share for the first quarter of 1999.  Absent the capitalization of advertising costs, American Classic would have reported a loss of $6.3 million, or ($0.44) per share, materially larger than the $4.4 million loss, or ($0.31) per share, reported for the first quarter of 1998.  Additionally, the deferral of direct response advertising costs into later quarters of 1999 decreased selling, general, and administrative ("SG&A") expense reported for the first quarter of 1999 by $2.8 million, from $16.7 million to $13.9 million.  SG&A expense was $13.1 million for the first quarter of 1998.  
+
+  F. Section 13(a) of the Exchange Act and Rule 13a-13 thereunder require issuers of registered securities to file quarterly reports with the Commission. The information contained in these reports must be accurate.  See ,  e.g. ,  SEC v. Savoy Industries, Inc. , 587 F. 2d 1149, 1165 (D.C. Cir. 1978),  cert.   denied , 440 U.S. 913 (1979). Item 303 of Regulation S-K requires that the MD&A section of a public company's interim reports contain, among other matters, information that is "necessary to an understanding of [the public company's] financial condition and results of operation." Specifically, the MD&A section must "identify any significant elements of the registrant's income or loss from continuing operations which do not arise from or are not necessarily representative of the registrant's ongoing business."  Instruction 4 to Item 303(b) of Regulation S-K, 17 C.F.R. Sec. 229.303(b).  In addition, Exchange Act Rule 12b-20 requires that quarterly and other required periodic reports contain further material information necessary to make the required statements made, in the light of the circumstances under which they were made, not misleading.  American Classic's MD&A section in the Form 10-Q for the first quarter of 1999 was materially misleading because it compared operating results for the first quarters of 1999 and 1998, without disclosing that the results for the first quarter of 1999 were materially affected by the capitalization of advertising costs and the resulting deferral of $2.8 million in advertising costs into later quarters.  Among other things:
+
+    1. American Classic stated that SG&A expense increased $0.8 million from the first quarter of 1998 to the same period in 1999, partially because of a $0.4 million increase in expansion costs.  American Classic did not   disclose that if the consistent method of expensing advertising costs as incurred was used in the two periods, SG&A expense would have increased $3.6 million, or 27.5%; and
+
+    2. American Classic stated that the consolidated operating loss (before tax) for the first quarter of 1999 was $6.3 million, only slightly more than the $6.1 million loss for the first quarter of 1998.  However, American Classic did not disclose that, absent the capitalization of advertising costs, its operating loss (before tax) would have been $9.1 million, or 50% more than the comparable period in 1998. 
+
+   American Classic Did Not Disclose the
+  Change in Accounting Treatment for Advertising Costs  
+
+  G.  Financial Statements contained in quarterly and annual reports filed with the Commission under Section 13(a) of the Exchange Act must conform to Regulation S-X, which in turn requires conformity with GAAP.  In its quarterly and annual reports for 1998, American Classic had recorded advertising costs as expenses at the time they were incurred.  American Classic disclosed this policy in its Form 10-K for the period ended December 31, 1998, filed with the Commission on March 31, 1999.  American Classic's decision to capitalize advertising costs in 1999 was an accounting change that should have been disclosed in its Form 10-Q for the first quarter of 1999.   See   generally  Accounting Principles Board (APB) Opinion No. 20; APB No. 28, ¶¶ 23 - 28.  American Classic deviated from GAAP by failing to disclose this change.  
+
+   American Classic's Failure to Meet the 
+  Requirements of SOP 93-7 - "Reporting on Advertising Costs"  
+
+  H. On December 29, 1993, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants (AICPA) issued Statement of Position 93-7, "Reporting on Advertising Costs" (SOP 93-7), which was effective for financial statements for years beginning after June 15, 1994.  SOP 93-7 is the authoritative accounting literature governing American Classic's accounting for its advertising costs.  SOP 93-7, ¶ 26, requires that advertising costs generally be expensed either as they are incurred or the first time advertising takes place.  SOP 93-7, however, contains an exception for certain direct-response advertising costs, which are costs of advertising whose primary purpose is to elicit sales to customers who can be shown to have responded specifically to the advertising.  If an advertising cost falls within the exception, the costs should be capitalized.  To fall within the exception, SOP 93-7 ¶ 34 requires:
+
+     there must be a means of documenting that response, including a record that can identify the name of the customer and the advertising that elicited the direct-response.  Examples of such documentation include the following: files indicating the customer names and the related direct-response advertisement; a coded order form, coupon, or response card, included with an advertisement, indicating the customer name; and a log of customers who have made phone calls to a number appearing in an advertisement, linking those calls to the advertisement.
+
+   I. Further, to utilize the exception, SOP 93-7 requires that the advertising costs result in probable future economic benefits.  Such benefits are defined to be "probable future revenues arising from that advertising in excess of future costs to be incurred in realizing those revenues."  SOP 93-7, ¶ 36.  SOP 93-7 discusses the conditions that must be met in order to conclude that direct-response advertising results in probable future benefits in ¶ 37:
+
+    Demonstrating that direct-response advertising will result in future benefits requires persuasive evidence that its effects will be similar to the effects of responses to past direct-response advertising activities of the entity that resulted in future benefits.  Such evidence should include verifiable historical patterns of results for the entity.  Attributes to consider in determining whether the responses will be similar include (a) the demographics of the audience, (b) the method of advertising, (c) the product, and (d) economic conditions.
+
+  J. SOP 93-7, ¶ 70, also requires that the estimate of future benefits be based on "reliable information."   SOP 93-7 further states, "it is generally difficult to determine the probable future benefits of advertising with the degree of reliability sufficient to report the results of the advertising as assets." SOP 93-7, ¶ 70.
+
+  K. During 1998 and 1999, American Classic primarily advertised its cruises by mass mailing flyers and brochures to potential customers.  In response to the mailings, potential customers made reservations for cruises by contacting American Classic.  American Classic mailed most of its advertisements and incurred most of its advertising costs during the first quarter of the year to promote cruises in the summer and fall.  During 1998, American Classic recorded its advertising costs at the time they were incurred and disclosed this policy in its Form 10-K.  In the first quarter of 1999, however, American Classic decided to capitalize these costs, relying on the exception for direct response advertising costs.  To capitalize direct-response advertising costs under the provisions of SOP 93-7, American Classic needed to have an effective means to demonstrate that the customers who purchased cruises had responded to specific advertisements.  American Classic also had to demonstrate that its advertising costs were recoverable from future benefits arising from such advertising, i.e., future revenues from passenger cruises minus future costs to be incurred in realizing those revenues. 
+
+  L. When American Classic filed its first quarter 1999 Form 10-Q, it was not determined whether American Classic had an effective means to demonstrate that the customers who purchased cruises responded to specific advertisements, nor were analyses performed to demonstrate the extent to which American Classic's advertising expenses were recoverable from probable future benefits.   Absent this information, SOP 93-7 did not allow   American Classic to capitalize direct-response advertising costs in the first quarter of 1999.  As a result, the financial statements contained in the first quarter 1999 Form 10-Q deviated from GAAP, understated American Classic's net loss by 29%, and understated its SG&A expense by 17%.
+
+   American Classic's Rescission of its Change in 
+  Accounting Treatment for Advertising Costs  
+
+  M. After receiving notice of the staff's investigation, American Classic conducted a review of its advertising expenses and, on November 2, 1999, American Classic voluntarily rescinded its capitalization of advertising costs.  In a Form 8-K, American Classic announced that it rescinded its capitalization of advertising costs and restated its earnings for the first and second quarters of 1999. 
+
+    Violations of the Federal Securities Laws  
+
+  N. On or about May 14, 1999, American Classic violated Section 13(a) of the Exchange Act and Rules 13a-13 and 12b-20 thereunder in that, as an issuer of a security registered pursuant to Section 12 of the Exchange Act, it filed a quarterly report, described in paragraphs II.B. through II.F. above, with the Commission containing information that was materially inaccurate and, in addition to the information expressly required to be included in the quarterly report, did not add such further material information as was necessary to make the required statements, in the light of the circumstances under which they were made not misleading, as described in paragraphs II.A. through II.M. above.
+
+  O. From in or about March 1999 through on or about May 14, 1999, American Classic violated Section 13(b)(2)(A) of the Exchange Act in that, as an issuer which has a class of securities registered pursuant to Section 12 of the Exchange Act and which was required to file reports pursuant to Section 15(d) of the Exchange Act, American Classic made and kept books, records and accounts which, did not, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer, as described in paragraphs II.A. through II.M. above.  
+
+   III. 
+
+  In view of the foregoing, the Commission deems it appropriate to impose the sanction set forth in the Offer submitted by American Classic.
+
+    Accordingly, IT IS HEREBY ORDERED that pursuant to Section 21C of the Exchange Act, American Classic cease and desist from committing or causing any violation and any future violation of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder.
+
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+             Secretary
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diff --git a/raw/aaer/2001/AAER-1418.txt b/raw/aaer/2001/AAER-1418.txt
new file mode 100644
index 0000000000000000000000000000000000000000..3551345454fdd52142e4edaff4a31f784ee25a7a
--- /dev/null
+++ b/raw/aaer/2001/AAER-1418.txt
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+ SECURITIES EXCHANGE ACT OF 1934
+ Release No.  44501 / July 2, 2001
+  ACCOUNTING AND AUDITING ENFORCEMENT
+ Release No. 1418 / July 2, 2001
+  ADMINISTRATIVE PROCEEDING
+ File No. 3-10529
+
+         In the Matter of 
+   James T. Rush,
+  Respondent. 
+    
+    : : : : : : :   
+  ORDER INSTITUTING PROCEEDINGS 
+PURSUANT TO RULE 102(e) OF THE 
+COMMISSION'S RULES OF PRACTICE, 
+MAKING FINDINGS, AND IMPOSING 
+REMEDIAL SANCTIONS       I. 
+
+  The Securities and Exchange Commission ("Commission") deems it appropriate to institute public administrative proceedings pursuant to Rule 102(e)  1     of the Commission's Rules of Practice against James T. Rush ("Respondent" or "Rush").
+
+   II. 
+
+  In anticipation of the institution of these administrative proceedings, Respondent has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings, and any other proceeding brought by or on behalf of the Commission, or in which the Commission is a party, and without admitting or denying the findings set forth below, except that he admits the Commission's finding that a Final Judgment of Permanent Injunction and Other Relief has been entered against him as set forth in Paragraph III.C below and admits the Commission's jurisdiction over him and over the subject matter of these proceedings, Respondent consents to the entry of this Order Instituting Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions ("Order").
+
+   III. 
+
+   FINDINGS 
+
+  The Commission makes the following findings:  2     A.  Rush, 52, now of Sioux Falls, South Dakota, became the Chief Financial Officer of Paracelsus Healthcare Corporation ("Paracelsus") in 1985, a position he held until August 1996.   Rush was licensed as a Certified Public Accountant with the State of California in 1973.  Rush's CPA license was cancelled on February 1, 2000, because he was delinquent in paying his licensing fees.  However, Rush can reinstate his license by reapplying and meeting all continuing education requirements.
+
+   B.  Paracelsus is a California corporation which registered a bond offering and began filing periodic reports with the Commission pursuant to Section 15(d) of the Securities Exchange Act of 1934 ("Exchange Act") in 1993.  In August 1996, Paracelsus registered offerings of common stock and notes and an exchange offer for the outstanding common stock of Champion Healthcare Corporation ("Champion").  Paracelsus raised $365 million in the offerings, merged with Champion, and became a publicly held, Section 12(b) reporting company, listed on the New York Stock Exchange.
+
+   C.  On June 18, 2001, the Commission filed a complaint against Rush and others in the United States District Court for the Southern District of Texas, Houston Division,  SEC v. Ron Messenger, et al , CIV. NO. H-01-2022 (S.D. TX, Houston Div.).  Solely for the purpose of settling these proceedings, Rush consented to the entry of a Final Judgment of Permanent Injunction and Other Relief ("Final Judgment") against him, without admitting or denying the allegations of the complaint, except as to subject matter jurisdiction, which he admitted.   On June 20, 2001, the United States District Court for the Southern District of Texas, Houston Division, entered the Final Judgment, which (1) permanently enjoins Rush from (i) violating Section 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1 and 13b2-2 thereunder, and from aiding and abetting violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13; and (ii) orders Rush to pay a civil penalty of $50,000.
+
+   D.  The Commission's complaint alleges that while Rush was Paracelsus' Chief Financial Officer, he participated in misconduct by which Paracelsus inflated its quarterly and annual earnings in filings with the Commission from at least 1993 through August 1996.  Specifically, the complaint alleges that Rush and others created and used "cookie jar" reserves which were inappropriate under Generally Accepted Accounting Principles, because no probable and reasonably estimable exposures justified their creation, and because their later decrease artificially boosted Paracelsus' earnings and concealed a decline in earnings.  Rush and others also concealed Paracelsus' failure to properly write off certain uncollectible psychiatric receivables, which also artificially boosted Paracelsus' earnings and concealed a decline in earnings.  Additionally, the complaint alleges that Rush and others failed to disclose all material facts regarding the misconduct to Paracelsus' auditors.
+
+   IV. 
+
+  In view of the foregoing, the Commission deems it appropriate to accept Rush's Offer and to impose the sanctions agreed to therein.
+
+  Accordingly,  IT IS HEREBY ORDERED , effective immediately, that:
+
+   A.  Rush is denied the privilege of appearing or practicing before the Commission as an accountant.
+
+   B.  After three years from the date of this Order, Rush may request that the Commission consider his reinstatement by submitting an application (attention:  Office of the Chief Accountant) to resume appearing or practicing before the Commission as:
+
+       1.  a preparer or reviewer, or a person responsible for the preparation or review, of any public company's financial statements that are filed with the Commission. Such an application must satisfy the Commission that Rush's work in his practice before the Commission will be reviewed either by the independent audit committee of the public company for which he works or in some other acceptable manner, as long as he practices before the Commission in this capacity; and/or
+
+       2.  an independent accountant. Such an application must satisfy the Commission that: (a) Rush, or the firm with which he is associated, is a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms ("SEC Practice Section"); (b) Rush, or the firm, has received an unqualified report relating to his, or the firm's, most recent peer review conducted in accordance with the guidelines adopted by the SEC Practice Section; and (c) as long as Rush appears or practices before the Commission as an independent accountant he will remain either a member of the SEC Practice Section or associated with a member firm of the SEC Practice Section, and will comply with all applicable SEC Practice Section requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education.
+
+   C.  The Commission's review of an application by Rush to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to Rush's character, integrity, professional conduct, or qualifications to appear or practice before the Commission.
+
+  By the Commission.
+
+                    Jonathan G. Katz  
+Secretary
+
+  
+
+ 
+ Footnotes 
+     1      Rule 102(e)(3)(i), in relevant part, provides that the Commission may suspend from appearing or practicing before it any accountant who by name has been permanently enjoined, by a court of competent jurisdiction in an action brought by the Commission, from violating any provision of the federal securities laws or the rules and regulations thereunder [17 C.F.R. 201.102(e)(3)(i)].
+
+      2     The findings herein are made pursuant to Rush's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.     
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diff --git a/raw/aaer/2001/AAER-1420.txt b/raw/aaer/2001/AAER-1420.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6c6d00ccee3003cd91fb601c56322688d52f2bee
--- /dev/null
+++ b/raw/aaer/2001/AAER-1420.txt
@@ -0,0 +1,1539 @@
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+              YourBankOnline.com, Pakie Plastino and William L. Butcher
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+        YourBankOnline.com, Pakie Plastino and William L. Butcher
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+
+ SECURITIES EXCHANGE ACT OF 1934
+ Release No. 44510 / July 3, 2001
+  AUDITING AND ACCOUNTING ENFORCEMENT
+ Release No. 1420 / July 3, 2001
+  ADMINISTRATIVE PROCEEDING
+ File No. 3-10313
+
+        In the Matter of  
+  SECURE SIGN, INC. (FORMERLY
+ YOURBANKONLINE.COM),
+ PAKIE V. PLASTINO,   
+   and
+ WILLIAM L. BUTCHER, C.P.A., 
+  Respondents. 
+    
+  : : : : : :   
+    ORDER MAKING FINDINGS, 
+ISSUING A CEASE-AND-DESIST  
+ORDER AND ORDERING  
+REMEDIAL SANCTIONS AGAINST  
+PAKIE V. PLASTINO      I.
+
+    On September 27, 2000 the Securities and Exchange Commission (the "Commission") instituted public cease-and-desist proceedings against respondent Pakie V. Plastino ("Plastino") pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") to determine whether he violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.  
+
+    In response to the institution of these proceedings, Plastino has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept.  Solely for the purpose of this proceeding and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except that he admits the jurisdiction of the Commission over him and over the subject matter of this proceeding, Plastino consents to the issuance of this Order Making Findings, Issuing a Cease-and-Desist Order and Ordering Remedial Sanctions Against Pakie V. Plastino ("Order").  
+
+  II.
+
+              On the basis of this Order and the Offer, the Commission makes the following findings:
+
+  A.  Nature of Proceeding 
+
+  1. This matter involves fraud by Consolidated Data, Inc. ("Consolidated" or "the Company"), an Internet-related software company based near Seattle, Washington, and its Chief Executive Officer, Pakie V. Plastino.  1    The action is based on Consolidated's substantial inflation of the value of its primary asset, an Internet banking software program called YourBankOnline (the "software"), in a press release and registration statement. 
+
+  2. In March 1999, Consolidated - a small software company with minimal operations at the time - acquired the software in exchange for restricted shares of Consolidated stock.  Shortly thereafter, Consolidated issued a press release claiming that it had just acquired a new software program for $10,000,000 in cash and stock.  In fact, the stock Consolidated exchanged for the software had a substantially lower value at the time of the acquisition; moreover, the company which sold the software to Consolidated had acquired the software for $410,000 just six months earlier.  This press release, which was followed by a series of additional releases touting the software, caused Consolidated's stock price to climb from under $1 to a high of $32 per share in the two weeks following the initial announcement.
+
+  3. In August 1999, Consolidated filed with the Commission a registration statement on Form 10-SB incorporating audited financial statements reporting a substantially inflated asset value for the software.  The software represented nearly 99% of the Company's assets.
+
+  4. Plastino and Consolidated had no legitimate basis for the valuation given to the software in the March press release and the August registration statement.
+
+  B.  Respondent 
+
+  5. Pakie V. Plastino, 51, is a resident of Palm Springs, California (with a business residence in Seattle, Washington).  Plastino was Consolidated's Chairman and Chief Executive Officer during the relevant period.  As of March 31, 1999, Plastino held approximately 4.9 million shares of Consolidated common stock (45% of the outstanding shares).
+
+  C.  Background 
+
+       Plastino And The Formation Of Consolidated Data 
+
+  6. In 1997, Plastino formed Contractors Directory, a company involved in developing an Internet database of building contractors and subcontractors.  Contractors Directory generated $17,515 in revenue for the fiscal year ended September 30, 1998 and $13,970 in revenue for the six months ended March 31, 1999. 
+
+  7. In April 1997, Contractors Directory entered into a reverse merger with a public shell company that had no operations.  The entity changed its name to Consolidated Data in November 1998, and began trading on the OTC Bulletin Board under the ticker symbol CSDD.  Between November 1998 and March 1999, Consolidated's stock traded at approximately $0.25 per share on minimal volume. 
+
+     Development Of The YourBankOnline Software  
+
+  8. The YourBankOnline software program was developed in 1998 by a California bank (the "bank").  The software allows small financial institutions to provide Internet-based banking services to their customers.  The bank originally planned to sell the rights to the program to a larger institution (the "licensee") for licensing to end users.  In September 1998, as the result of delays in the negotiations between the bank and the licensee, the bank instead sold the software to a third party (the "owner") for $410,000.  The owner intended to license the software to the licensee for a profit, while retaining the right to license the YourBankOnline software to other financial institutions as well.
+
+  9. In early 1999, the owner licensed the non-exclusive rights to the software to the licensee in exchange for 50% of any revenues generated by the licensee's licensing of the software to end-users, up to a maximum of $1.3 million in revenues (i.e. $650,000 maximum payable to the owner).  No cash changed hands in this transaction.  
+
+     Consolidated's Acquisition Of The YourBankOnline Software 
+
+  10.   The owner of the software was unsuccessful in its efforts to license the software rights to any other financial institutions.  In February 1999, the owner contacted Consolidated and offered to sell the software for $10,000,000.  According to the company's August 1999 Form 10-SB, as of March 31, 1999 Consolidated had a total of $138 in cash (as well as property and equipment valued at $7,004).
+
+  11. Consolidated agreed to a deal which on paper appeared to represent a sale of the software for $10,000,000.  According to the contract, executed on March 10, 1999, Consolidated purchased the YourBankOnline software from the owner under the following terms.  First, Consolidated would immediately issue the owner two million shares of restricted stock at an assigned value of $2 per share.  Second, Consolidated would pay the owner $6,000,000 in cash or 1.2 million shares of restricted stock assigned a value of $5 per share.  The latter payment would be made at a rate of $10,000 per software license issued by Consolidated, with the remainder payable in stock at the end of twelve months.
+
+  12. Pursuant to the agreement, Consolidated issued two million shares of restricted stock to the owner in March 1999; the remaining 1.2 million shares were issued, at the owner's request, in April 1999.
+
+  D. Consolidated Issued a False And Misleading Press Release On March 30, 1999,  Which Materially Overstated The Value Of The YourBankOnline Software.  
+
+  13. On March 30, 1999, Consolidated issued a press release, drafted by Plastino, announcing that Consolidated "has finalized an agreement with [the owner] to purchase its proprietary software YourBankOnline.com.  The ten million ($10,000,000) purchase price is to be paid in a combination of cash and stock."  This press release was disseminated over the Internet and discussed on Internet stock discussion boards.  
+
+  14. The following day, the Company's stock price closed at $3 3/8 (a 100% increase over the prior day's close, and nearly ten times the price which had prevailed through most of March) on record volume.  
+
+  15. Consolidated followed this press release with a flurry of additional releases - nearly a dozen in April alone - each touting a different technical aspect of the YourBankOnline software.  Many of these press releases were characterized by "ticker spamming," the practice of including the names and ticker symbols of numerous well-known technology companies so that investors searching for news on the bigger companies are more likely to come across the press release.
+
+  16. Consolidated's promotional efforts resulted in a substantial run-up in the stock price.  The price went as high as $32 in intraday trading on April 12, and then steadily declined to $3 by August 1999.  
+
+  17. The March 30 press release was materially misleading.  The Company did not, in fact, pay $10,000,000 in cash and stock for the software.  The $10,000,000 price was based on the $2 and $5 assigned valuations used in the agreement between Consolidated and the owner.  However, Consolidated was, at the time of the agreement, a thinly traded OTC Bulletin Board stock trading in the range of $0.20 to $0.50 per share, and these valuations were thus entirely speculative.  The stock that Consolidated exchanged for the software had a market value far below $10,000,000 at the time the software purchase was announced (particularly since the stock issued to the owner was restricted and could not be freely traded). 
+
+  18. In addition, just one week before signing the contract, Consolidated had hired an outside consulting firm to help draft a registration statement and business plan for Consolidated.  Under the contract between Consolidated and the firm, Consolidated issued the firm 300,000 shares of common stock in exchange for services valued at $60,000 - the equivalent of $0.20 per share.  This stock, unlike the stock issued to the owner, was unrestricted.
+
+  19. Despite the press release's claim that Consolidated had purchased the software for $10,000,000 in "cash and stock," Consolidated had no financial ability to make cash payments at the time of the contract.  The press release gave the false impression that Consolidated had the financial strength to acquire a valuable new software program for $10,000,000, when in fact the Company had a total of $138 in the bank, the consideration it exchanged for the software was worth far less than $10,000,000, and the same asset had been purchased by the owner from the bank that designed the program for $410,000 just six months earlier.
+
+  20. In May 1999, following the dissemination of the misleading press release and the resulting inflation of the stock price, Plastino entered into a private sale of Consolidated stock.  In a contract executed on May 21, 1999, Plastino entered into an option agreement to purchase real estate for $600,000 in cash and 30,000 shares of Consolidated stock.  Plastino ultimately delivered the stock in May 2000, when the stock was trading at $2.625 per share.  
+
+  21. During the relevant period, Plastino owned 4.9 million shares (or 45% of the Consolidated's outstanding common stock after the issuance of the stock to the owner), and thus further benefited by the increase in Consolidated's stock price.  Furthermore, Consolidated, an OTC Bulletin Board company, sought to be listed on the NASDAQ exchange, and the Company's stock price and asset value were both essential to Consolidated's ability to satisfy NASDAQ's listing requirements.
+
+  22. Plastino knew, or was reckless in not knowing, that the March 30 press release was materially false and misleading.  Based on the foregoing, Plastino violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
+
+  E. Consolidated Filed A Registration Statement Which Incorporated Financial  Statements Reflecting The Inflated Software Valuation.    
+
+  23. On August 9, 1999, Consolidated filed a registration statement on Form 10-SB, signed by Plastino.  The registration statement incorporated audited financial statements for the fiscal year ended March 31, 1999.  Consolidated reported total assets of $4.1 million, of which $4 million consisted of the YourBankOnline software.  (Because the financial statements covered the period ending March 31, and the final 1.2 million shares of Consolidated stock were not delivered to the owner until April, Consolidated chose to include only the 2 million shares paid to the owner in March in calculating the software's asset value.)
+
+  24. This registration statement was false and misleading.  There was no basis for the $4 million asset valuation.  The stock issued in exchange for the software was worth far less than $2 per share at the time of the software purchase, and the same software had recently been purchased for only $410,000 by the owner.
+
+  25. The Company's use of the $2 per share stock price in calculating the asset value was not in conformity with generally accepted accounting principles ("GAAP").  Under GAAP, assets received by a corporation in return for stock must be recorded at fair value; the fair value may be determined by reference either to the value of the assets received or the stock issued, whichever is more clearly evident.  Here, on the date of the software purchase, Consolidated's stock was trading at $0.50, with minimal historical trading volume.  The restricted nature of the stock issed by Consolidated added further uncertainty to its fair value.  The use of an assigned $2 per share stock value by Consolidated was arbitrary and inappropriate.
+
+  26. In the absence of a clear fair value for the restricted stock issued to the owner, Consolidated should have recorded the asset at the value of the software itself.  At the time of the transaction, Consolidated had no appraisal of the value of the software, and no customers for the product.  The only evident and objective value of the asset was the price the owner had agreed to pay to the bank that had designed the software ($410,000).  At most, Consolidated could have considered the price the licensee agreed to pay the owner for the software licensing rights (a maximum of $650,000).  By recording the asset at $4,000,000, Consolidated materially overstated its assets by approximately $3.35 million.
+
+  27. Plastino knew, or was reckless in not knowing, that the financial statements included in the Form 10-SB were materially false and misleading.  Based on the foregoing, Plastino violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
+
+  III.
+
+    Based on the foregoing, the Commission deems it appropriate to accept the Offer submitted by Plastino.  Accordingly, IT IS HEREBY ORDERED pursuant to Section 21C of the Exchange Act that:
+
+  A) Plastino shall cease and desist from committing or causing any violations or any future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and
+
+  B) Plastino shall, within six months of the entry of the Order, pay disgorgement and prejudgment interest in the total amount of $72,750, plus postjudgment interest calculated in accordance with Rule 600 of the Commission's Rules of Practice from the date of entry of the Order, to the United States Treasury.  Such payment shall be: (1) made by United States postal money order, certified check, bank cashier's check or bank money order; (2) made payable to the Securities and Exchange Commission; (3) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Alexandria, Stop 0-3, VA 22312; and (4) submitted under cover letter that identifies Plastino as a respondent in these proceedings, the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to the District Administrator, San Francisco District Office, Securities and Exchange Commission, 44 Montgomery Street, Suite 1100, San Francisco, CA  94104.
+
+    By the Commission.
+
+                Jonathan G. Katz
+               Secretary
+  
+
+ 
+ Footnote 
+     1      During the relevant period, the Company operated under the name Consolidated Data, Inc.  In February 2000, the Company changed its name to YourBankOnline.com, the name under which this proceeding was initiated.  The Company changed its name to Secure Sign, Inc. in November 2000.  For purposes of clarity, the company is referred to as "Consolidated" or "the Company" in the Offer and the Order.    
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diff --git a/raw/aaer/2001/AAER-1423.txt b/raw/aaer/2001/AAER-1423.txt
new file mode 100644
index 0000000000000000000000000000000000000000..7a615f27a686a457fd7982f431e57b4e3c345bb0
--- /dev/null
+++ b/raw/aaer/2001/AAER-1423.txt
@@ -0,0 +1,1569 @@
+
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+ 
+ 
+   
+     
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+ 
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+     SEC.gov | John Lerlo 
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+         !function(){var e=navigator.userAgent,a=document.documentElement,n=a.className;n=n.replace("no-js","js"),/iPad|iPhone|iPod/.test(e)&&!window.MSStream&&(n+=" ua-ios"),a.className=n}(); 
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+                        
+              SECURITIES ACT OF 1933 
+Release No. 7995 / July 18, 2001 
+
+ SECURITIES EXCHANGE ACT OF 1934 
+Release No. 44564 / July 18, 2001 
+
+ ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 1423 / July 18, 2001 
+
+ ADMINISTRATIVE PROCEEDING 
+File No.3-10533 
+
+  
+
+ 
+	 
+		 
+			 
+			 
+			 In the Matter of 
+
+			 John Lerlo, 
+
+			 Respondent. 
+
+			  
+
+			  
+			 
+			 : 
+			: 
+			: 
+			: 
+			: 
+			: 
+			: 
+			 
+			 ORDER INSTITUTING PUBLIC 
+			ADMINISTRATIVE PROCEEDINGS 
+			PURSUANT TO SECTION 8A OF THE 
+			SECURITIES ACT OF 1933 AND SECTION 
+			21C OF THE SECURITIES EXCHANGE ACT 
+			OF 1934, MAKING FINDINGS, AND 
+			IMPOSING A CEASE-AND-DESIST ORDER 
+		 
+	 
+ 
+
+ I. 
+
+ The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be, and they hereby are, instituted against John Lerlo ("Respondent" or "Lerlo") pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Section 21C of the Securities Exchange Act of 1934 ("Exchange Act"). 
+
+ II. 
+
+ In anticipation of the institution of these administrative proceedings, Respondent has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or in which the Commission is a party, and without admitting or denying the findings, except as to the Commission's jurisdiction over him and over the subject matter of the proceedings, which are admitted, Respondent 
+
+ consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order ("Order"). 
+
+ III. 
+
+ On the basis of this Order and Respondent's Offer, the Commission makes the findings set forth below:  1    
+
+ A.  Respondent  
+
+ John Lerlo, age 46   is, and at all relevant times was, the Plant Manager at American Bank Note Holographics, Inc.'s ("ABNH") Huntington Valley, PA manufacturing facility. 
+
+ B.  Others  
+
+ 1. ABNH, a Delaware corporation with its principal executive offices located in Elmsford, New York, is engaged in the origination, production, and marketing of mass-produced secure holograms. ABNH was, until July 1998, a wholly-owned subsidiary of American Banknote Corporation ("ABN"). On or about July 14, 1998, ABNH became a public company through an initial public offering ("IPO") that raised approximately $107 million, the proceeds of which went entirely to ABN. ABNH's IPO was effected pursuant to a Registration Statement ABN caused ABNH to file on Form S-1 with the Commission. ABNH's stock was registered pursuant to Section 12(b) of the Exchange Act and traded on the New York Stock Exchange until it was suspended from trading in August 1999. Currently, ABNH's stock trades on the OTC Bulletin Board. 
+
+ 2. ABN, at all relevant times, was a public holding company whose stock was registered pursuant to Section 12(b) of the Exchange Act and traded on the New York Stock Exchange. Through its subsidiaries, ABN, among other things, supplied stored-value telephone cards and magnetic-strip transaction cards and printed business forms, checks, and counterfeit-resistant documents of value such as money orders, passports, foreign currency, and stock and bond certificates. ABN filed for Chapter 11 bankruptcy on December 8, 1999. Currently, ABN's stock trades on the OTC Bulletin Board. 
+
+ C.  Summary  
+
+ ABN and ABNH, through a number of their former senior managers and others, systematically and fraudulently inflated the revenue and net income of ABN and ABNH, from 1996 through 1998. ABN and ABNH engaged in a number of improper practices that materially increased annual and quarterly revenue and net income in a departure from generally accepted accounting principles ("GAAP"). The practices included, among other things, the improper recognition of revenue on "bill and hold" sales. To avoid detection of the scheme, ABN and ABNH actively deceived ABN's independent auditors by, among other things, altering corporate records and reporting false production, sale, and shipment data. 
+
+ On Tuesday, January 19, 1999, ABNH announced that it would restate results for the second and third quarters of 1998 and that it expected that revenues and net income for the fourth quarter of 1998 would be significantly lower than that of the fourth quarter of 1997. ABNH's stock fell approximately 69% from its January 19, 1999 close of $15.125 to a January 20, 1999 close of $4.625. ABN's stock fell approximately 14% from its January 19, 1999 close of $1 5/16 to a January 20, 1999 close of $1 1/8. On Monday, January 25, 1999, ABNH announced that it would restate its results for each of the first three quarters of 1998 and that its financial statements as of December 31, 1997, and December 31, 1996 should no longer be relied upon. The announcement further depressed each company's stock price. 
+
+ As a result of the foregoing, ABNH's Registration Statement on Form S-1 contained materially false and misleading financial statements for its fiscal years 1996 and 1997, as well as for its interim quarters for fiscal year 1997 and for the first quarter of its fiscal year 1998. ABNH also included materially false and misleading financial statements in its Forms 10-Q which it filed for the second and third quarters of fiscal year 1998. As for ABN, as a result of the foregoing, it included materially false and misleading financial statements in its Forms 10-K for fiscal years ended December 31, 1996 and 1997, and in its Forms 10-Q which it filed for the first three quarters of fiscal years 1997 and 1998. 
+
+ In connection with a 1997 year-end "bill and hold" transaction, Lerlo, at the behest of ABNH's former President, backdated, and changed quantities on, ABNH receiving documents to reflect that holograms produced by a subcontractor in January 1998 actually were completed and delivered to ABNH by December 31, 1997. Also at the urging of ABNH's former President, Lerlo provided him with a false affidavit confirming that the falsified receiving documents were correct. ABNH's former President then provided the falsified receiving documents to ABN's auditors to convince them that revenue could be recognized in fiscal year 1997 for all the holograms the subcontractor had produced. Finally, in January 1999, Lerlo participated in the creation of two memoranda containing false information related to the 1997 year-end "bill and hold" transaction. Lerlo knew, at the time, that ABNH's former President was going to provide these memoranda to ABNH's auditors. 
+
+ D.  Facts  
+
+ In December 1997, ABNH obtained a large "bill and hold" order for approximately $8 million worth of holograms.  2    Because ABNH lacked the capacity to manufacture and complete all of the holograms by year-end, it arranged to subcontract the manufacturing of approximately $6.9 million worth of holograms to another company. ABNH knew, however, that the subcontractor could not manufacture and complete all the holograms by year-end. First, the subcontractor did not have the capacity to manufacture all the holograms by year-end. Second, before ABNH could recognize the transaction as a valid "bill and hold" sale, the holograms had to be "completed." This required the holograms, which are initially produced in "rolls," ( e.g. , like a roll of paper towels), to be slit down to smaller "reels" (like a roll of paper towels cut into thirds, for example) and then numbered and separately labeled as belonging to the customer. ABNH knew that the subcontractor was engaged only to manufacture  rolls  because the subcontractor's facility lacked the capacity to slit the rolls into reels and then number the holograms. Consequently, ABNH knew that the holograms the subcontractor produced would not be "complete" until they were delivered to ABNH's facility and ABNH then slit, numbered, and labeled them as belonging to the customer. 
+
+ As expected, the subcontractor did not finish producing unslit, unnumbered rolls of holograms until mid-January 1998. In fact, most of the rolls the subcontractor produced were delivered to ABNH's manufacturing facility in January 1998. ABNH, however, recognized revenue of approximately $6.9 million in fiscal year 1997 on this "bill and hold" transaction, approximately $6 million of which was fraudulent because it should have been recognized in fiscal year 1998. Although ABNH had a valid "bill and hold" agreement in place with the customer, the approximately $6 million in revenue was improperly recognized because it came from the sale of holograms that the subcontractor had not completed and delivered to ABNH by December 31, 1997. 
+
+ ABN's auditors identified the $8 million "bill and hold" transaction as a major issue for its audit of ABNH's results for fiscal year 1997. Having fraudulently recognized approximately $6 million in revenue in connection with this transaction, ABNH undertook to mislead its auditors into believing that the holograms the subcontractor produced were completed and had been delivered to ABNH's manufacturing facility by year-end 1997. 
+
+ During January 1998, Lerlo, at the behest of ABNH's former President, backdated, and changed quantities on ABNH receiving documents and also signed an affidavit confirming that the receiving documents, which Lerlo had knowingly falsified, were correct. ABNH's former President then provided the receiving documents to ABN's auditors to convince them that ABNH had received all of the holograms the subcontractor had produced by December 31, 1997. Lerlo was reckless in not knowing that by falsifying ABNH receiving documents he would cause ABN's and ABNH's financial statements to become materially false and misleading. 
+
+ In late 1998 or early 1999, in connection with their work on the fiscal year 1998 audit, ABNH's auditors uncovered holograms designated as having been produced by ABNH's subcontractor in 1997, but marked with 1998 dates. In January 1999, ABNH's former President told Lerlo that ABNH needed to convince its auditors that the holograms marked with 1998 dates were produced in 1997. In response, Lerlo, at the request of ABNH's former President, participated in the creation of two memoranda, each dated January 14, 1999, which he knew falsely stated that some of the holograms the subcontractor had produced in 1997 were defective and had to be replaced in 1998. Lerlo knew these memoranda would be provided to ABNH's auditors and, in fact, they were. 
+
+ E.  Violations  
+
+ Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder, prohibit material misstatements or omissions, made with scienter, in connection with the purchase or sale of securities.  SEC v. Texas Gulf Sulphur Co. , 401 F.2d 833, 860-62 (2d Cir. 1968),  cert.   denied , 394 U.S. 976 (1969). Scienter is the "mental state embracing the intent to deceive, manipulate or defraud."  Ernst & Ernst v. Hochfelder , 425 U.S. 185, 193 n.12 (1976). A fact is material if there is a substantial likelihood that a reasonable investor would consider the information to be important.  Basic, Inc. v. Levinson , 485 U.S. 224, 231-32 (1988). Misrepresentation of a company's earnings,  SEC v. Texas Gulf   Sulphur Co. , 401 F.2d 833, 849 (2d Cir. 1968),  cert.   denied , 394 U.S. 976 (1969), and the improper recognition of revenue in departure from GAAP,  see   Fine v. American Solar King Corp. , 919 F.2d 290, 297, 300-01 (5th Cir. 1990), may be material. 
+
+ Section 17(a)(1) of the Securities Act prohibits a person, in the offer or sale of any securities, from employing any device, scheme, or artifice to defraud.  See ,  e.g. ,  U.S. v. Naftalin , 441 U.S. 768, 771-72 (1979). In addition, Section 17(a)(2) of the Securities Act prohibits a person from obtaining money by means of untrue statements of material fact or omissions of material fact. Section 17(a)(3) prohibits a person from engaging in any transaction, practice or course of business that operates or would operate as a fraud upon a purchaser. Scienter is required to violate Section 17(a)(1) but not Sections 17(a)(2) and (a)(3).  Aaron v. SEC , 446 U.S. 680, 694 (1980). 
+
+ Section 13(a) of the Exchange Act and Exchange Act Rules 13a-1 and 13a-13 require issuers with securities registered under Section 12 of the Exchange Act to file annual and quarterly reports with the Commission and to keep this information current. Such reports must be true and correct.  See   SEC v. Savoy Industries , 587 F.2d 1149, 1165 (D.C. Cir. 1978). Exchange Act Rule 12b-20 requires that such reports include all material information necessary to make the required statements, in the light of the circumstances under which they are made, not misleading. Pursuant to the instructions applicable to Form 10-Q, financial statements contained therein must conform to Regulation S-X, which, in turn, requires conformity with GAAP. 17 C.F.R. &sec; 210.4-01(a)(1). 
+
+ Section 13(b)(2)(A) of the Exchange Act requires that every issuer of securities registered pursuant to Section 12 of the Exchange Act make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect its transactions and disposition of assets. Section 13(b)(5) of the Exchange Act provides that no person shall knowingly falsify any such book, record, or account or circumvent internal controls. Exchange Act Rule 13b2-1 also prohibits, directly or indirectly, the falsification of any book, record, or account subject to Section 13(b)(2)(A) of the Exchange Act. Section 13(b)(2)(B) of the Exchange Act requires issuers to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP. 
+
+ Exchange Act Rule 13b2-2 prohibits an officer or director of an issuer from (a) making or causing to be made a materially false or misleading statement or (b) omitting or causing to be omitted a statement of a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading to an accountant in connection with a required audit or the preparation or filing of a required document or report. 
+
+ In connection with its 1997 fiscal year-end "bill and hold" transaction, ABNH fraudulently recognized approximately $6 million in revenue in fiscal year 1997. ABN caused ABNH to file with the Commission a Registration Statement on Form S-1 in July 1998, and ABN filed with the Commission an annual report on Form 10-K for fiscal year 1997, and a quarterly report on Form 10-Q for the first quarter of fiscal year 1998, all of which contained, among other things, materially false and misleading financial statements because ABNH had improperly recognized revenue for this "bill and hold" transaction. As a result of the foregoing, ABN and ABNH violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5. ABN also violated Sections 13(a) and 13(b)(2)(A) and (B) of the Exchange Act, and Exchange Act Rules 12b-20 and 13a-1. In addition, by providing ABNH's auditors with the two false memoranda that Lerlo participated in creating in January 1999, ABNH's former President violated Exchange Act Rule 13b2-2. 
+
+ As a result of his conduct, Lerlo was a cause of ABNH's and ABN's violations set forth above and violated Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder. Lerlo was reckless in not knowing that by falsifying ABNH receiving documents in connection with ABNH's fiscal year-end 1997 "bill and hold" sale, he would cause ABN's and ABNH's financial statements to become materially false and misleading. In addition, Lerlo, at the request of ABNH's former President, assisted in creating two memoranda in January 1999, which he knew falsely stated that some of the holograms produced by the subcontractor in 1997 were defective and had to be replaced with new reels in 1998. Lerlo knew these memoranda would be provided to ABNH's auditors, and, in fact, they were. As a result of this conduct, Lerlo was a cause of ABNH's former President's violation of Rule 13b2-2. 
+
+ IV. 
+
+ Lerlo has submitted an Offer of Settlement in which, without admitting or denying the findings herein, he consents to the Commission's entry of this Order, which: (1) makes findings, as set forth above; and (2) orders Lerlo to cease and desist from committing or causing any violation, or any future violation,of certain provisions of the federal securities laws, as set forth below. As set forth in Lerlo's Offer of Settlement, Lerlo undertakes to cooperate with Commission staff in connection with this action and any related judicial or administrative proceeding or investigation commenced by the Commission or to which the Commission is a party. 
+
+ V. 
+
+ Based on the foregoing, the Commission deems it appropriate to accept Respondent's Offer and impose the relief specified therein. 
+
+ Accordingly, IT IS HEREBY ORDERED that pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, John Lerlo cease and desist from committing or causing any violation, or any future violation, of Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act, and Exchange Act Rules 10b-5, 13b2-1, and 13b2-2, and that he cease and desist from causing any violation, or any future violation, of Sections 13(a) and 13(b)(2)(A) and (B) of the Exchange Act, and Exchange Act Rules 12b-20 and 13a-1. 
+
+ IT IS HEREBY FURTHER ORDERED that Lerlo shall comply with his undertaking described in Section IV. above. 
+
+ By the Commission. 
+
+ Jonathan G. Katz 
+Secretary 
+
+ 
+
+ 
+
+ Footnotes 
+
+ 
+	 
+		 
+			   1   
+			 The findings herein are made pursuant to the Respondent's Offer and are not binding on any other person or entity in this or any other proceeding. 
+		 
+		 
+			   2   
+			 Under GAAP, revenue is ordinarily recognized when, among other things, delivery has occurred. Revenue may also be recognized in a "bill and hold" transaction whereby a customer agrees to purchase the goods but the seller retains physical possession until the customer requests shipment to designated locations. The Commission's Accounting and Auditing Enforcement Release Number 108 states that revenue may be recognized on "bill and hold" sales only if certain conditions are met. 
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diff --git a/raw/aaer/2001/AAER-1426.txt b/raw/aaer/2001/AAER-1426.txt
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+ SECURITIES EXCHANGE ACT OF 1934
+ Release No.    44581 / July 20, 2001    
+  ACCOUNTING AND AUDITING ENFORCEMENT
+ Release No.     1426 / July 20, 2001     
+  ADMINISTRATIVE PROCEEDING
+ File No.  3-10537
+
+        In the Matter of    
+     RICHARD P. MACCHIARULO, CPA    
+        Respondent. 
+	      
+	    : : : : : :    
+ ORDER INSTITUTING PUBLIC  
+ADMINISTRATIVE PROCEEDINGS  
+PURSUANT TO RULE 102(e) OF THE 
+COMMISSION'S RULES OF PRACTICE, 
+MAKING FINDINGS, AND IMPOSING 
+REMEDIAL SANCTIONS     I.   
+
+  The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be, and they hereby are, instituted against Richard P. Macchiarulo ("Respondent" or "Macchiarulo") pursuant to Rule 102(e)(3) of the Commission's Rules of Practice.  1    II.   
+
+  In anticipation of the institution of these public administrative proceedings, Respondent has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept.  Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except that Respondent admits the jurisdiction of the Commission over him and the subject matter of these proceedings, and admits the Commission's finding that a Final Judgment of Permanent Injunction ("Final Judgment") has been entered against him as set forth in Section III.D.,  Respondent consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions ("Order").
+
+  III.   
+
+  On the basis of this Order and Respondent's Offer, the Commission makes the findings set forth below: 
+
+  A. Macchiarulo, age 39,   served as Vice President - Finance of American Bank Note Holographics, Inc. ("ABNH"), a Delaware corporation with its principal executive offices located in Elmsford, New York, from June 1997, until his resignation on February 4, 1999.  Prior to this period, Macchiarulo served as Director of Financial Reporting and Budgets for American Banknote Corporation ("ABN"), a publicly traded holding company incorporated in Delaware, with its principal offices located in New York, New York.  Macchiarulo is, and at all relevant times was, a Certified Public Accountant licensed by the state of New York.  
+
+  B. Until July 1998, ABNH was a wholly-owned subsidiary of ABN.  Thereafter, ABNH's stock was, at all relevant times, registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and ABNH filed quarterly reports with the Commission. 
+
+  C. ABN's stock was, during all relevant times, registered pursuant to Section 12(b) of the Exchange Act, and ABN filed quarterly and annual reports with the Commission.  
+
+  D. On July 18, 2001, the Commission filed a Complaint against Macchiarulo in  Securities and Exchange Commission v. Richard P. Macchiarulo  (" SEC v. Macchiarulo ") (Civil Action No. 01 CV 6454, USCD, S.D.N.Y.).  On January 12, 2001, Macchiarulo consented to the entry of the Final Judgment against him in  SEC v. Macchiarulo , without admitting or denying the allegations of the Complaint, except as to subject matter jurisdiction, which Macchiarulo admitted.  On July 18, 2001, the United Sates District Court for the Southern District of New York entered the Final Judgment which:  (1) permanently enjoined Macchiarulo from, directly or indirectly, violating Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5, 13b2-1, and 13b2-2 thereunder, and aiding and abetting violations of Sections 13(a), 13(b)(2)(A) and (B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder; (2) ordered Macchiarulo to disgorge an amount equal to losses illegally avoided by insider trading plus prejudgment interest thereon; (3) ordered Macchiarulo to pay a civil penalty pursuant to the Insider Trading Sanctions Act of 1984; and (4) prohibited Macchiarulo, for a period of ten years, from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act.   
+
+  D. The Commission's Complaint in  SEC v. Macchiarulo  alleged, among other things, that Macchiarulo engaged in a fraudulent scheme which resulted in ABNH filing with the Commission a Registration Statement on Form S-1 that contained materially false and misleading financial statements pertaining to ABNH for fiscal year 1997, as well as the interim quarters for fiscal year 1997 and for the first quarter of fiscal year 1998, and filing with the Commission materially false and misleading financial statements on Form 10-Q for the second and third quarters of fiscal year 1998.  According to the Complaint, Macchiarulo's conduct also resulted in ABN filing materially false and misleading financial statements on Form 10-K, for the fiscal year ended December 31, 1997, and on Form 10-Q, for the first three quarters of the fiscal years 1997 and 1998.  
+
+  The Complaint alleged that Macchiarulo engaged in a number of improper accounting practices that he knew, or was reckless in not knowing, would materially increase ABN's and ABNH's annual and quarterly  revenue and net income in a departure from generally accepted accounting principles ("GAAP"), including:  recognizing revenue on "bill and hold" sales of holograms that did not meet the criteria for "bill and hold" sales, recognizing revenue on shipments of work in process and with respect to holograms that were never shipped, recognizing revenue for holograms shipped to, but not purchased by, customers, recognizing revenue for holograms shipped to third-party warehouses which the customers had not purchased, and holding open quarters in order to record additional revenue.  
+
+  The Complaint also alleged that as a result of Macchiarulo's conduct, ABN's and ABNH's books, records, and accounts were falsified and consequently ABN and ABNH failed to make and keep books, records, and accounts that accurately and fairly reflected their transactions and dispositions of assets, and that ABN and ABNH failed to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions were recorded as necessary to permit preparation of financial statements in conformity with GAAP or other criteria applicable to such statements.  The Complaint further alleged that Macchiarulo altered copies of certain documents and provided the altered documents to ABN's auditors during the audit of ABN's financial statements for fiscal year 1997.  Finally, the Complaint alleged that Macchiarulo violated the anti-fraud provisions of the federal securities law when, in breach of a fiduciary duty he owed to ABNH, he told a friend in December 1998 that it would be a good time for the friend to sell his ABNH stock, which the friend did sell, thereby avoiding trading losses. 
+
+  IV.
+
+  In view of the foregoing, the Commission deems it appropriate to accept Macchiarulo's Offer, and, 
+
+  ACCORDINGLY IT IS HEREBY ORDERED, effective immediately, that Macchiarulo be, and hereby is, permanently suspended from appearing or practicing before the Commission as an accountant.
+
+  By the Commission 
+
+                Jonathan G. Katz 
+               Secretary
+  
+
+ 
+     1        Rule 102(e)(3) provides, in relevant part, that: 
+
+ The Commission, with due regard to the public interest and without preliminary hearing, may, by order, temporarily suspend from appearing or practicing before it any . . . accountant . . . who has been by name . . . permanently enjoined by any court of competent jurisdiction, by reason of his or her misconduct in an action brought by the Commission, from violating or aiding and abetting the violation of any provision of the Federal securities laws or of the rules and regulations thereunder.      
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diff --git a/raw/aaer/2001/AAER-1433.txt b/raw/aaer/2001/AAER-1433.txt
new file mode 100644
index 0000000000000000000000000000000000000000..4734600060ebb07381c9f9fe87586e6c331d1631
--- /dev/null
+++ b/raw/aaer/2001/AAER-1433.txt
@@ -0,0 +1,1366 @@
+
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+              Richard I. Berger and Donna M. Richardson
+           
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+        Richard I. Berger and Donna M. Richardson
+       
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+ Litigation Release No. 17100 / August 13, 2001
+
+  Accounting and Auditing Enforcement Release No. 1433 / August 13, 2001
+
+   SEC V. RICHARD I. BERGER AND DONNA M. RICHARDSON , Civil Action No. 00-10351 WJR (Mcx) (C.D. Cal.)
+
+  The Securities and Exchange Commission ("Commission") announced that on August 7, 2001, the Honorable William J. Rea, United States District Judge for the Central District of California, entered a judgment of permanent injunction against Donna M. Richardson ("Richardson"), the former Chief Financial Officer of Craig Consumer Electronics, Inc. ("Craig"), a former marketer of consumer electronic products located in Los Angeles County, California.
+
+  The Commission filed its complaint on September 27, 2000 in which it alleged that Richardson, a resident of Dracut, Massachusetts, misstated and omitted material facts regarding Craig's precarious financial condition in an initial public offering and in periodic financial reports filed in 1996 and 1997.  Craig's voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code was dismissed in August 1998.
+
+  Without admitting or denying the allegations contained in the complaint, Richardson consented to a permanent injunction against future violations of the antifraud provisions (Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder), the reporting provision (Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder), record-keeping provision (Section 13(b)(2)(A) of the Exchange Act), internal controls provision (Section 13(b)(2)(B) of the Exchange Act), books and records provision (Rule 13b2-1 of the Exchange Act), knowing circumvention of internal controls provisions (Section 13(b)(5) of the Exchange Act) and lying to an accountant provision (Rule  13b2-2 of the Exchange Act).
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diff --git a/raw/aaer/2001/AAER-1437.txt b/raw/aaer/2001/AAER-1437.txt
new file mode 100644
index 0000000000000000000000000000000000000000..e144ed84820672337702d1c605683429a52bdfd9
--- /dev/null
+++ b/raw/aaer/2001/AAER-1437.txt
@@ -0,0 +1,1530 @@
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+              Indus International, Inc.
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+
+ SECURITIES EXCHANGE ACT OF 1934
+ Release No. 44764 / September 5, 2001
+  ACCOUNTING AND AUDITING ENFORCEMENT
+ Release No.   1437 / September 5, 2001
+  ADMINISTRATIVE PROCEEDING
+ File No. 3-10563
+  
+      In the Matter of 
+  INDUS INTERNATIONAL, INC.
+  Respondent 
+    
+  : : : : : : :   
+ ORDER INSTITUTING PUBLIC  
+CEASE-AND-DESIST PROCEEDING, MAKING  
+FINDINGS AND ISSUING A CEASE-AND-DESIST  
+ORDER AGAINST INDUS INTERNATIONAL, INC.
+    I.
+
+    The Securities and Exchange Commission ("Commission") deems it appropriate that a public cease-and-desist proceeding be instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Indus International, Inc. ("Indus" or the "Company" or the "Respondent").
+
+    Accordingly, IT IS HEREBY ORDERED that a cease-and-desist proceeding against Indus be, and hereby is, instituted.
+
+  II.
+
+    In anticipation of the institution of this proceeding, Indus has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept.  Solely for the purpose of this proceeding and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein except that Indus admits the jurisdiction of the Commission over it and over the subject matter of this proceeding, Indus consents to the issuance of this Order Instituting Public Cease-and-Desist Proceeding, Making Findings and Issuing a Cease-and-Desist Order Against Indus International, Inc. ("Order").
+
+  III.
+
+    On the basis of this Order and the Offer, the Commission makes the following findings:
+
+  A. Respondent
+
+  Indus is a San Francisco, California corporation that manufactures enterprise asset management software and provides related services.  On August 25, 1997, Indus merged with TSW International, Inc. located in Atlanta, Georgia.  Indus's common stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act and is quoted on the Nasdaq Stock Market.
+
+  B. Summary   
+
+    This matter involves a one-quarter financial reporting fraud by former executives of Indus.  In September 1999, in order to meet analysts' expectations, Indus' former Chief Administrative Officer and head of Sales ("CAO"), along with its Vice President of Manufacturing Industry Sales ("VP of Sales") and its General Manager of Sales Operations ("General Manager"), provided side letters to two customers and then hid them from Indus' finance staff.  Each side letter granted the customer the right to cancel its contract with Indus, and thus made it improper for Indus to recognize revenue on the deal.  The finance staff recognized revenue, unaware of the cancellation provisions.  As a result of these fraudulent deals, Indus' original Form 10-Q for the September 30, 1999 quarter improperly overstated the Company's revenue by $3.7 million (8.1%) and its income from operations by approximately $2.4 million (300.8%).
+
+    In March 2000, after an internal investigation, Indus filed with the Commission restated financials for the September 1999 quarter that showed:  restated revenue of $45.8 million, compared with previously reported revenue of $50.9 million (an 11.1% overstatement), and restated income from operations of $0.8 million, compared to previously reported income from operations of $4.5 million (a 574.7% overstatement).  The two fraudulent deals orchestrated by the CAO and the two members of the sales staff were the primary components of the restatement.
+
+  C. The Original Equipment Manufacturer Contractor Deal
+
+      1. Indus Personnel Negotiated a Contingent Contract With An Original Equipment Manufacturer Contractor and Concealed the Contingency from the Accounting Department.  
+
+    On August 10, 1999, an Original Equipment Manufacturer contractor ("OEM Contractor") placed an order with Indus to license $1.7 million of Indus software and over $300,000 in services related to that software.  The OEM Contractor intended to use the software as part of a larger project (which it had bid upon) for its end user.  The OEM Contractor followed this order with a signed contract with Indus dated September 9, 1999 (the "September 9 contract").  However, both the purchase order and the September 9 contract were expressly contingent on the OEM Contractor being chosen to work on the end user project.  The end user was expected to announce its decision on or about September 15, 1999, but did not do so.  Then, on September 29, Indus learned that the end user would not make its final decision until mid-October 1999, which was in the next fiscal quarter.  
+
+  That same day, the CAO directed the General Manager to get a new contract from the OEM Contractor with the end user contingency removed from the body of the contract and documented in a separate side agreement.  Working with the VP of Sales, the General Manager prepared a new contract for the OEM Contractor that removed the contingency, drafted a side letter that documented the OEM Contractor's right to cancel and signed the side letter in the name of the VP of Sales.
+
+  The OEM Contractor refused to accept the side letter.  However, the OEM Contractor did agree to move the contingency to a contract Addendum.  The Addendum once again specified that the OEM Contractor's contract with Indus was contingent on the OEM Contractor winning the end user contract.  The Addendum gave the OEM Contractor until October 20, 1999 to cancel the deal.  The OEM Contractor signed the agreement, including the Addendum, and sent it to the General Manager for receipt on September 30 (the "September 30 contract") and Indus shipped software under the contract to the OEM Contractor.
+
+  In early October 1999, Indus' accounting department asked both the CAO and the General Manager for a copy of the September 30 contract for revenue recognition purposes.  The CAO and the General Manager provided copies of the contract, but each withheld the Addendum from the accounting staff.  As a result, Indus' accounting department improperly recognized approximately $1.7 million in revenue on the OEM Contractor deal for the September 1999 quarter.    2. After the OEM Contractor Cancelled the Deal, the CAO Directed the Scheme to Conceal the Cancellation from Indus' Accounting Department.   
+
+  In late October 1999, the OEM Contractor learned that it had failed to win the end user contract.  As a result, the OEM Contractor invoked its right to cancel the contract with Indus and returned the software to the Company.  At about the same time, Indus' accounting department contacted the OEM Contractor to inquire why the OEM Contractor had failed to make its initial payment under the September 30 contract.  The OEM Contractor informed the accounting department that it had exercised its right to cancel the September 30 contract and had returned the software to Indus.
+
+  When Indus accounting personnel questioned the VP of Sales and the General Manager about this, the accounting personnel were told that the OEM Contractor was mistaken, that the September 30 contract was valid and that the software would be re-shipped to the OEM Contractor.  The CAO then directed the VP of Sales to create false shipping documents to convince Indus' accounting department that Indus had re-shipped the software to the customer. 
+
+      3. The CAO Also Procured a Misleading Audit Confirmation from the OEM Contractor.
+
+    In November 1999, the CAO and the VP of Sales met with the OEM Contractor in an effort to convince the OEM Contractor to take the software back and use it on another project.  To that end, the CAO had prepared and signed a letter that purported to extend the contract termination date on the September 30 contract to January 31, 2000.  However, the OEM Contractor refused to extend the deal and declined to accept the software.
+
+  By this time, the CAO was also concerned that his scheme would be discovered by Indus' outside auditors during the annual audit confirmation process.  Thus, at the same November meeting, the CAO asked the OEM Contractor to sign a misleading audit confirmation letter saying that the OEM Contractor received the software and that they would pay for it.  The OEM Contractor refused and indicated that if he received a confirmation request he would not sign it.  The CAO then asked the OEM Contractor to return a letter only stating that it was the OEM Contractor's policy not to respond to audit letters.  The meeting ended without an agreement as to how the OEM Contractor would respond to the audit confirmation.
+
+  In January 2000, after further discussions with the CAO, the OEM Contractor returned a misleading response to an audit confirmation request from Indus' outside auditors.  The audit confirmation request asked the OEM Contractor to confirm that, as of November 30, 1999 it owed Indus approximately $2 million.  1    In its response, the OEM Contractor "acknowledged" the existence of the September 30 contract and "acknowledged" that the contract called for certain payments totaling more than $2 million.  However, the response failed to disclose that, prior to November 30, 1999, the OEM Contractor had cancelled the contract pursuant to the cancellation right contained in the Addendum.  
+
+  D. The Puerto Rican Distributor Deal
+
+      1. The CAO and the General Manager Negotiated a Contingent Contract With a Puerto Rican Distributor.    
+
+    On September 30, 1999, the CAO learned that another significant deal that Indus had forecast to close in the September 1999 quarter had fallen through.  To replace that revenue, the CAO told an Indus salesperson to get a $2 million order from a Puerto Rican distributor who was an Indus reseller.  The Puerto Rican distributor said that it would only do the deal if it were given a right of cancellation.  The CAO authorized the right of cancellation.  The CAO then signed a side letter that provided that the distributor could cancel the contract within 90 days.  The General Manager forwarded the side letter on September 30 to the Puerto Rican distributor. 
+
+  The next day, October 1, 1999, the General Manager called the Puerto Rican distributor to inquire about the contract.  The Puerto Rican distributor's President had not yet approved the deal.  To make it appear that the contract had been finalized prior to the end of Indus' third quarter, the General Manager asked the Puerto Rican distributor to backdate the contract and to adjust the date on his facsimile machine to September 30.  The Puerto Rican distributor did as the General Manager requested. 
+
+      2. The CAO and the General Manager Concealed the Contingency from Indus' Accounting Department.
+
+  When the General Manager received the signed Puerto Rican distributor contract on October 1, he saw that the Puerto Rican distributor had typed the right of cancellation onto the contract form.  The Puerto Rican distributor refused to remove the language from the contract.  The General Manager then called the CAO, who told the General Manager to eliminate the language from the contract.  The General Manager altered the contract to reflect this change.  The CAO then took steps to conceal the contingency from the Indus accounting staff.  The CAO signed another side letter dated December 29, 1999 extending the Puerto Rican distributor's cancellation date for another 90 days.
+
+  As a result of this fraud, Indus improperly recognized $2 million in revenue in the September 1999 quarter on the Puerto Rican distributor transaction.
+
+  E. Indus' Lack of Internal Controls
+
+    The fraud at Indus was made possible, in part, by the Company's poor internal controls.  The General Manager, who was responsible for contract administration, reported to the head of the Sales department, rather than to Indus' accounting or finance staff.  The CAO (who was also the head of Sales) took advantage of this reporting structure and the company lacked sufficient internal controls to detect or prevent him from doing so.
+
+  F. Legal Conclusions 
+
+    As described in Parts III(B) through (E) above, during the third quarter of 1999, former Indus executives engaged in fraudulent conduct to improperly boost the Company's financial results.  As a result of the fraud, Indus's financial statements for the third quarter (which were filed with the Commission and disseminated to investors) were materially false and misleading.  In addition, the Company failed to maintain books, records and accounts that, in reasonable detail, accurately and fairly reflected its transactions and dispositions of assets and failed to implement and maintain a system of internal accounting controls sufficient to permit the preparation of financial statements in conformity with Generally Accepted Accounting Principles ("GAAP").  Finally, the Company failed to maintain and implement a system of internal accounting controls sufficient to provide reasonable assurances that its financial statements were prepared in conformity with GAAP. 
+
+    Based on the foregoing, the Commission concludes that the Company violated Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder.
+
+  IV.
+
+    In determining to accept the Offer, the Commission considered remedial acts promptly undertaken by Respondent and cooperation afforded to the Commission staff.
+
+  V.
+
+    Based on the foregoing, the Commission deems it appropriate to accept the Offer submitted by Indus.  Accordingly, IT IS HEREBY ORDERED pursuant to Section 21C of the Exchange Act that:
+
+    Indus cease and desist from committing or causing any violations or any future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder.
+
+    By the Commission.
+
+              Jonathan G. Katz
+             Secretary
+
+  
+
+ 
+ Footnote 
+     1       The $2.0 million figure includes the $1.7 million Indus took into revenue in the September 1999 quarter plus subsequent services called for under the contract.    
+
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diff --git a/raw/aaer/2001/AAER-1438.txt b/raw/aaer/2001/AAER-1438.txt
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index 0000000000000000000000000000000000000000..23880093bab7585b991b9062f8b98ffcefbb0125
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@@ -0,0 +1,1517 @@
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+     SEC.gov | Carl Albano 
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+              Carl Albano
+           
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+        Carl Albano
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+              ACCOUNTING AND AUDITING ENFORCEMENT
+ Release No.  1438 / September 5, 2001 
+  ADMINISTRATIVE PROCEEDING
+ File No. 3-10564 
+  
+     In the Matter of 
+ CARL ALBANO 
+  Respondent  
+    
+  : : : : : :   
+ ORDER INSTITUTING PUBLIC  
+CEASE-AND-DESIST PROCEEDING, MAKING  
+FINDINGS AND ISSUING A CEASE-AND-DESIST  
+ORDER AGAINST CARL ALBANO
+    I.
+
+    The Securities and Exchange Commission ("Commission") deems it appropriate that a public cease-and-desist proceeding be instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Carl Albano ("Albano" or the "Respondent").
+
+    Accordingly, IT IS HEREBY ORDERED that a cease-and-desist proceeding against Albano be, and hereby is, instituted.
+
+  II.
+
+    In anticipation of the institution of this proceeding, Albano has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept.  Solely for the purpose of this proceeding and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein except that Albano admits the jurisdiction of the Commission over it and over the subject matter of this proceeding, Albano consents to the issuance of this Order Instituting Public Cease-and-Desist Proceeding, Making Findings and Issuing a Cease-and-Desist Order Against Carl Albano ("Order").
+
+  III.
+
+    On the basis of this Order and the Offer, the Commission makes the following findings:
+
+  A. Respondent
+
+  Carl Albano, age 52, was Indus' General Manager of Sales Operations from 1997 until he left the Company in May 2000.  Albano lives in Marietta, Georgia.  
+
+  B. Related Party
+
+  Indus is a San Francisco, California corporation that manufactures enterprise asset management software and provides related services.  On August 25, 1997, Indus merged with TSW International, Inc. located in Atlanta, Georgia.  Indus' common stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act and is quoted on the Nasdaq Stock Market.
+
+  C. Summary   
+
+    This matter involves a one-quarter financial reporting fraud by former executives of Indus.  In September 1999, in order to meet analysts' expectations, Indus' former Chief Administrative Officer and head of Sales ("CAO"), along with Carl Albano ("Albano") and its Vice President of Manufacturing Industry Sales ("VP of Sales"), provided side letters to two customers and then hid them from Indus' finance staff.  Each side letter granted the customer the right to cancel its contract with Indus, and thus made it improper for Indus to recognize revenue on the deal.  The finance staff recognized revenue, unaware of the cancellation provisions.  As a result of these fraudulent deals, Indus' original Form 10-Q for the September 30, 1999 quarter improperly overstated the Company's revenue by $3.7 million (8.1%) and its income from operations by approximately $2.4 million (300.8%).
+
+    In March 2000, after an internal investigation, Indus filed with the Commission restated financials for the September 1999 quarter that showed:  restated revenue of $45.8 million, compared with previously reported revenue of $50.9 million (an 11.1% overstatement), and restated income from operations of $0.8 million, compared to previously reported income from operations of $4.5 million (a 574.7% overstatement).  The two fraudulent deals orchestrated by the CAO with Albano and the VP of Sales were the primary components of the restatement.
+
+  D. The Original Equipment Manufacturer Contractor Deal
+
+      1. Indus Personnel Negotiated a Contingent Contract With An Original Equipment Manufacturer Contractor and Concealed the Contingency from the Accounting Department.  
+
+    On August 10, 1999, an Original Equipment Manufacturer contractor ("OEM Contractor") placed an order with Indus to license $1.7 million of Indus software and over $300,000 in services related to that software.  The OEM Contractor intended to use the software as part of a larger project (which it had bid upon) for its end user.  The OEM Contractor followed this order with a signed contract with Indus dated September 9, 1999 (the "September 9 contract").  However, both the purchase order and the September 9 contract were expressly contingent on the OEM Contractor being chosen to work on the end user project.  The end user was expected to announce its decision on or about September 15, 1999, but did not do so.  Then, on September 29, Indus learned that the end user would not make its final decision until mid-October 1999, which was in the next fiscal quarter.  
+
+  That same day, the CAO directed Albano to get a new contract from the OEM Contractor with the end user contingency removed from the body of the contract and documented in a separate side agreement.  Working with the VP of Sales, Albano prepared a new contract for the OEM Contractor that removed the contingency, drafted a side letter that documented the OEM Contractor's right to cancel and signed the side letter in the name of the VP of Sales.
+
+  The OEM Contractor refused to accept the side letter.  However, the OEM Contractor did agree to move the contingency to a contract Addendum.  The Addendum once again specified that the OEM Contractor's contract with Indus was contingent on the OEM Contractor winning the end user contract.  The Addendum gave the OEM Contractor until October 20, 1999 to cancel the deal.  The OEM Contractor signed the agreement, including the Addendum, and sent it to Albano for receipt on September 30 (the "September 30 contract") and Indus shipped software under the contract to the OEM Contractor.
+
+  In early October 1999, Indus' accounting department asked both the CAO and Albano for a copy of the September 30 contract for revenue recognition purposes.  The CAO and Albano provided copies of the contract, but each withheld the Addendum from the accounting staff.  As a result, Indus' accounting department improperly recognized approximately $1.7 million in revenue on the OEM Contractor deal for the September 1999 quarter.    2. After the OEM Contractor Cancelled the Deal, the CAO Directed the Scheme to Conceal the Cancellation from Indus' Accounting Department.   
+
+  In late October 1999, the OEM Contractor learned that it had failed to win the end user contract.  As a result, the OEM Contractor invoked its right to cancel the contract with Indus and returned the software to the Company.  At about the same time, Indus' accounting department contacted the OEM Contractor to inquire why the OEM Contractor had failed to make its initial payment under the September 30 contract.  The OEM Contractor informed the accounting department that it had exercised its right to cancel the September 30 contract and had returned the software to Indus.
+
+  When Indus accounting personnel questioned the VP of Sales and Albano about this, the accounting personnel were told that the OEM Contractor was mistaken, that the September 30 contract was valid and that the software would be re-shipped to the OEM Contractor.  The CAO then directed the VP of Sales to create false shipping documents to convince Indus' accounting department that Indus had re-shipped the software to the customer. 
+
+  E. The Puerto Rican Distributor Deal
+
+      1. The CAO and Albano Negotiated a Contingent Contract With a Puerto Rican Distributor.    
+
+    On September 30, 1999, the CAO learned that another significant deal that Indus had forecast to close in the September 1999 quarter had fallen through.  To replace that revenue, the CAO told an Indus salesperson to get a $2 million order from a Puerto Rican distributor who was an Indus reseller.  The Puerto Rican distributor said that it would only do the deal if it were given a right of cancellation.  The CAO authorized the right of cancellation.  The CAO then signed a side letter that provided that the distributor could cancel the contract within 90 days.  Albano forwarded the side letter on September 30 to the Puerto Rican distributor. 
+
+  The next day, October 1, 1999, Albano called the Puerto Rican distributor to inquire about the contract.  The Puerto Rican distributor's President had not yet approved the deal.  To make it appear that the contract had been finalized prior to the end of Indus' third quarter, Albano asked the Puerto Rican distributor to backdate the contract and to adjust the date on his facsimile machine to September 30.  The Puerto Rican distributor did as Albano requested. 
+
+      2. The CAO and Albano Concealed the Contingency from Indus' Accounting Department.
+
+  When Albano received the signed Puerto Rican distributor contract on October 1, he saw that the Puerto Rican distributor had typed the right of cancellation onto the contract form.  The Puerto Rican distributor refused to remove the language from the contract.  Albano then called the CAO, who told him to eliminate the language from the contract.  Albano altered the contract to reflect this change.  The CAO then took steps to conceal the contingency from the Indus accounting staff.  The CAO signed another side letter dated December 29, 1999 extending the Puerto Rican distributor's cancellation date for another 90 days.
+
+  As a result of this fraud, Indus improperly recognized $2 million in revenue in the September 1999 quarter on the Puerto Rican distributor transaction.
+
+  F. Indus' Lack of Internal Controls
+
+    The fraud at Indus was made possible, in part, by the Company's poor internal controls.  Albano, who was responsible for contract administration, reported to the head of the Sales department, rather than to Indus' accounting or finance staff.  The CAO (who was also the head of Sales) took advantage of this reporting structure and the Company lacked sufficient internal controls to detect or prevent him from doing so.
+
+  G. Legal Conclusions 
+
+    As described in Parts III(C) through (F) above, during the third quarter of 1999, former Indus executives engaged in fraudulent conduct to improperly boost the Company's financial results.  Albano's actions, as described above, caused Indus to issue financial statements for the third quarter (which were filed with the Commission and disseminated to investors) that were materially false and misleading.  In addition, Albano caused the Company to fail to maintain books, records and accounts that, in reasonable detail, accurately and fairly reflected its transactions and dispositions of assets.  Albano also knowingly circumvented Indus' internal accounting controls by withholding side letters from Indus' accounting staff.
+
+    Based on the foregoing, the Commission concludes that Albano violated Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder, and caused violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder.
+
+  IV.
+
+    In determining to accept the Offer, the Commission considered remedial acts promptly undertaken by Respondent and cooperation afforded to the Commission staff.
+
+  V.
+
+    Based on the foregoing, the Commission deems it appropriate to accept the Offer submitted by Albano.  Accordingly, IT IS HEREBY ORDERED pursuant to Section 21C of the Exchange Act that:
+
+    Albano cease and desist from committing or causing any violations of Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder, and causing any violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder.
+
+    By the Commission.
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+              Jonathan G. Katz
+             Secretary
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diff --git a/raw/aaer/2001/AAER-1439.txt b/raw/aaer/2001/AAER-1439.txt
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index 0000000000000000000000000000000000000000..ad63c5b5de75ad182fe2748ac00369ded1346cf7
--- /dev/null
+++ b/raw/aaer/2001/AAER-1439.txt
@@ -0,0 +1,1372 @@
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+              William Grabske, Robert Pocsik and Ralph Widmaier
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+        William Grabske, Robert Pocsik and Ralph Widmaier
+       
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+ Litigation Release No.   17116 / September 5, 2001
+
+  Accounting and Auditing Enforcement Release No. 1439 / September 5, 2001
+
+   SECURITIES AND EXCHANGE COMMISSION v. WILLIAM GRABSKE, ROBERT POCSIK AND RALPH WIDMAIER , United States District Court for the Northern District of California, Civil Action No. C 01-3355
+
+    The Securities and Exchange Commission today filed suit in federal district court against the former Chief Executive Officer ("CEO") and two other former officers of Indus International, Inc. ("Indus" or the "Company"), for their roles in a 1999 financial reporting fraud that caused the Company to overstate its quarterly operating income by more than 300%.  In a separate action, the Commission instituted administrative cease-and-desist proceedings against Indus and a fourth former employee for their roles in the scheme.  Indus, a manufacturer of enterprise asset management software, was headquartered in San Francisco, California at the time of the fraud; the Company is now based in Atlanta, Georgia.
+
+    Named in district court action were:  former President and CEO William Grabske, age 58, of Tiburon, California; former Chief Administrative Officer Robert Pocsik, age 49, of Sag Harbor, New York; and former Vice President of Manufacturing Industry Sales Ralph Widmaier, age 38, of Actworth, Georgia.  Named in the administrative filing, in addition to Indus, was Carl Albano, age 52, former General Manager of Contract Operations.
+
+  According to the Commission's filings, beginning in September 1999, as Indus approached the end of its third fiscal quarter, Grabske and Pocsik directed a scheme to fraudulently boost the Company's financial results to meet analysts' expectations.  As part of this scheme, Pocsik instructed Widmaier and Albano to obtain orders from two Indus customers, even though the orders were subject to cancellation.  The customer cancellation rights were documented in so-called side letters, which were then hidden from Indus' accounting staff.  As a result, Indus improperly recognized revenue on these orders in the quarter ended September 30, 1999.  The fraud caused Indus to overstate its revenue for the quarter by $3.7 million (8.1%) and its income from continuing operations by $2.4 million (300.8%).  Each of the orders was later cancelled.
+
+    The Commission's district court complaint charges Grabske, Pocsik and Widmaier with securities fraud (Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder); circumvention of Indus' internal accounting controls and falsification of records (Section 13(b)(5) of the Exchange Act and Rule 13b2-1); and aiding and abetting Indus' violations of the periodic reporting and books and records provisions (Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder).  In addition, the complaint charges Grabske and Pocsik with failing to devise and maintain adequate internal accounting controls and lying to accountants (Section 13(b)(2)(B) of the Exchange Act and Rule 13b2-2 thereunder). 
+
+  The complaint seeks injunctions against each defendant and monetary penalties.  In addition, the complaint seeks an order barring Grabske and Pocsik from serving as an officer or director of any public company and disgorgement of ill-gotten gains from sales of Indus stock from Widmaier.  Simultaneous with the filing of the Commission's civil complaint, Widmaier consented, without admitting or denying the allegations in the Commission's complaint, to the entry of a permanent injunction, disgorgement of his profits from stock sales of approximately $38,000, and a civil penalty of $15,000. 
+
+  In addition, the Commission instituted, and simultaneously settled, cease-and-desist proceedings against Indus and Albano.  The Commission's Order Instituting Proceedings against Indus finds that Indus materially misstated its financial results for the third quarter of fiscal 1999 and directs Indus to cease and desist from violations of the periodic reporting, internal controls and books and records provisions of the federal securities laws.  The Commission's Order Instituting Proceedings against Albano finds that Albano caused Indus to issue financial statements for the third quarter that were materially false and misleading and directs Albano to cease and desist from violations of the antifraud and internal control provisions and from causing violations of the periodic reporting and books and records provisions of the federal securities laws.  Indus and Albano consented to issuance of their respective Orders without admitting or denying the Orders' findings.
+
+  In a related matter, the United States Attorney's Office for the Northern District of California today announced that they had charged Grabske with criminal securities fraud, making false statements to the Commission, and other claims, and charged Pocsik with conspiracy to commit criminal securities fraud while at Indus.  
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diff --git a/raw/aaer/2001/AAER-1441.txt b/raw/aaer/2001/AAER-1441.txt
new file mode 100644
index 0000000000000000000000000000000000000000..48db6b93f381dea7a2c728ab3e0779f9924ee66b
--- /dev/null
+++ b/raw/aaer/2001/AAER-1441.txt
@@ -0,0 +1,1549 @@
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+              SECURITIES ACT OF 1933 
+Release No. 8001 / September 10, 2001 
+
+ SECURITIES EXCHANGE ACT OF 1934 
+Release No. 44779 / September 10, 2001 
+
+ ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 1441 / September 10, 2001 
+
+ ADMINISTRATIVE PROCEEDING 
+File No. 3-10568 
+
+  
+
+ 
+	 
+		 
+			 
+			 
+			 In the Matter of 
+
+			 WALTER T. REEDER, 
+
+			 Respondent 
+
+			  
+
+			  
+			 
+			 : 
+			: 
+			: 
+			: 
+			: 
+			: 
+			: 
+			 
+			 ORDER INSTITUTING PUBLIC 
+			PROCEEDINGS PURSUANT TO 
+			SECTION 8A OF THE SECURITIES ACT 
+			OF 1933 AND SECTION 21C OF THE 
+			SECURITIES EXCHANGE ACT OF 1934, 
+			MAKING FINDINGS, AND ISSUING 
+			CEASE-AND-DESIST ORDER 
+		 
+	 
+ 
+
+  I.  
+
+ The Securities and Exchange Commission ("Commission") deems it appropriate to institute public administrative proceedings against Respondent Walter Thompson Reeder ("Reeder") pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Section 21C of the Securities Exchange Act of 1934 ("Exchange Act"). 
+
+ In anticipation of the institution of these administrative proceedings, Reeder has submitted an Offer of Settlement ("Offer"), which the Commission has determined that it is in the public interest to accept. Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission or to which the Commission is a party, prior to a hearing and without admitting or denying the findings contained herein, except that he admits the jurisdiction of the Commission over him and over the subject matter of these proceedings, Respondent Reeder consents to the issuance of this Order Instituting Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, and Issuing a Cease-and-Desist Order ("Order") and to the entry of the findings and the issuance of the cease-and-desist order as set forth below. 
+
+  II.  
+
+ Accordingly, IT IS ORDERED that said proceedings be, and hereby are, instituted. 
+
+  III.  
+
+ On the basis of the Order and Offer, the Commission finds the following:  1   
+
+  A. Respondent  
+
+ Walter Thompson Reeder, 48, has served as vice president and a director of Swisher International, Inc. since March 1988. Reeder is the second highest-ranking officer at the company and reports directly to CEO Patrick Swisher ("Swisher"). Reeder also is the majority owner of Charlotte Hygiene, the company that purchased the Charlotte hygiene franchise. Reeder resides in Charlotte, NC. 
+
+  B. Other Relevant Persons and Entities  
+
+ Swisher International Inc. (SII), a Nevada corporation headquartered in Charlotte, NC, is in the business of franchising commercial and residential hygiene services. Following its initial public offering in 1993, SII registered with the Commission pursuant to Section 12(g) of the Exchange Act. Its common stock traded on the NASDAQ from April 1993 to May 1998 under the symbol SWSH and currently trades on the OTC bulletin board. On April 28, 2000, Swisher International filed a Form 15 terminating its registration with the Commission pursuant to Exchange Act Rule 12(g)(4), and is no longer required to file periodic reports with the Commission. 
+
+ Patrick Lee Swisher, 46, has been Chief Executive Officer and a director of SII since its inception. Swisher is also the majority owner of Lone Star Hygiene, LLC ("Lone Star"), a Texas corporation that bought and manages the Houston franchise. 
+
+ C.   The Premature Recognition of the Houston Franchise Sale  
+
+ SII and its Chairman Patrick L. Swisher overstated the company's earnings for the quarter ended July 31, 1996 by prematurely recording the $450,000 sale of the company-owned Houston franchise to a corporation Swisher set up and controlled. At Swisher's direction, SII improperly recognized the revenue in its Form 10-Q for the quarter ended July 31, 1996, despite the fact that the sale was not finalized. The $284,017 gain SII recorded on the sale was material as it enabled SII to report quarterly net income of $163,886 instead of a loss of $120,131. Swisher's and Reeder's intentional or reckless conduct resulted in the accounting staff recognizing the sale of the Houston franchise as a third quarter transaction, when in fact that transaction was not yet completed. 
+
+ SII's third quarter Form 10-Q also failed to disclose that Swisher was the majority owner of Lone Star. Such disclosures, known as related-party transaction disclosures, are required by Regulation S-X &sect 210.10,  Interim Financial Statements  [17 CFR § 210.10], and Statement of Financial Accounting Standards No. 57,  Related Party Disclosures . 
+
+ By virtue of his position and conversations he had with Swisher, Reeder knew that Swisher was the majority owner of Lone Star, the entity that purchased the Houston franchise. Reeder also knew that the company's financial statements did not reflect (1) that Swisher was the majority owner of Lone Star or (2) that it was a related-party transaction. Nonetheless, on or about February 14, 1997, Reeder reviewed and signed a representation letter requested by the auditors. In this letter, Reeder told the auditors that all "Related-party transactions and related amounts receivable or payable including sales, purchases, loans, transfers, leasing arrangements and guarantees, all of which have been recorded in accordance with the economic substance of the transactions" had been properly recorded and disclosed in the company's financial statements. SII's Form 10-K filed after the close of the audit did not disclose the related-party nature of the Houston franchise sale. 
+
+ On October 30, 1996, the company filed a Form S-3 registering 221,000 of 480,000 SII shares Swisher had recently transferred to Armand Investment Corporation ("Armand"), a Bahamian company for which Swisher was the sole director. The registration statement, which respondent Reeder signed as a director, did not disclose that Swisher was a beneficial owner of the shares, which was a material fact. 
+
+ Reeder knew that Swisher was the sole director of Armand. Through conversations with Swisher, Reeder knew that Swisher had initially contemplated using the Armand entity as the majority owner of Lone Star Hygiene instead of himself and therefore that Swisher controlled Armand. Reeder also understood Armand to be a retirement vehicle for Swisher. Subsequently, on January 21, 1997, Reeder witnessed Swisher's signature as an "Authorized Representative" and "President" of Armand Investment Corporation. Nonetheless, SII made no effort to amend or update the Form S-3. 
+
+  IV.  
+
+ Section 10(b) of the Exchange Act and Rule 10b-5 thereunder prohibits a person from making misstatements or omissions of material fact or engaging in any scheme to defraud in connection with the purchase or sale of a security. A fact is material if there is a substantial likelihood that a reasonable investor would consider the information to be important.  Basic, Inc. v. Levinson , 485 U.S. 224, 231-32 (1988). To violate Section 10(b) and Rule 10b-5, a defendant must act with scienter,  Aaron v. SEC , 446 U.S. 680, 695 (1980), defined as a mental state embracing intent to deceive, manipulate, or defraud.  Ernst & Ernst v. Hochfelder , 425 U.S. 185, 193 n.12 (1976). Recklessness also has been found to satisfy the scienter requirement.  See ,  e.g. ,  Decker v. Massey-Ferguson, Ltd. , 681 F.2d 111, 120 (2d Cir. 1982). 
+
+ Reeder's intentional or reckless conduct resulted in SII's accounting staff prematurely recognizing the Houston franchise sale in the third quarter of 1996, in violation of Section 10(b) and Rule 10b-5 thereunder. As a result, the financial statements included in SII's Form 10-Q for the quarter ended July 31, 1996 and the Form 10-K for the period ended October 31, 1996, were materially overstated. 
+
+ Section 13(b)(5) of the Exchange Act provides that no person shall knowingly falsify any book, record, or account or circumvent internal controls. Rule 13b2-1 prohibits the falsification of any book, record, or account subject to Section 13(b)(2)(A). Rule 13b2-2 prohibits an officer or director from making material false statements or omissions to an accountant in connection with an audit of an issuer's financial statements or the preparation of any document or report required to be filed with the Commission. By signing the representation letter that told the auditors that all related-party transactions had been disclosed, under the circumstances described above, Reeder's intentional or reckless conduct violated Section 13(b)(5). This conduct also violated Rules 13b2-1 and 13b2-2. Likewise, Reeder's conduct resulting in the creation of records reflecting the Houston franchise sale in the company's third quarter violated Rule 13b2-1. 
+
+ Section 17(a)(2) of the Securities Act, prohibits any person from obtaining money or property by means of untrue statements of material facts or omissions, in the offer or sale of securities. Section 17(a)(3) of the Securities Act proscribes "any transaction, practice or course of business, which operates or would operate as a fraud or deceit . . ." in the offer or sale of securities. A violation of these provisions may be established by a showing of negligence.  Aaron v. SEC,  448 U.S. 680, 697 (1980);  SEC v. Hughes Capital Corp.,  124 F.3d 449, 453-54 (3d Cir. 1997). Respondent violated Sections 17(a)(2) and (3) by signing the Form S-3 which omitted to disclose the material fact that Swisher beneficially owned Armand's 480,000 shares of SII stock. 
+
+  V.  
+
+ Based on the foregoing, the Commission finds that Respondent Walter Thompson Reeder violated Sections 17(a)(2) and (3) of the Securities Act and Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5, 13b2-1, and 13b2-2 thereunder. 
+
+  VI.  
+
+ In view of the foregoing, the Commission deems it appropriate to impose the following orders: 
+
+ Accordingly, IT IS HEREBY ORDERED, pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, that Respondent Walter Thompson Reeder cease and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and (3) of the Securities Act; and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1 and 13b2-2. 
+
+ By the Commission. 
+
+ Jonathan G. Katz 
+Secretary 
+
+ 
+
+ 
+
+ Footnote 
+
+  
+
+ 
+	 
+		 
+			   1    
+			 The findings herein are made pursuant to the Respondent's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding. 
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diff --git a/raw/aaer/2001/AAER-1442.txt b/raw/aaer/2001/AAER-1442.txt
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+              George Kelly Moore, CPA
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+        George Kelly Moore, CPA
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+       SECURITIES ACT OF 1933
+       Release No.   8003 / September 10, 2001
+        SECURITIES EXCHANGE ACT OF 1934
+       Release No.  44781 / September 10, 2001   
+        ACCOUNTING AND AUDITING ENFORCEMENT
+       Release No.    1442 / September 10, 2001
+        ADMINISTRATIVE PROCEEDING
+       File No.  3-10570
+
+              In the Matter of   
+        GEORGE KELLY MOORE, CPA 
+  Respondent. 
+    			  
+			    : : : : : : :   
+ ORDER INSTITUTING PUBLIC
+ PROCEEDINGS PURSUANT TO
+ SECTION 8A OF THE SECURITIES
+ ACT OF 1933, SECTION 21C OF 
+ THE SECURITIES EXCHANGE 
+ ACT OF 1934, AND RULE 102(e) OF THE
+ COMMISSION'S RULES OF PRACTICE,
+ MAKING FINDINGS, ISSUING CEASE-
+ AND-DESIST ORDER, AND IMPOSING
+ REMEDIAL SANCTIONS     I. 
+
+          The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest to institute public administrative proceedings against Respondent George Kelly Moore ("Moore"), pursuant to Section 8A of the Securities Act of 1933 ("Securities Act"), Section 21C of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule 102(e) of the Commission's Rules of Practice [17 C.F.R.§ 201.102(e)].  1    In anticipation of the institution of these administrative proceedings, Moore has submitted an Offer of Settlement ("Offer"), which the Commission has determined that it is in the public interest to accept.  Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission or to which the Commission is a party, prior to a hearing and without admitting or denying the findings contained herein, except that he admits the jurisdiction of the Commission over him and over the subject matter of these proceedings, Respondent Moore consents to the issuance of this Order Instituting Proceedings Pursuant to Section 8A of the Securities Act of 1933, Section 21C of the Securities Exchange Act of 1934, and Rule 102(e) of the Commission's Rules of Practice, Making Findings, Issuing Cease-and-Desist Order, and Imposing Remedial Sanctions ("Order"), and to the entry of the findings contained herein, and the imposition of the remedial sanctions set forth below.
+
+         II. 
+
+        Accordingly, IT IS ORDERED that said proceedings be, and hereby are, instituted.
+
+         III. 
+
+        On the basis of the Order and Offer, the Commission finds the following:  2     A.  Respondent 
+
+          George Kelly Moore, age 69, is a certified public accountant registered in the states of North Carolina and Florida, and was at all relevant times a board member, audit committee member, and paid consultant to Swisher International, Inc.
+
+         B.     Other Relevant Persons and Entities 
+
+            Swisher International, Inc. ("SII"), a Nevada corporation headquartered in Charlotte, NC, is in the business of franchising commercial and residential hygiene services.  Following its initial public offering in 1993, SII registered with the Commission pursuant to Section 12(g) of the Exchange Act.  Its common stock traded on the NASDAQ from April 1993 to May 1998 under the symbol SWSH and currently trades on the OTC bulletin board.  On April 28, 2000, SII filed a Form 15 terminating its registration with the Commission pursuant to Exchange Act Rule 12(g)(4), and is no longer required to file periodic reports with the Commission.
+
+            Patrick Lee Swisher ("Swisher"), 46, has been chief executive officer and a director of SII since its inception.  Swisher is also the majority owner of Lone Star Hygiene, LLC ("Lone Star"), a Texas corporation that bought and manages the Houston franchise.  
+
+          C.   The Premature Recognition of the Houston Franchise Sale 
+
+            SII and CEO Swisher, overstated the company's earnings for the third quarter ended July 31, 1996 by prematurely recording the $450,000 sale of the company-owned Houston franchise to a corporation Swisher set up and controlled.  At Swisher's direction, SII prematurely recognized the revenue in its Form 10-Q for the quarter ended July 31, 1996.  The $284,017 gain SII recorded on the sale was material as it enabled SII to report quarterly net income of $163,886 instead of a loss of $120,131.      
+
+            SII's third quarter Form 10-Q also failed to disclose that Swisher was the majority owner of Lone Star.  Such disclosures, known as related-party transaction disclosures, are required by Regulation S-X § 210.10,  Interim Financial Statements  [17 CFR § 210.10], and Statement of Financial Accounting Standards No. 57,  Related Party Disclosures . 
+
+        D.  Respondent Helped the Accounting Staff Make an Inaccurate Entry and Failed to See that SII Disclosed the Related Party Nature of the Sale 
+
+         Moore was Swisher's personal accountant and served on SII's board and audit committee from 1993 to 1998.  In 1995, when SII's CFO resigned, the company retained Moore to render services to the accounting department on an interim basis.  As a paid consultant earning $125 per hour, Moore advised the staff on the accounting treatment for selected transactions, and had a role in preparing the company's financial statements for inclusion in periodic reports.  
+
+        In September 1996, several weeks into SII's fourth quarter, Swisher falsely told the accounting staff that the company's sale of the profitable Houston franchise had closed the preceding July.  In accordance with Swisher's instruction, Moore, directly or indirectly, caused the accounting staff to make the journal entry that falsified the books by recording a $284,017 gain for the sale in the company's books and records for the quarter ended July 31, 1996.     
+
+        Through his conversations with Swisher, Moore knew that Swisher was the majority owner of Lone Star, the purchaser of the Houston franchise.  Although he reviewed SII's Form 10-Q for the quarter ended July 31,1996, and the Form 10-K for the period ended October 31, 1996, Moore did not identify, or require SII to identify, the Houston franchise sale as a related-party transaction in either filing.
+
+            On October 30, 1996, the company filed a Form S-3 registering 221,000 of 480,000 SII shares Swisher had recently transferred to Armand Investment Corporation ("Armand"), a Bahamian company for which Swisher was the sole director.  As a paid consultant, Moore billed the company to review the filing.  Moore knew or should have known that Swisher controlled Armand's shares.  As Swisher's personal accountant and through conversations with him, Moore knew that Swisher had initially contemplated using the Armand entity as the majority owner of Lone Star instead of himself.  Nonetheless, Moore signed the Form S-3 as an SII director.  Despite that knowledge and his review of the Form S-3, Moore did not disclose, or direct SII to disclose, that Swisher was a beneficial owner of Armand's shares, which was a material fact.  
+
+        E.  Respondent Failed to Disclose Another Material Related-Party Transaction 
+
+        On or about July 30, 1997, SII sold the company-owned Charlotte franchise to a corporation owned by a senior SII officer for $415,000.  SII recorded a $381,461 gain for the Charlotte sale.  This was a material transaction as it allowed the company to avoid reporting an approximately $133,000 quarterly loss. The Charlotte franchise sale was a related-party transaction, which fact was not disclosed in SII's Form 10-Q for the period ended July 31, 1997, as it should have been under Regulation S-X § 210.10,  Interim Financial Statements  [17 CFR § 210.10] and Statement of Financial Accounting Standards No. 57,  Related Party Disclosures .
+
+          Moore, and others at the company, knew that a senior SII officer was president of the corporation purchasing the Charlotte franchise.  Nonetheless, Moore failed to disclose, and failed to require SII to disclose, the sale as a related-party transaction.
+
+        F.  Respondent Failed to Write-Down Notes Receivable to Account for Interest-Free Periods 
+
+            SII had a common practice of granting interest-free periods to new franchisees on franchise sales that the company financed.  Between November 1, 1995 and October 31, 1997, approximately 30% of SII's franchise sales included interest-free periods. However, SII failed to discount notes receivable to reflect such interest-free periods, as required by generally accepted accounting principles.  Moore failed to require that SII write-down the notes, and thus caused SII's financial statements to be misstated.
+
+          IV. 
+
+         Legal Discussion 
+
+        Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder require issuers with securities registered under Section 12 of the Exchange Act to file annual and quarterly reports with the Commission and to keep this information current.  The obligation to file such reports embodies the requirement that they be true and correct.  See, e.g., SEC v. Savoy Indus., Inc.,  587 F.2d 1149, 1165 (D.C. Cir. 1978),  cert. denied , 440 U.S. 913 (1979).  Exchange Act Rule 12b-20 further requires the inclusion of any additional material information that is necessary to make required statements, in light of the circumstances under which they were made, not misleading.  Information regarding the financial condition of a company is presumptively material.   SEC v. Blavin , 760 F.2d 706, 711 (6th Cir. 1985).   
+
+        Section 13(b)(2)(A) of the Exchange Act requires Section 12 registrants to make and keep books, records, and accounts that accurately and fairly reflect the transactions and dispositions of their assets; Section 13(b)(2)(B) of the Exchange Act requires issuers to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions are recorded as necessary to permit preparation in conformity with generally accepted accounting principles.  Rule 13b2-1 also prohibits the direct or indirect falsification of any book, record, or account subject to Section 13(b)(2)(A).  
+
+        Moore committed a violation of Rule 13b2-1 and caused SII's violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13, by assisting the accounting staff in preparing the journal entry reflecting the Houston franchise sale in the third quarter 1996.  Also, Moore failed to require that SII write-down its notes receivable and disclose the related-party nature of two material transactions.
+
+            Section 17(a)(2) of the Securities Act, prohibits any person from obtaining money or property by means of untrue statements of material facts or omissions, in the offer or sale of securities.  Section 17(a)(3) of the Securities Act proscribes "any transaction, practice or course of business, which operates or would operate as a fraud or deceit..." in the offer or sale of securities.  A violation of these provisions may be established by a showing of negligence.   Aaron v. SEC , 448 U.S. 680, 697 (1980);  SEC v. Hughes Capital Corp. , 124 F.3d 449, 453-54 (3d Cir.1997).  Respondent committed or caused violations of Section 17(a)(2) and (3) of the Securities Act by signing the Form S-3 which omitted to disclose the material fact that Swisher beneficially owned Armand's 480,000 shares of SII stock.  
+
+         V. 
+
+          Based on the foregoing, the Commission finds that Respondent George Kelly Moore willfully violated or aided and abetted others who violated Sections 17(a)(2) and (3) of the Securities Act; Sections 13(a), 13(b)(2)(A) and (B) of the Exchange Act and Rules12b-20, 13a-1, 13a-13, and 13b2-1 thereunder for purposes of Rule 102(e)(1)(iii) of the Commission's Rules of Practice.
+
+        Moore also caused violations of Sections 17(a)(2) and (3) of the Securities Act; Sections 13(a), 13(b)(2)(A) and (B) of the Exchange Act and Rules12b-20, 13a-1, and 13a-13 for purposes of Section 8A of the Securities Act and Section 21C of the Exchange Act.
+
+           
+VI. 
+
+        In view of the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer of Settlement submitted by George Kelly Moore:
+
+        Accordingly, IT IS HEREBY ORDERED, pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, that Respondent George Kelly Moore cease and desist from committing or causing any violation and any future violation of Sections 17(a)(2) and (3) of the Securities Act, and Exchange Act Rule 13b2-1, and that Moore cease and desist from   causing any violation and any future violation of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, and 13a-13 thereunder. 
+
+        IT IS HEREBY FURTHER ORDERED, effective immediately, that:
+
+        A.  Moore be, and hereby is, denied the privilege of appearing or practicing before the Commission as an accountant;
+
+        B.  After two (2) years from the date of the Order, Moore may request that the Commission consider his reinstatement by submitting an application (attention: Office of Chief Accountant) to resume appearing or practicing before the Commission as: 
+
+        1. A preparer or reviewer, or a person responsible for the preparation or review, of any public company's financial statements that are filed with the Commission.  Such an application must satisfy the Commission that Moore's work in his practice before the Commission will be reviewed either by the independent audit committee of the public company for which he works or in some other acceptable manner as long as he practices before the Commission in this capacity; and/or
+
+        2. An independent accountant.  Such an application must satisfy the Commission that: (a) Moore, or any firm with which he is or becomes associated is a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms ("SEC Practice Section"); (b) Moore, or the firm, has received an unqualified report relating to his, or the firm's, most recent peer review conducted in accordance with the guidelines adopted by the SEC Practice Section; and (c) as long as Moore appears or practices before the Commission as an independent accountant, he will remain either a member of the SEC Practice Section or associated with a member firm of the SEC Practice Section, and will comply with all applicable SEC Practice Section requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education. 
+
+        C.  The Commission's review of any request or application by Moore to resume appearing or practicing before the Commission may include consideration of, in addition to the matter referred to above, any other matters relating to Moore's character, integrity, professional conduct, or qualifications to appear or practice before the Commission.
+
+          By the Commission. 
+
+          Jonathan G. Katz  
+Secretary
+  
+
+ 
+ Footnotes 
+       1       Paragraph 1 of Rule 102(e)(1) provides, in relevant part, that:
+
+ The Commission may...deny, temporarily or permanently, the privilege of appearing or practicing before it in any way to any person who is found by the Commission after notice and opportunity for hearing in the matter...(ii) [t]o be lacking in character or integrity or to have engaged in unethical or improper professional conduct; or (iii) [to] have willfully violated, or willfully aided and abetted the violation of any provision of the federal securities laws or the rules and regulations thereunder.        2        The findings herein are made pursuant to the Respondent's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.    
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diff --git a/raw/aaer/2001/AAER-1444.txt b/raw/aaer/2001/AAER-1444.txt
new file mode 100644
index 0000000000000000000000000000000000000000..c5da2bf7498cf2803edc5a21fba7ef3cf38aa257
--- /dev/null
+++ b/raw/aaer/2001/AAER-1444.txt
@@ -0,0 +1,1576 @@
+
+
+ 
+ 
+   
+     
+ 
+ 
+ 
+ 
+ 
+ 
+
+     
+     
+     SEC.gov | Baker Hughes Incorporated 
+     
+     
+     
+     
+     
+     
+     
+         !function(){var e=navigator.userAgent,a=document.documentElement,n=a.className;n=n.replace("no-js","js"),/iPad|iPhone|iPod/.test(e)&&!window.MSStream&&(n+=" ua-ios"),a.className=n}(); 
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+              Baker Hughes Incorporated
+           
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+   
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+             
+        Baker Hughes Incorporated
+       
+
+             
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+
+ SECURITIES EXCHANGE ACT OF 1934
+ Release No.   44784 / September 12, 2001
+  ACCOUNTING AND AUDITING ENFORCEMENT
+ Release No.   1444 / September 12, 2001
+  ADMINISTRATIVE PROCEEDING
+ File No. 3-10572
+
+        In the Matter of 
+  BAKER HUGHES INCORPORATED,
+      Respondent.  
+    
+  : : : : : : :   
+ ORDER INSTITUTING PUBLIC 
+PROCEEDINGS PURSUANT TO 
+SECTION 21C OF THE SECURITIES 
+EXCHANGE ACT OF 1934, MAKING 
+FINDINGS AND IMPOSING A 
+CEASE-AND-DESIST ORDER     I. 
+
+    The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Baker Hughes Incorporated ("Baker Hughes" or the "Respondent").
+
+   II. 
+
+    In anticipation of the institution of these proceedings, Baker Hughes has submitted an Offer of Settlement ("Offer") which the Commission has determined to accept.  Solely for the purpose of this proceeding, and any other proceeding brought by or on behalf of the Commission, or to which the Commission is a party, and prior to a hearing pursuant to the Commission's Rules of Practice, 17 C.F.R. §201.100  et seq ., the Respondent, without admitting or denying the findings contained in this Order Instituting Public Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order ("Order"), except that Respondent admits that the Commission has jurisdiction over it and over the subject matter of this proceeding, consents to the entry of this Order.
+
+   III. 
+
+  The Commission makes the following findings:
+
+     A.  Respondent  
+
+     Baker Hughes Incorporated  is a Delaware corporation headquartered in Houston, Texas.  The company is engaged principally in the oilfield services industry and operates in more than 80 countries.  Baker Hughes' common stock is registered with the Commission pursuant to Section 12(b) of the Exchange Act, and is listed on the New York Stock Exchange.
+
+     B.  Other Relevant Persons and Entities  
+
+     James W. Harris , age 42 and a Certified Public Accountant ("CPA"), was the Director of Taxes from 1994 to 1997, Vice President (Tax) from 1997, and Controller of Baker Hughes from 1998 until his resignation on May 21, 1999.  
+
+     Eric L. Mattson , age 49, was the senior Vice President and Chief Financial Officer ("CFO") of Baker Hughes from 1993 until his resignation on May 21, 1999. 
+
+     PT Eastman Christiensen  ("PTEC") is an Indonesian corporation headquartered in Jakarta, Indonesia.  PTEC is controlled by Baker Hughes and its financial results appear in the consolidated financial statements of Baker Hughes.
+
+     KPMG Siddharta Siddharta & Harsono  ("KPMG") is a public accounting firm in Jakarta, Indonesia.  KPMG is an affiliate firm of KPMG International, a Swiss association with member firms in 159 countries.  In 1997, Baker Hughes retained KPMG as its accounting and tax consultants in Indonesia.  KPMG reviewed PTEC's 1997 corporate tax returns and represented PTEC in the 1998 audit of its 1997 tax returns by the Indonesian Ministry of Finance, Directorate General of Taxation (the "Directorate General").
+
+     Sonny Harsono , an Indonesian citizen, is a senior KPMG partner in the offices of KPMG located in Jakarta, Indonesia.
+
+   IV. 
+
+    FACTS  
+
+     A.  Summary  
+
+    In March 1999, Baker Hughes' CFO and its Controller authorized an illegal payment, through KPMG, its agent in Indonesia, to a local government official in Indonesia.  Baker Hughes, through its CFO and Controller, directed that this improper payment be made while knowing or aware that KPMG would pass all or part of the payment along to a foreign government official for the purpose of influencing the official's decision affecting the business of Baker Hughes.  This improper payment was made in violation of the Foreign Corrupt Practices Act ("FCPA").  In addition, in 1998 and 1995, senior managers at Baker Hughes authorized payments to Baker Hughes' agents in India and Brazil, respectively, without making an adequate inquiry as to whether the agents might give all or part of the payments to foreign government officials in violation of the FCPA.  Baker Hughes improperly recorded all three transactions in its books and records as routine business expenditures.  In addition to its false books and records, Baker Hughes also failed to devise and maintain an adequate system of internal accounting controls to detect and prevent improper payments to foreign government officials and to provide reasonable assurance that transactions were recorded as necessary to permit the preparation of financial statements in conformity with Generally Accepted Accounting Principles.
+
+     B.  Baker Hughes Made an Improper Payment in Indonesia And Falsified its Books and Records  
+	
+       1. The Indonesian Ministry of Finance's Tax Assessment 
+
+  In November 1998, the Indonesian Ministry of Finance's Directorate General of Taxation notified PTEC, an Indonesian corporation controlled by Baker Hughes, that it would soon begin a tax audit of PTEC's 1997 tax returns.  Those returns claimed a substantial refund.  The next month, the Directorate General commenced the tax audit.  In February 1999, the Directorate General notified PTEC of its preliminary determination that PTEC's tax liability would be assessed at $3.2 million.  On February 26, 1999, as instructed by PTEC's Finance Manager, a PTEC employee contacted KPMG and instructed KPMG to represent PTEC before the Directorate General.  Shortly after that initial contact, the PTEC Finance Manager told KPMG that the Indonesian tax official was seeking an improper payment.
+
+          KPMG immediately reviewed the preliminary determination by the Directorate General and concluded that the proposed $3.2 million assessment against PTEC was incorrect.  Initially, KPMG concurred with PTEC's determination that it was due a refund.  KPMG contacted Baker Hughes' Asia-Pacific Tax Manager (the "Regional Tax Manager") based in Australia with oversight responsibility for Indonesian tax matters, and told him of its findings.  KPMG suggested that it meet with the Directorate General in an attempt to reconcile the disparity between their respective findings.  Following KPMG's advice, the Regional Tax Manager instructed KPMG to meet with the Directorate General to discuss the merits of the assessment and correct what KPMG believed was an incorrect tax assessment.  During these meetings, the Indonesian tax official told KPMG that he was aware of PTEC's reputation of making "goodwill payments" to tax officials, and demanded a payment of $200,000 in exchange for which he would reduce PTEC's tax assessment.  KPMG initially rejected the Indonesian tax official's request for an illicit payment.  On March 5, 1999, KPMG informed the Regional Tax Manager of the Indonesian tax official's demand for an illicit payment.  During this conversation, the Regional Tax Manager instructed KPMG not to pay the Indonesian tax official but to challenge the assessment on its merits.
+
+       2. KPMG Discusses Making an Improper Payment 
+
+          During several subsequent meetings between the Indonesian tax official and KPMG, the Indonesian tax official reiterated his demand for an improper payment.  The KPMG Tax Manager assigned to the audit engagement ("KPMG Tax Manager"), who was an Australian citizen on secondment from KPMG Australia, informed the Regional Tax Manager of the Indonesian tax official's continuing demand for an illicit payment.  In response, the Regional Tax Manager asked the KPMG Tax Manager to find out how much the Indonesian tax official wanted to reduce the assessment.  Because it appeared to the KPMG Tax Manager that the Regional Tax Manager was considering making the illicit payment, the KPMG Tax Manager met with Sonny Harsono, a senior KPMG partner, and told him about the Indonesian tax official's continuing demand for an illicit payment.  Concerned about the applicability of the FCPA, the KPMG Tax Manager asked Harsono how to handle the Indonesian tax official's insistence on an illicit payment.
+
+          After listening to an explanation of the situation, Harsono advised the KPMG Tax Manager that the FCPA was an issue because PTEC was controlled by a U.S. public company and that KPMG should be careful in dealing with the Indonesian tax official's demand.  Notwithstanding his recognition of the potential FCPA issues, Harsono advised the KPMG Tax Manager that if Baker Hughes represented directly to KPMG, not through PTEC, that it wanted KPMG to make the illicit payment, KPMG would be willing to pay the Indonesian tax official.  To conceal the improper payment, Harsono agreed with the KPMG Tax Manager that KPMG should generate an invoice that would include money for the payment to the Indonesian tax official and for KPMG's fees for services rendered.  As a result of his discussions with Harsono, the KPMG Tax Manager understood that PTEC would have to provide the funds to pay the Indonesian tax official.
+
+       3. KPMG Informs Baker Hughes of its Options 
+
+          On March 8, 1999, the KPMG Tax Manager notified the Regional Tax Manager that despite repeated requests, the Indonesian tax official was unwilling to review the merits of the assessment without the improper payment.  However, the KPMG Tax Manager further explained that the Indonesian tax official had told KPMG that he was now willing to reduce the assessment from $3.2 million to $270,000 in exchange for an improper payment of $75,000.  In addition, the KPMG Tax Manager told the Regional Tax Manager that he had consulted with Harsono and that Harsono had authorized him to make the illicit payment if Baker Hughes wanted KPMG to make the payment.  Based on his discussion with Harsono, the KPMG Tax Manager told the Regional Tax Manager that, to conceal the improper payment, KPMG would issue a $143,000 invoice for "professional services rendered."  The $143,000 was comprised of $75,000 for the Indonesian tax official, plus KPMG's actual fees and applicable taxes.  Further, the KPMG Tax Manager told the Regional Tax Manager that KPMG was unwilling to use its own funds to pay the Indonesian tax official, but rather required PTEC to provide the funds.
+
+          The KPMG Tax Manager concluded the conversation with the Regional Tax Manager by noting that there were only two options available to Baker Hughes:  one, contest the $3.2 million tax assessment which, under Indonesian law, would require immediate payment of the full assessment and perhaps as much as two years to resolve the issue; or two, make the illicit payment.  The Regional Tax Manager told the KPMG Tax Manager that any decision to make the payment had to be made and authorized by senior management in Houston and that he intended to take this matter to them.  In the meantime, the Regional Tax Manager told the KPMG Tax Manager to stall the Indonesian tax official and thus delay the issuance of the $3.2 million tax assessment.
+
+       4. Baker Hughes' Senior Management Discuss the Proposed Transaction 
+
+          On March 9, 1999, during a conference call, the Regional Tax Manager in Australia spoke to Harris, Baker Hughes' controller, located in Houston, and to Baker Hughes' FCPA advisor ("FCPA advisor") in Washington, D.C. about the Indonesian tax official's demand for a $75,000 improper payment, KPMG's offer to make the improper payment on PTEC's behalf using PTEC's funds, and the method by which KPMG would conceal the payment.  Further, the Regional Tax Manager told Harris and the FCPA advisor that the Indonesian tax official had given PTEC only 48 hours to respond to his demand and, that if PTEC failed to meet his demand, he was prepared to issue the $3.2 million tax assessment.  The FCPA advisor advised Harris and the Regional Tax Manager that any payment to an Indonesian tax official under the circumstances described would violate the FCPA.  In addition, the FCPA advisor instructed Harris and the Regional Tax Manager that for KPMG to continue working for PTEC, KPMG must first provide PTEC with specific written assurances that it would not make any illegal payments on behalf of PTEC to any Indonesian government official.  
+
+          Shortly after the conference call, the Regional Tax Manager sent Harris a detailed e-mail delineating the events in Indonesia and apologizing for bringing this distasteful problem to Harris.  In the e-mail, the Regional Tax Manager discussed the urgency of the problem and described the two options available to PTEC for resolving the tax problem that the KPMG Tax Manager previously had identified.  The Regional Tax Manager identified the option of making the improper payment as the better one from a financial perspective   because it would provide Baker Hughes "certainty" and save "significant profit and loss costs, associated with foreign exchange risks and cost of finance."  He also told Harris that KPMG could characterize the improper payment as a "success fee." 
+
+          On March 10, 1999, Harris told Baker Hughes' General Counsel and Mattson, Baker Hughes' CFO, of the Indonesian tax official's demand for an improper payment.  During this meeting, Harris told the General Counsel and Mattson that he had talked with the FCPA advisor, who had advised him to obtain a letter from KPMG assuring Baker Hughes that it would not make any improper payments to any Indonesian government official on behalf of PTEC.  The General Counsel stated that the Indonesian tax official's demands raised FCPA concerns.  In response, Mattson asked the General Counsel why PTEC could not pay KPMG and not worry about what KPMG did with the money.  The General Counsel responded by stating that Baker Hughes cannot bury its head in the sand and ignore the problem.  The General Counsel instructed Mattson and Harris to continue working with the FCPA advisor, to follow any directions given by the FCPA advisor, and under no circumstances to enter into any transaction that could potentially violate the FCPA.
+
+       5. Baker Hughes' CFO and Controller Authorize the Improper Payment  
+
+          On the evening of March 10, 1999, during a conference call with Mattson and Harris, the Regional Tax Manager reported that KPMG was unwilling to issue the specific letter requested by the FCPA advisor.  However, the Regional Tax Manager said that KPMG indicated a willingness to issue its standard engagement letter in lieu of the letter specifically requested by the FCPA advisor.  The Regional Tax Manager told Mattson and Harris that the standard engagement letter referenced KPMG's international code of conduct.  In addition, the Regional Tax Manager told Mattson and Harris that PTEC's 48 hour grace period was fast running out and that the Indonesian tax official was threatening to issue the $3.2 million assessment.  Disregarding the FCPA advisor's instructions, and acting contrary to the advice of the General Counsel, Mattson and Harris authorized the Regional Tax Manager to proceed with the "success fee" transaction without obtaining the specific letter that the FCPA advisor had instructed they obtain.  After the conference call, the Regional Tax Manager called the KPMG Tax Manager to authorize him to proceed with the "success fee" transaction.  The Regional Tax Manager also told the KPMG Tax Manager that the authorization came from the highest level in Houston, specifically the CFO.
+
+          On March 11, 1999, KPMG created and sent a false invoice to PTEC for $143,000.  Although the invoice purported to be for professional services rendered, in reality, it comprised the $75,000 to be paid to the Indonesian tax official, and the remainder for KPMG's actual fees and applicable taxes.  After receiving the invoice, PTEC paid KPMG $143,000 and improperly entered the transaction on its books and records as payment for professional services rendered.  On March 23, 1999, PTEC received a tax assessment of approximately $270,000 from the Directorate General.
+
+       6. Baker Hughes Attempts to Unwind the Transaction and Takes Corrective Action 
+
+          After Baker Hughes' General Counsel and FCPA advisor discovered that Mattson and Harris had authorized KPMG to make the improper payment to the Indonesian tax official to reduce PTEC's tax assessment, Baker Hughes embarked on a corrective course of conduct.  In particular, the company:  attempted to stop the payment to KPMG; instructed KPMG not to make the payment to the Indonesian tax official and to return the entire amount paid to KPMG; engaged outside counsel to report to the audit committee; voluntarily and promptly disclosed the misconduct to the Commission and the Department of Justice; disclosed the matter to its outside auditors and corrected its books and records; fired KPMG; asked for and obtained the resignation of those senior management officials responsible for the violative conduct; filed a formal objection to the $270,000 assessment with the Directorate General and took steps to determine the correct tax deficiency; paid $2.1 million to the Indonesian government, which it believed to be the correct tax assessment; and implemented enhanced FCPA policies and procedures.  In addition, Baker Hughes cooperated with the Commission's investigation, including declining to assert its attorney-client privilege with respect to communications during the relevant time period concerning the Indonesian transaction.
+
+          As part of its ameliorative efforts, Baker Hughes demanded that KPMG issue a true and accurate invoice.  KPMG returned Baker Hughes' $75,000 plus related taxes and charges, and issued PTEC a true and accurate invoice in the amount of $14,300 for professional services rendered.  
+
+     C.  The 1998 Transaction in India  
+
+          In August 1998, Baker Hughes acquired the Western Atlas Corporation ("Western Atlas").  At that time, Western Geophysical Corporation ("Western Geophysical") was a subsidiary of Western Atlas providing, among other things, seismic services throughout the world for offshore geophysical exploration.  With the acquisition of Western Atlas, Western Geophysical became a subsidiary of Baker Hughes.
+
+          In September 1998, under the terms of a contract signed in September 1996, with the Indian Oil and Natural Gas Commission, Western Geophysical began preparations to perform various 3D seismic surveys in the Bay of Canby, India.  In order for its foreign-flagged vessels to enter the Indian coastal waters and perform the seismic surveys, Western Geophysical was required to obtain shipping permits from the Director General of Shipping in Bombay, India.  Before the Director General of Shipping could issue the permits, Western Geophysical had to obtain a "no objection certificate" from the Indian Coastal Commission ("ICC"), an organization of private Indian-flagged vessels, stating that there were no suitable Indian-flagged vessels available to carry out the seismic operations.
+
+          On October 14, 1998, while Western Geophysical's foreign-flagged vessels were en route to India, an agent for Western Geophysical was working on securing the permits from the Director General of Shipping.  The agent contacted the General Manager for Western Geophysical's Far East, Australia and China Operations ("General Manager") who, at the time, was traveling in Hong Kong.  The Western Geophysical agent told the General Manager that the company needed to obtain permits before its foreign-flagged vessels could enter Indian coastal waters.  The Western Geophysical agent advised the General Manager that if the General Manager provided $15,000, he might be able to get the permits issued.  The General Manager authorized the agent to "take care of it."  Shortly after the General Manager's authorization, the Western Geophysical agent obtained the necessary shipping permits, without obtaining the "no objection certificate."
+
+          Thereafter, the Western Geophysical agent requested a reimbursement of the $15,000 payment.  A Western Geophysical employee in the accounting department sent an e-mail to the General Manager in the United States seeking authorization to pay the agent.  Without making an adequate inquiry to ensure that all or part of the $15,000 would not be paid to a foreign government official in violation of the FCPA, the General Manager authorized the payment of $15,000 to the Western Geophysical agent.  Subsequently, Western Geophysical's accounting staff improperly recorded the $15,000 payment: (a) without determining to whom the money ultimately would be paid or the specific purpose of the payment; and (b) by inaccurately describing the payment on its books and records as payment for a "Shipping Permit."
+
+      D. The 1995 Transaction in Brazil  
+
+  In 1995, Baker Hughes planned and implemented a two part restructuring of its operations in Brazil.  The first part of the restructuring involved merging several of Baker Hughes' Brazilian subsidiaries into Centrilift, another Baker Hughes subsidiary.  Upon completion of the merger, Baker Hughes reincorporated and renamed Centrilift "Baker Hughes do Brasil Ltda." ("BHB").  The second part of the restructuring involved transferring the assets and liabilities of Baker Hughes Equipamentos Ltda. ("BHEL"), another Baker Hughes subsidiary, to BHB and leaving BHEL dormant.  BHEL's Finance Director ("Finance Director") and Baker Hughes' International Tax Manager ("International Tax Manager"), who was also the team leader for the reorganization, believed that the restructuring, as planned, had to be completed by Baker Hughes' September 30, 1995 fiscal year end, in order for Baker Hughes to take a $40 million U.S. tax deduction in that year.  Before the restructuring became effective, Brazilian law required that BHB file various documents with, and receive the approval of, the Commercial Registry in Rio de Janeiro ("Commercial Registry").
+
+  In August 1995, a Brazilian agent representing BHEL informed the Finance Director that he needed $10,000 in order to obtain the approval from the Commercial Registry that was necessary to complete the restructuring within a week.  The Finance Director sought approval for this payment from the International Tax Manager.  The International Tax Manager informed his supervisor of the agent's request for $10,000 to obtain the approval from the Commercial Registry.  Without making an adequate inquiry to ensure that all or part of the $10,000 would not be paid to a foreign government official in violation of the FCPA, Baker Hughes authorized the Finance Director to pay the $10,000.  Based on this authorization, the Finance Director paid the agent $10,000 on August 30, 1995.  Subsequently, Baker Hughes improperly recorded the $10,000 payment: (a) without determining to whom the money ultimately would be paid or the specific purpose of the payment; and (b) by inaccurately describing the payment as an "advance payment for expenses related to the commercial registry board of Rio de Janeiro." 
+
+
+
+   V. 
+
+    LEGAL DISCUSSION  
+
+      A. Applicable Law  
+
+    The FCPA, first enacted in 1977, amended the Exchange Act to make it unlawful for U.S. issuers, or anyone acting at their behest, to make improper payments to   any foreign official in order to obtain or retain business.  Section 30A of the Exchange Act.  In addition, the FCPA established accounting control requirements for issuers subject to either the registration or reporting provisions of the Exchange Act.  Section 13 of the Exchange Act.
+
+          Section 13(b)(2)(A) of the Exchange Act requires every issuer with a class of securities registered pursuant to Section 12 of the Exchange Act to make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer.  Section 13(b)(2)(B) of the Exchange Act requires every issuer to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management's general or specific authorization; and (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and to maintain accountability for assets.
+
+      B. Violations by Baker Hughes  
+
+          Baker Hughes, through its CFO and Controller, authorized PTEC to pay KPMG $143,000 at a time when PTEC had a tax assessment matter pending before the Indonesian tax authorities.  Baker Hughes' CFO and Controller knew or were aware of a high probability that KPMG intended to use $75,000 of the $143,000 to pay the Indonesian government tax official who was conducting PTEC's tax audit.  Further, Baker Hughes' CFO and Controller knew that the $75,000 payment to the Indonesian tax official was to be made to obtain a reduction in its tax assessment from $3.2 million to approximately $270,000.  Subsequent to the payment to KPMG, PTEC recorded the $143,000 payment to KPMG on its books and records as payment for professional services rendered knowing that the entry did not accurately and fairly reflect the disposition of its assets.  Such conduct violated the books and records and internal controls provisions of the Exchange Act, Sections 13(b)(2)(A) and (B).
+
+    Baker Hughes, through Western Geophysical's General Manager for Western Geophysical's Far East, Australia and China Operations, authorized Western Geophysical to pay one of its agents $15,000 to obtain shipping permits from the Director General of Shipping.  The General Manager authorized the $15,000 payment without determining to whom the money ultimately would be paid or the specific purpose of the payment.  In addition, Baker Hughes recorded the $15,000 payment on its books and records in a manner that did not, in reasonable detail, accurately and fairly reflect the disposition of its assets.  Accordingly, Baker Hughes' conduct violated the books and records and internal controls provisions of the Exchange Act, Sections 13(b)(2)(A) and (B).
+
+    Baker Hughes, through its Director of Taxes and International Tax Manager, authorized BHEL to pay one of its agents $10,000 to obtain from the Commercial Registry the approval necessary to complete its restructuring.  Baker Hughes authorized the $10,000 payment without determining to whom the money ultimately would be paid or the specific purpose of the payment.  In addition, Baker Hughes recorded the $10,000 payment on its books and records in a manner that did not, in reasonable detail, accurately and fairly reflect the disposition of its assets.  Accordingly, Baker Hughes' conduct violated the books and records and internal controls provisions of the Exchange Act, Sections 13(b)(2)(A) and (B).
+
+
+
+   VI. 
+
+    FINDINGS  
+
+    Based on the foregoing, the Commission finds that Respondent violated Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.  In determining to accept the offer, the Commission considered remedial acts promptly undertaken by Respondent and cooperation afforded to the Commission staff.
+
+   VII. 
+
+    ORDER  
+
+    Accordingly,  IT IS HEREBY ORDERED , pursuant to Section 21C of the Exchange Act, that Respondent cease and desist from committing or causing any violation and any future violation of:
+
+    (i) Section 13(b)(2)(A) of the Exchange Act by making and keeping books, records and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of the issuer, including, but not limited to, accurately and fairly reflecting any payment or gift, or the authorization of the payment of any money or the giving of anything of value to:  (1) any foreign official; (2) any foreign political party or official thereof or any candidate for foreign political office; or (3) any person, while knowing that all or a portion of such money or thing of value will be given, directly or indirectly, to any foreign official, to any foreign political party or official thereof, or to any candidate for foreign political office; whether such payment or gift is prohibited by Section 30A(a) of the Exchange Act, excepted by Section 30A(b) of the Exchange Act, or is subject to the affirmative defense under Section 30A(c) of the Exchange Act.
+
+    (ii) Section 13(b)(2)(B) of the Exchange Act by devising and maintaining a system of internal accounting controls sufficient to provide reasonable assurances that:  (1) transactions are executed in accordance with management's general or specific authorization; (2) transactions are recorded as necessary (I) to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and (II) to maintain accountability for assets.  With respect to the requirements of 2(II), any payment or gift, or the authorization of the payment of any money or the giving of anything of value to:  (1) any foreign official; (2) any foreign political party or official thereof or any candidate for foreign political office; or (3) any person, while knowing that all or a portion of such money or thing of value will be given, directly or indirectly, to any foreign official, to any foreign political party or official thereof, or to any candidate for foreign political office shall be recorded in sufficient detail to permit a determination of whether such payment or gift is prohibited by Section 30A(a) of the Exchange Act, excepted by Section 30A(b) of the Exchange Act, or  is subject to the affirmative defense under Section 30A(c) of the Exchange Act; (3) access to assets is permitted only in accordance with management's general or specific authorization; and (4) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
+
+    By the Commission.
+
+                _____________________________
+               Jonathan G. Katz
+               Secretary
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diff --git a/raw/aaer/2001/AAER-1446.txt b/raw/aaer/2001/AAER-1446.txt
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+
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+   
+     
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+ 
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+ 
+ 
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+     
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+     SEC.gov | KPMG Siddharta & Harsono and Sonny Harsono 
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+              KPMG Siddharta & Harsono and Sonny Harsono
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+        KPMG Siddharta & Harsono and Sonny Harsono
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+ Litigation Release No.17127 / September 12, 2001
+
+  Accounting and Auditing Enforcement Release No. 1446 / September 12, 2001
+
+   UNITED STATES OF AMERICA AND SECURITIES AND EXCHANGE COMMISSION v. KPMG SIDDHARTA SIDDHARTA & HARSONO AND SONNY HARSONO , Civil Action No. H-01-3105 (S.D. Tex.) (filed September 11, 2001)
+
+   SEC AND DEPARTMENT OF JUSTICE FILE FIRST-EVER JOINT CIVIL ACTION AGAINST KPMG SIDDHARTA SIDDHARTA & HARSONO AND ITS PARTNER SONNY HARSONO FOR AUTHORIZING THE PAYMENT OF A BRIBE IN INDONESIA 
+
+    On September 11, 2001, the Securities and Exchange Commission and the United States Department of Justice filed a joint civil injunctive action in the United States District Court for the Southern District of Texas, Houston Division, against KPMG Siddharta Siddharta & Harsono ("KPMG-SSH"), a public accounting firm in Jakarta, Indonesia and Sonny Harsono ("Harsono"), a partner of KPMG-SSH.  KPMG-SSH is an affiliate firm of KPMG International.  This is the first time that the Commission and the Department of Justice, both of which have jurisdiction over the antibribery provisions of the Foreign Corrupt Practices Act ("FCPA"), have combined to file a joint civil action.
+
+    The complaint alleges that in 1999, Harsono authorized KPMG-SSH personnel to bribe an Indonesian tax official on behalf of one of KPMG-SSH's clients, PT Eastman Christensen ("PTEC"), an Indonesian company beneficially owned by Baker Hughes Incorporated ("Baker Hughes").  KPMG-SSH agreed to make the illicit payment to influence the Indonesian tax official to reduce a tax assessment for PTEC from $3.2 million to $270,000.  Harsono advised KPMG-SSH personnel that if Baker Hughes represented directly to KPMG-SSH, not through PTEC, that it wanted KPMG-SSH to make the illicit payment, KPMG-SSH would be willing to pay the Indonesian tax official.  To conceal the improper payment, Harsono agreed with KPMG-SSH personnel that KPMG-SSH should generate an invoice that would include money for the payment to the Indonesian tax official and for KPMG-SSH's fees for services rendered.  The false invoice, although purporting to be for professional services rendered, in reality represented $75,000 to be paid to an Indonesian tax official, and the remainder for KPMG-SSH's actual fees and applicable taxes.  After receiving the invoice, PTEC paid KPMG-SSH $143,000 and improperly entered the transaction on its books and records as payment for professional services rendered.  On March 23, 1999, PTEC received a tax assessment of approximately $270,000 from the Indonesian government, almost $3 million lower than the original assessment.
+
+    Without admitting or denying the allegations of the complaint, the defendants have consented to the entry of a Final Judgment that permanently enjoins both defendants from violating and aiding and abetting the violation of the antibribery provisions of the FCPA and the internal controls and books and records provisions of the Securities Exchange Act of 1934 ("Exchange Act") (Sections 104A(a)(1), (2) and (3) of the FCPA and Sections 30A(a)(1), (2) and (3), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act).    
+
+  The Commission also filed, on September 11, 2001, a civil injunctive action in the United States District Court for the Southern District of Texas, Houston Division, against Mattson and Harris alleging that they authorized the payment of a bribe of $75,000 through KPMG-SSH.  Mattson and Harris directed that this payment be made while knowing that KPMG-SSH would pass all or part of the payment along to a foreign government official for the purpose of influencing the Indonesian tax official to issue a lower tax assessment for PTEC.  The complaint alleges that Mattson and Harris violated Sections 30A(a) and 13(b)(5) of the Exchange Act and Exchange Act Rule 13b2-1 promulgated thereunder and aided and abetted Baker Hughes' violations of the books and records and internal controls provisions of the Exchange Act, Sections 13(b)(2)(A) and 13(b)(2)(B).  See Litigation Release No. 17126 (September 12, 2001).
+
+      Finally, in a related action, the Commission instituted, on September 12, 2001, settled administrative proceedings against Baker Hughes.  The Commission's Order finds that, in March 1999, Baker Hughes' CFO and its Controller authorized the above-described illegal payment, through KPMG-SSH, its agent in Indonesia, to a local government official in Indonesia.  The Order also finds that in 1998 and 1995, senior managers at Baker Hughes authorized payments to Baker Hughes' agents in India and Brazil, respectively, without making an adequate inquiry as to whether the agents might give all or part of the payments to foreign government officials in violation of the FCPA.  Without admitting or denying the Commission's findings, Baker Hughes consented to the entry of the Commission's Order.  The Order directs that Baker Hughes cease and desist from committing or causing any violation and any future violation of the internal controls and books and records provisions of the Exchange Act (Sections 13(b)(2)(A) and Section 13(b)(2)(B) of the Exchange Act).  See Securities Exchange Act Release No. 44784 (September 12, 2001); Accounting and Auditing Enforcement Release No. 1447.
+
+      The Commission wishes to thank the United States Department of Justice for its assistance in this matter.  
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diff --git a/raw/aaer/2001/AAER-1448.txt b/raw/aaer/2001/AAER-1448.txt
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+
+
+ 
+ 
+   
+     
+ 
+ 
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+     SEC.gov | C.E.C. Industries Corporation, Gerald H. Levine, and Marie A. Levine 
+     
+     
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+              C.E.C. Industries Corporation, Gerald H. Levine, and Marie A. Levine
+           
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+        C.E.C. Industries Corporation, Gerald H. Levine, and Marie A. Levine
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+ LITIGATION RELEASE NO. 17139 / September 19, 2001
+
+  ACCOUNTING AND AUDITING ENFORCEMENT RELEASE NO. 1448
+
+   SEC SETTLES FRAUD ACTION AGAINST CEC INDUSTRIES 
+
+  SECURITIES AND EXCHANGE COMMISSION v. C.E.C. INDUSTRIES CORPORATION, GERALD H. LEVINE, and MARIE A. LEVINE, Case No. 1:99CV02568 (D.D.C.) 
+
+  On September 10, 2001, the United States District Court for the District of Columbia permanently enjoined C.E.C. Industries Corporation from violating the anti-fraud and certain record-keeping and internal controls provisions of the federal securities laws.  C.E.C. was further ordered by the Court to, within 90 days of the entry of the judgment, file amended quarterly and annual reports with the Commission restating the financial results for its fiscal years ended March 31, 1996 and March 31, 1997, and its fiscal quarters ended June 30, September 30, and December 31, 1997.  C.E.C. also was enjoined from failing to file timely and accurate quarterly and annual reports in the future and ordered to file all of its delinquent quarterly and annual reports for its fiscal year ended March 31, 1998 and all subsequent periods.  
+
+  The Commission's complaint, filed September 28, 1999, alleged that C.E.C. fraudulently overstated its assets and revenues in public filings and other public statements during the company's fiscal years ended March 31, 1996 and March 31, 1997. According to the complaint, these material overstatements all resulted from various asset exchange transactions in which C.E.C. acquired non-cash assets in exchange for either company stock or other non-cash assets previously acquired with company stock.  The complaint also alleges that C.E.C. has been chronically delinquent in filing required reports with the Commission since June 1997, and has not filed any required reports since July 1998.  The Commission contends that Gerald and Marie Levine, as C.E.C.'s controlling officers and directors during the relevant time period, were directly responsible for C.E.C.'s fraudulent overstatements of assets and revenues, as well as for C.E.C.'s filing delinquencies.  According to the complaint, the Levines also published false and misleading information about C.E.C. on the Internet during the period in question.
+
+  Without admitting or denying the charges against it, CEC consented to the entry of an injunction permanently enjoining it from violating Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934, and Exchange Act Rules 10b-5, 13a-1, 13a-13 and 12b-20.  C.E.C. was further ordered to file amended quarterly and annual filings with restated financial statements, and to bring itself current in its periodic filings, as specific above.  The Commission continues to litigate this matter against Gerald and Marie Levine.  In a related administrative proceeding, C.E.C.'s auditor during the relevant period, William L. Clancy, was suspended from practicing before the Commission for a period of three years pursuant to Rule 102(e)(1)(ii) of the Commission's Rules of Practice.   
+
+  Related Commission Releases
+
+   http://www.sec.gov/litigation/litreleases/lr16299.htm   ( Complaint )   http://www.sec.gov/litigation/admin/34-42392.htm  (Clancy  administrative proceeding ).
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diff --git a/raw/aaer/2001/AAER-1450.txt b/raw/aaer/2001/AAER-1450.txt
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@@ -0,0 +1,1540 @@
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+              Regina Fernandez
+           
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+        Regina Fernandez
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+
+ SECURITIES EXCHANGE ACT OF 1934 
+ Release No.   44815 / September 19, 2001
+  ACCOUNTING AND AUDITING ENFORCEMENT                                             
+ Release No.   1450 / September 19, 2001
+  ADMINISTRATIVE PROCEEDING 
+ File No. 3-10578
+
+            In the Matter of  
+      REGINA FERNANDEZ,
+   Respondent.  
+    
+  : : : : : : :   
+ ORDER INSTITUTING PUBLIC
+ PROCEEDINGS PURSUANT
+ TO SECTION 21C OF THE
+ SECURITIES EXCHANGE ACT
+ OF 1934, MAKING FINDINGS
+ AND IMPOSING A CEASE-AND-
+ DESIST ORDER    I.
+
+  The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be, and hereby are, instituted against Regina Fernandez ("Fernandez") pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act").
+
+  II.
+
+  In anticipation of the institution of these proceedings, Fernandez has submitted an Offer of Settlement, which the Commission has determined to accept.  Solely for the purposes of these proceedings and any other proceedings brought by or on behalf of the Commission or to which the Commission is a party, Fernandez, without admitting or denying the findings set forth herein, except that she admits the jurisdiction of the Commission over her and over the subject matters set forth herein, consents to the issuance of this Order Instituting Public Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing a Cease-and-Desist Order ("the Order").
+
+  III.
+
+  On the basis of this Order and Fernandez' Offer of Settlement, the Commission makes the following findings:  1    A.  RESPONDENT  
+
+  Fernandez, age 41, was the corporate secretary of Madera International, Inc. ("Madera") from March 1996 until April 1999.  She signed Madera's fiscal 1998 Annual Report filed with the Commission as Madera's secretary-treasurer and chief financial officer.
+
+
+
+    B. THE ISSUER 
+
+
+
+    Madera was at all times relevant to this proceeding a Nevada corporation headquartered in Coral Gables, Florida, engaged in the timber business.  Its common stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act and was traded on the Electronic Bulletin Board operated by the National Association of Securities Dealers.
+
+
+
+    C. MADERA'S FALSE FINANCIAL STATEMENTS
+
+
+
+  During its fiscal year ended March 31, 1998, Madera overstated its sales revenues in financial statements filed with the Commission by a total of $2,654,934.  This financial fraud was accomplished by the preparation and recordation of false sales invoices and the submission of false accounts receivable confirmations to Madera's independent auditors.  Had Madera not recorded these fraudulent sales, it would have reported a pre-tax loss of $1,489,264 for fiscal 1998, rather than the $1,165,670 pre-tax profit it falsely reported in the financial statements included in its annual report on Form 10-K.
+
+
+
+  In fiscal 1999, Madera recorded additional fraudulent sales in the total amount of $1,759,947.  In its quarterly report on Form 10-Q for the first quarter of fiscal 1999, Madera reported timber sales of $1,819,350.  This amount included a fraudulent sale in the amount of $401,030.  As a result of recording this bogus sale, Madera falsely reported a pre-tax profit of $215,694 for that quarter rather than a pre-tax loss of $185,336.  During the fourth quarter of fiscal 1999, Madera recorded additional bogus sales totaling $1,358,917.  These fraudulent sales were reflected in sales figures contained in a Madera press release dated May 4, 1999, which announced what the company purported to be record revenues and profits for fiscal 1999 and "the complete turnaround afforded the company at the hands of present management...."  The fraudulent sales recorded in fiscal 1999 were later reversed in connection with the audit of Madera's financial statements for its fiscal year ended March 31, 1999.
+
+
+
+  D. FERNANDEZ' ROLE
+
+              During the period in question, Fernandez was responsible for, among other things, Madera's accounting and bookkeeping functions as well as furnishing Madera's independent auditors with documents and information to support their audits of Madera's financial statements.            In connection with Madera's fiscal 1998 audit, Fernandez prepared invoices totaling $2,654,934 that she knew or was reckless in not knowing were materially false and misleading and provided 
+
+  these invoices to Madera's independent auditors.  In addition, Fernandez prepared audit confirmation requests for completion by certain entities that Madera represented to be customers and whose responses were relied upon by Madera's auditors.  Fernandez, however, knew or was reckless in not knowing but failed to disclose to the auditors that these entities had not, in fact purchased any product from Madera.
+
+  In connection with Madera's fiscal 1999 audit, Fernandez prepared and furnished to the company's auditors invoices amounting to $1,358,917 that she knew or was reckless in not knowing were false and misleading.  In addition, Fernandez prepared audit confirmation requests for comple­tion by certain purported customers of Madera whose responses were relied upon by Madera's auditors.   Fernandez, however, knew or was reckless in not knowing but failed to disclose to the auditors that these entities had not, in fact, purchased any product from Madera.  Further, Fernandez furnished the company's auditors with fabricated cash receipts records. 
+
+  IV.
+
+              A.  Violations of the Reporting Provisions 
+
+
+
+              Commission Rules 13a-1 and 13a-13 require issuers whose securities are registered pursuant to Section 12 of the Exchange Act to file annual and quarterly reports, respectively.  Rule 12b-20 requires that the reports contain such information as is necessary to insure that the statements made in those reports are not, under the circumstances, misleading.  Financial statements incorporated in Commission filings must comply with Regulation S-X, which in turn requires conformity with Generally Accepted Accounting Principles ("GAAP").  As described above, Madera violated these provisions by filing annual and quarterly reports with the Commission that included materially false financial statements.
+
+
+
+  Fernandez caused Madera's violations of the reporting provisions of the Exchange Act by preparing false and misleading invoices and recording them in Madera's books and records and by furnishing Madera's auditors with these false and misleading invoices, and with false and misleading cash receipts records.  
+
+
+
+  B.  Violations of the Antifraud Provisions 
+
+
+
+              Material misstatements or omissions made with scienter in connection with the purchase or sale of securities violate Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.  See, e.g., SEC v. Texas Gulf Sulphur Co., 401 F.2d 833 (2d Cir. 1968), cert. denied, 394 U.S. 976 (1969).  Fernandez violated Section 10(b) and Rule 10b-5 thereunder by intentionally or recklessly causing materially false and misleading periodic reports to be filed with the Commission, as detailed above.  In so doing, Fernandez satisfies the scienter requirement of Section 10(b) and Rule 10b-5.       
+
+
+
+  C.  Violations of the Books and Records and Internal Accounting Control Provisions 
+
+
+
+              Section 13(b)(2) of the Exchange Act requires an issuer to make and keep books, records, and accounts which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of its assets.  Section 13(b)(5) provides that no person shall knowingly circumvent or knowingly fail to implement a system of internal accounting controls, or knowingly falsify any accounting book, record or account.  Rule 13b2-1 promulgated under Section 13(b)(2) provides that no person shall, directly or indirectly, falsify or cause to be falsified any book, record, or account subject to Section 13(b)(2).  Rule 13b2-2, also promulgated under Section 13(b)(2), prohibits any officer or director from making or causing to be made any materially false or misleading statement to an accountant in connec­tion with an audit of the issuer's financial statements or the preparation of any filing with the Commission.
+
+
+
+              Fernandez violated Section 13(b)(5) and Rule 13b2-1 by falsifying Madera's books and records in connection with the recording of fraudulent sales and receivables.  She violated Rule 13b2-2 by providing Madera's auditors with false sales invoices and cash receipts records, and by failing to disclose to the auditors that the unexecuted accounts receivable confirmations she prepared for them did not reflect actual receivables of the company.
+
+  V.
+
+              Based on the foregoing, the Commission finds that Fernandez violated Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1, and 13b2-2 thereunder and caused violations by Madera of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. 
+
+  VI.
+
+              In view of the foregoing, the Commission finds that it is appropriate to impose the following relief as agreed to in the Offer of Settlement.
+
+              Accordingly, IT IS HEREBY ORDERED, pursuant to Section 21C of the Exchange Act, that Fernandez cease and desist committing or causing any violations and any future violations of Sections 10(b) and 13(b)(5) of the Exchange Act and Exchange Act Rules 10b-5, 13b2-1 and 
+
+  13b2-2 and from causing any violations and any future violations of Section 13(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1 and 13a-13.
+
+   
+
+   By the Commission. 
+
+              Jonathan G. Katz 
+             Secretary
+
+  
+
+ 
+ Footnote 
+       1      The findings herein are made pursuant to Fernandez' Offer of Settlement and are not binding on any other person or entity in this or in any other proceeding.    
+
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diff --git a/raw/aaer/2001/AAER-1451.txt b/raw/aaer/2001/AAER-1451.txt
new file mode 100644
index 0000000000000000000000000000000000000000..17da9a19b94292a6b54535e3db1b1d92b745dfeb
--- /dev/null
+++ b/raw/aaer/2001/AAER-1451.txt
@@ -0,0 +1,1523 @@
+
+
+ 
+ 
+   
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+     SEC.gov | Ralph Sanchez, CPA 
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+        Ralph Sanchez, CPA
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+     SECURITIES EXCHANGE ACT OF 1934
+     Release No.  44816 / September 19, 2001
+      ACCOUNTING AND AUDITING ENFORCEMENT
+     Release No.  1451 / September 19, 2001
+      ADMINISTRATIVE PROCEEDING
+     File No.  3-10579
+
+            In the Matter of    
+      RALPH SANCHEZ, CPA,	
+  Respondent. 
+    	
+  : : : : : : :   
+   ORDER INSTITUTING PUBLIC
+ ADMINISTRATIVE PROCEEDINGS
+ PURSUANT TO RULE 102(e) OF THE
+ COMMISSI0N'S RULES OF PRACTICE, 
+ MAKING FINDINGS AND IMPOSING
+ REMEDIAL SANCTIONS     I.
+
+        The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Ralph Sanchez ("Sanchez"), a certified public accountant, pursuant to Rule 102(e) (1) (ii) of the Commission's Rule of Practice.  1    II.
+
+        In anticipation of the institution of this administrative proceeding, Sanchez has submitted an Offer of Settlement which the Commission has determined to accept.  Solely for the purposes of this proceeding and any other proceeding brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the Commission's findings contained herein, except that he admits  the jurisdiction of the Commission over him and over the subject matter of this proceeding, Sanchez consents to the entry of this Order and the findings and imposition of remedial sanctions set forth below.
+
+      III.
+
+        On the basis of this Order and Sanchez's Offer of Settlement, the Commission makes the following findings:  2    A.  RESPONDENT 
+
+        Sanchez, age 50, is a certified public accountant licensed in Florida and a partner with the firm of Sanson, Kline, Jacomino & Company ("Sanson Kline") located in Miami, Florida.  Sanchez was the engagement partner for his firm's initial audit of the financial statements of Madera International, Inc. ("Madera") for the fiscal year ended March 31, 1999.
+
+        B.  ISSUER 
+
+      Madera was at all times relevant to this proceeding a Nevada corporation headquartered in Coral Gables, Florida engaged in the timber business.  Its common stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act and was traded on the Electronic Bulletin Board operated by the National Association of Securities Dealers. 
+
+        C.  MADERA'S FALSE FINANCIAL STATEMENTS
+
+        Madera's major asset as reported in its fiscal 1999 financial statements consisted of timber properties located in the Brazilian rain forest valued at $27 million.  This asset accounted for 72% of Madera's total assets and 75% of Madera's stockholders' equity.  Madera had no credible evidence showing that it had clear title to the timber properties and had no reasonable basis to value the properties at $27 million.  The $27 million valuation was arbitrarily determined by Madera management.  By reporting its ownership of the timber properties at a value it could not support,  Madera failed to comply with generally accepted accounting principles ("GAAP") and materially overstated its assets and stockholder's equity at March 31, 1999.
+
+        D.  SANCHEZS' FAILURE TO COMPLY WITH PROFESSIONAL STANDARDS
+
+        Sanchez failed to conduct the fiscal 1999 audit of Madera in accordance with generally accepted auditing standards ("GAAS") in that, among other things, he failed to exercise due care and obtain sufficient competent evidential matter concerning the ownership and value of the timber properties.  Codification of Statements on Auditing Standards ("AU")  §  326.01.  Sanchez failed to perform adequate procedures or make adequate inquiries concerning the value or ownership of the timber properties. Instead, Sanchez improperly relied on management representations and the fact that the timber properties had been reported at the $27 million value in Madera's financial statements that were audited by a predecessor accounting firm for the prior four years.
+
+        Sanchez's reliance on management representations with regard to the timber properties was all the more improper because Sanchez was on notice that the representations of Madera management were not reliable.  During the audit, Sanchez had discovered false sales booked by Madera during fiscal 1999.  In an attempt to deceive him concerning the purported sales, Madera management had furnished him with fraudulent sales invoices, shipping documents and cash receipts records.  When Sanchez brought his concerns to management, he received no adequate explanation.  Although he did make certain that the false sales were reversed, Sanchez made no effort to determine why Madera management had provided him with the false documentation. 
+
+        Knowing that Madera management had furnished him with false documentation and made false representations concerning the bogus sales, Sanchez should have approached other areas of the audit with increased professional skepticism and should have questioned whether he could rely on management representations, particularly with regard to the ownership and valuation of Madera's major asset, the timber properties.  AU § 333.04 states:
+
+        [i]f a representation made by management is contradicted by other audit 
+      evidence, the auditor should investigate the circumstances and consider 
+      the reliability of the representation made.  Based on the circumstances,  
+      the auditor should consider whether his or her reliance on management's  
+      representations relating to other aspects of the financial statements is  
+      appropriate and justified." 
+
+       Moreover, Sanchez failed to consider the provisions of Statement of Financial Accounting Standards No. 121,  Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of  ("FAS 121").  FAS 121 requires that long-lived assets, in this case the timber properties, be reviewed for impairment "whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable."  FAS 121 cites as an example of events that indicate that the carrying amount of an asset should be assessed, "a current period operating cash flow loss combined with a history of operating or cash flow losses...."  Sanchez knew that Madera had a history of operating losses and that the property in question was not and had not been producing any revenues or cash flow for Madera.  Yet Sanchez failed to consider the requirements of FAS 121 and failed to assess whether the timber properties should be written down in value.   Sanchez's should have approached this crucial aspect of the audit with increased skepticism due to his knowledge that Madera management had lied to him and furnished him with false documentation in connection with the false sales revenue. 
+
+      IV.
+
+        Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer of Settlement submitted by Sanchez and accordingly,
+
+        IT IS HEREBY ORDERED, effective immediately, that:
+
+        A. Sanchez is denied the privilege of appearing or practicing before the Commission as an accountant.
+
+        B. After one year from the date of this order, Sanchez may request that the Commission consider his reinstatement by submitting an application (attention: Office of the Chief
+
+      Accountant) to resume appearing or practicing before the Commission as:
+
+     a preparer or reviewer, or a person responsible for the preparation or 
+      review, of any public company's financial statements that are filed with the 
+      Commission. Such an application must satisfy the Commission that Sanchez's  
+      work in his practice before the Commission will be reviewed either by the 
+      independent audit committee of the public company for which he works or in some  
+      other acceptable manner, as long as he practices before the Commission in this 
+      capacity; and/or
+
+    an independent accountant. Such an application must satisfy the Commission 
+      that: (a) Sanchez, or the firm with which he is associated, is a member of the 
+      SEC Practice Section of the American Institute of Certified Public 
+      Accountants Division for CPA Firms ("SEC Practice Section"); (b) Sanchez, or 
+      the firm, has received an unqualified report relating to his, or the firm's, 
+      most recent peer review conducted in accordance with the guidelines adopted by 
+      the SEC Practice Section; and (c) as long as Sanchez appears or practices 
+      before the Commission as an independent accountant he will remain either a 
+      member of the SEC Practice Section or associated with a member firm of the SEC 
+      Practice Section, and will comply with all applicable SEC Practice Section 
+      requirements, including all requirements for periodic peer reviews, concurring 
+      partner reviews, and continuing professional education.
+         C. The Commission's review of an application by Sanchez to resume appearing 
+      or practicing before the Commission may include consideration of, in addition to 
+      the matters referenced above, any other matters relating to Sanchez's  
+      character, integrity, professional conduct, or qualifications to appear or 
+      practice before the Commission.
+
+           By the Commission.
+
+  Jonathan G. Katz
+ Secretary
+  
+
+ 
+ Footnotes 
+       1       Rule 102(e) (1) of the Commission's Rules of Practice provides, in pertinent part, that the Commission may deny, temporarily or permanently, the privilege of appearing or practicing before it in any way to any person who is found by the Commission: "... (ii) to be lacking in character or integrity or to have engaged in unethical or improper professional conduct...."      2     The findings herein are made pursuant to Sanchez's Offer of Settlement and are not binding on any other person or entity in this or in any other proceeding.    
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diff --git a/raw/aaer/2001/AAER-1453.txt b/raw/aaer/2001/AAER-1453.txt
new file mode 100644
index 0000000000000000000000000000000000000000..67cc9d5b7e3b47ca9d6abe9f26005aa9ed97993a
--- /dev/null
+++ b/raw/aaer/2001/AAER-1453.txt
@@ -0,0 +1,1386 @@
+
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+              Madera International, Inc.
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+ Litigation Release No. 17140 /  September 19, 2001
+
+  Accounting and Auditing Enforcement Release No. 1453 / September 19, 2001
+
+  SEC CHARGES FORMER EXECUTIVES OF TIMBER COMPANY MADERA INTERNATIONAL WITH FALSIFYING FINANCIAL STATEMENTS 
+  MADERA'S INDEPENDENT ACCOUNTANTS CHARGED WITH AUDIT FAILURES
+
+   SECURITIES AND EXCHANGE COMMISSION v. MADERA INTERNATIONAL, INC., RAMIRO FERNANDEZ-MORIS and DANIEL S. LEZAK , Civ. No. 01-10985 (JR) (D.D.C.) 
+
+   SECURITIES AND EXCHANGE COMMISSION v. REGINA FERNANDEZ , Civ. No. 01-10986 (JR) (D.D.C.) 
+
+   IN THE MATTER OF MADERA INTERNATIONAL, INC. , Administrative Proceeding File No. 3-10577
+
+   IN THE MATTER OF REGINA FERNANDEZ , Administrative Proceeding File No. 3-10578
+
+   IN THE MATTER OF HARLAN & BOETTGER, LLP, WILLIAM C. BOETTGER and P. ROBERT WILKINSON , Administrative Proceeding File No. 3-10580   
+
+   IN THE MATTER OF RALPH SANCHEZ , Administrative Proceeding File No. 3-10579
+
+    The Securities and Exchange Commission announced today the filing of two complaints in the United States District Court for the District of Columbia, charging three former officers of Madera International, Inc. with falsifying Madera's financial statements and fraudulently inflating the company's assets, sales and net income.  Madera was engaged in exporting timber from South America.
+
+  Named in the first complaint are Madera, Ramiro Fernandez-Moris, who beginning in March 1996 was Madera's president, chief executive officer and chairman, and Daniel S. Lezak, who was Madera's chief executive officer and chairman until March 1996 and thereafter functioned as its chief financial officer.  The complaint alleges that during the period from 1994 through early 2000, the defendants: (1) recorded as assets of Madera various purported timber-producing properties to which it had no apparent legal title; (2) assigned unrealistic values to those properties; (3) recorded revenues from phony sales; (4) failed to disclose significant related party transactions; and (5) furnished false sales invoices, shipping documents, cash receipts records, and audit confirmations to Madera's auditors.  These practices resulted in the filing with the Commission of numerous false and misleading periodic reports during the period from 1994 to 2000.  The defendants in this action also issued false press releases concerning, among other things, Madera's results of operations and business prospects.  Fernandez-Moris and Lezak enriched themselves by selling Madera stock during the period of their falsification of the Company's public disclosures.  
+
+    The Commission's Complaint seeks from Madera, Fernandez-Moris and Lezak permanent injunctions against future violations of the antifraud, reporting, books and records, and internal control provisions of the Securities Exchange Act of 1934 ("Exchange Act"), Sections 10(b), 13(a) and 13(b)(2)(A) and (B) and 13(b)(5) and Rules 10b-5, 12b-20, 13a-1, and 13a-13, 13b2-1, and 13b2-2 thereunder, as well as civil money penalties pursuant to Section 21(d)(3) of the Exchange Act, and, additionally with respect to Fernandez-Moris and Lezak, disgorgement and officer and director bars.
+
+    The Commission also instituted an administrative proceeding pursuant to Section 12(j) of the Exchange Act to determine whether the registration of Madera's common stock should be revoked.  Madera has failed to file periodic reports with the Commission since its quarterly report on Form 10-Q for the quarter ended December 31, 1999.  In addition, according to allegations of the Commission's Division of Enforcement, Madera included in its annual report on Form 10-K for its fiscal year ended March 31, 1998 and quarterly report on Form 10-Q for the quarter ended June 30, 1999 financial statements that failed to conform with Generally Accepted Accounting Principles in that they materially overstated the value of Madera's revenues and gross profits.
+
+    The Commission also authorized administrative proceedings and the filing of a civil action against Regina Fernandez, Madera's corporate secretary.  Simultaneously with the institution of the administrative proceedings, and without admitting or denying the Commission's findings, Fernandez consented to the issuance of an order requiring that she cease and desist from committing or causing violations of the antifraud, reporting, books and records provisions of the Exchange Act.  In addition, Fernandez consented, without admitting or denying the allegations in the Commission's Complaint, to a Final Judgment in an action filed against her in U.S. District Court for the District of Columbia, ordering her to pay a civil penalty of $15,000.
+
+    The Commission also authorized the institution and simultaneous settlement of administrative proceedings pursuant to Rule 102(e) of the Commission's Rules of Practice against Madera's former outside auditor, Harlan & Boettger, LLP, its two audit partners, William C. Boettger and P. Robert Wilkinson as well as the Company's successor auditor, Ralph Sanchez.  Harlan & Boettger, LLP,  William C. Boettger and P. Robert Wilkinson consented to the entry of an order permanently denying each of them the privilege of practicing as accountants before the Commission.  Ralph Sanchez consented to the entry of an order denying him the privilege of practicing as an accountant before the Commission with a right to reapply after one year.
+  
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diff --git a/raw/aaer/2001/AAER-1454.txt b/raw/aaer/2001/AAER-1454.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ec1d8fa2605c99cae3897aae56febe3546da98f2
--- /dev/null
+++ b/raw/aaer/2001/AAER-1454.txt
@@ -0,0 +1,1556 @@
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+ File No. 3-10584 
+
+     
+In the Matter of   
+GUNTHER INTERNATIONAL, LTD.    Respondent.    
+ : : : : : : : : 
+  ORDER INSTITUTING PUBLIC 
+ADMINISTRATIVE PROCEEDINGS  
+PURSUANT TO SECTION 21C OF 
+THE SECURITIES EXCHANGE ACT 
+OF 1934, MAKING FINDINGS AND 
+IMPOSING A CEASE-AND-DESIST ORDER  
+   I. 
+
+ The Securities and Exchange Commission ("Commission") deems it appropriate that a public administrative proceeding be, and hereby is, instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Respondent Gunther International, Ltd. 
+
+ II. 
+
+ In anticipation of the institution of these administrative proceedings, the Respondent has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept.  Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings, Respondent consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing a Cease-and-Desist Order ("Order"). 
+
+ III. 
+
+ On the basis of this Order and Respondent's Offer, the Commission makes the findings set forth below.  1     A. Respondent  
+
+ Gunther International, Ltd. ("Gunther") is a Delaware corporation with its principal executive offices located in Norwich, CT.  Gunther manufactures, sells and services complex document finishing machines.  Its systems, which are sold primarily to large insurance companies, copy, selectively collate, staple or bind documents and insert them into envelopes.  Gunther generates revenue from two sources -- the sale of its systems, which comprised about 60% of the company's revenue in fiscal year 1998, and the sale of service contracts to maintain the systems, from which the company derived approximately 40% of its revenue in fiscal year 1998.   
+
+ Gunther completed its initial public offering of stock in December 1993.  Gunther's common stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act and was traded on the NASDAQ SmallCap Market at the time of the relevant conduct.  Gunther's stock is currently traded on the OTC Bulletin Board.   
+
+  B. Summary  
+
+ This matter involves violations of the reporting, record keeping and internal controls provisions of the Exchange Act by Gunther during its fiscal years ended March 31, 1997 and March 31, 1998.  On January 14, 1999, Gunther restated its financial statements for these two fiscal years, and restated the first three quarters of fiscal year 1998.  The fiscal year 1997 financial results, which initially reported $259,000 in net income, were restated to a $1.3 million net loss.  The fiscal year 1998 financial results, which initially reported a $2.7 million net loss and $9.3 million of total assets, were restated to a $2.63 million net loss  2   and $8 million of total assets.  In the restated quarters of fiscal year 1998, Gunther reported net losses of $897,430, $961,668 and $610,784 in the first, second and third quarters, respectively, after it had previously reported a first quarter net loss of $227,580, second quarter net income of $43,778 and third quarter net income of $125,026.   
+
+ In fiscal year 1997, Gunther overstated its net income by $1,593,000.  The originally reported 1997 financial results were inaccurate because Gunther improperly recognized revenue, that should have been deferred, for service contracts, improperly included accounts receivables in its assets when contracts for the sale of systems had not been signed by the end of the fiscal year, failed to record a significant invoice from its largest vendor at year end and improperly reversed another invoice from that same vendor. 
+
+ As of March 31, 1998, Gunther's assets for the full fiscal year were overstated by almost $1.4 million.  During fiscal year 1998, Gunther understated its net loss for the first quarter by $669,850, overstated net income in the second quarter by $1,005,446 and overstated net income in the third quarter by $735,810.  Gunther's originally reported results were inaccurate, in part, because Gunther understated its expenses by failing to reduce assets when certain machine components were completed, and because it improperly failed to record certain machine deposits. 
+
+ As a result of the foregoing acts, Gunther violated Section 13(a) of the Exchange Act, and Exchange Act Rules 12b-20, 13a-1 and 13a-13, when it filed with the Commission annual reports on Form 10-KSB for fiscal years 1997 and 1998, and quarterly reports for the first three quarters of fiscal year 1998, that contained materially false and misleading financial statements and other information.  In addition, Gunther violated Section 13(b)(2)(A) of the Exchange Act by failing to make and keep books, records, and accounts that accurately and fairly reflected its transactions and disposition of assets.  Finally, Gunther violated Section 13(b)(2)(B) of the Exchange Act by failing to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions were recorded as necessary to permit preparation of financial statements in conformity with Generally Accepted Accounting Principles ("GAAP").  
+
+   C. Facts  
+
+ 1. Fiscal Year 1997 Misstatements 
+
+ 2. a. Gunther Overstates 1997 Service Revenues 
+
+ Gunther generated approximately 40% of its fiscal year 1997 revenues from the sale of service contracts.  In fiscal year 1997, Gunther overstated its service revenues by $824,000.  Gunther overstated its service revenues by recognizing revenue for services it had not yet performed. 
+
+ (1) Gunther Improperly Recognizes Service Revenue That Should Have Been Deferred 
+
+ Customers purchasing Gunther systems typically entered into service contracts with Gunther for service on the systems.  Gunther would bill its customers, on either a quarterly or annual basis, in advance of the actual performance of the service.  Under GAAP, however, Gunther could only recognize revenue as it was earned on a pro rata basis over the term of the service contract. 
+
+ Prior to fiscal year 1997, and through the second quarter of fiscal year 1997, Gunther determined the appropriate amount of service revenue to record on a monthly basis for each service contract through the use of a monthly tracking schedule.  However, at some point in fiscal year 1997, Gunther discontinued the use of this schedule.  This caused Gunther to inaccurately report service revenue in its third quarter filing on Form 10-QSB during fiscal 1997.  Consequently, in connection with its year-end audit, Gunther had to devise a method to determine the appropriate amount of service revenue to report for the fiscal year.  To do this, Gunther created a "trued-up" schedule to determine the appropriate balance in the deferred service revenue account.  3    All of the revenue that was not required to be in the deferred service revenue account was recognized as service revenue. 
+
+ The "trued-up" schedule was supposed to list all "open" contracts during the fourth quarter.  Open contracts included those contracts pursuant to which services had been performed in the fourth quarter and would continue to be performed into fiscal year 1998.  The schedule specified for each contract the revenue to be recognized, relating to fiscal year 1997, and the amount to be deferred, relating to fiscal year 1998. 
+
+ To record the fourth quarter revenue, Gunther took the total amount of deferred revenue on the schedule, and then subtracted that from the amount of deferred revenue reflected on the general ledger.  What remained was $952,000, which Gunther recorded as service revenue.  However, when it did this, Gunther overstated service revenue by $515,000. 
+
+ Service revenues were overstated for two reasons.  First, the deferred revenue balance listed on the schedule was understated because the "trued-up" schedule left off a number of open contracts.  Therefore, when Gunther reduced the deferred revenue account balance in the general ledger by subtracting an understated deferred service revenue total from the schedule, it recognized revenue of over $446,000 that should have been recognized in fiscal year 1998.  Second, certain invoices relating to services to be performed in the following fiscal year were included in the deferred revenue account balance in the general ledger.  These same invoices, however, had not been included on the schedule because they had not yet begun and therefore were not open contracts at the end of the fiscal year.  Gunther, therefore, should have separately reduced the deferred revenue account in the general ledger and accounts receivable for over $68,000 of these invoices, but it did not.  As a result, service revenues were further overstated. 
+
+ (2) Gunther Records Service Contract Billings Directly to the Service Revenue Account 
+
+ Gunther abruptly changed its method of recording its service invoices during the last three weeks of fiscal year 1997.  Beginning with invoices that were recorded on March 11, rather than recording its service invoices to the deferred service revenue account, Gunther recorded 11 of its March invoices directly to the service revenue account.  Because Gunther had billed its service customers before the contract period started, this method overstated service revenue by the total of these invoices, or $309,000. 
+
+ b. Gunther Understates Accounts Payables 
+
+ (1) Gunther Fails to Record a March 1997 Payable 
+
+ In fiscal year 1997, a third party provider performed most of the maintenance services on Gunther systems.  Gunther expected the third party provider to bill in advance for servicing the regular monthly maintenance contracts.  The regular maintenance bills from the third party provider averaged between $250,000 and $280,000 per month during fiscal year 1997.  
+
+ On March 20, 1997, the third party provider generated a $242,000 bill for March 1997 services.   Under GAAP, Gunther should have recorded the liability and corresponding expense in fiscal year 1997, because that is the period to which the services related.  Gunther, however, entered the invoice into the accounting system on the date the invoice was received, which was in fiscal year 1998.  As a result, Gunther understated its service cost of sales by $242,000 by failing to accrue for this March payable. 
+
+ (2) Gunther Improperly Reverses a Payable 
+
+ In January 1997, the third party service provider gave Gunther a $203,000 supplemental invoice for "current site changes or additions" and "adjustments to previous invoices" for services that it had provided during fiscal year 1997.  Included with the invoice were at least five pages of information explaining the charges.   
+
+ Gunther entered this invoice into the accounting system in January 1997.  However, Gunther reversed the invoice during the first quarter of fiscal year 1998.  This improper reversal caused Gunther's service cost of sales to be understated by $203,000.   
+
+ As a result of the errors relating to the two payables, Gunther's net income was overstated by approximately $446,000. 
+
+ c. Gunther Overstates Accounts Receivable 
+
+ When Gunther sent a contract to a customer to sign, it generally sent along an invoice for the deposit amount.  The generation of this deposit invoice created an accounts receivable.  Gunther, therefore, had to reduce accounts receivable at the end of each quarter for the invoices for which customers had not signed a contract.  Accounts receivable were not reduced, however, for two invoices generated in March 1997, for which a contract had not been signed by March 31, 1997.  These improperly included invoices caused accounts receivable on the balance sheet to be overstated by approximately $323,000 and net income to be overstated by a corresponding $323,000.  
+
+ 3. Fiscal Year 1998 Misstatements 
+
+ a. Gunther Overstates Assets and Understates Expenses for Machine Subassemblies 
+
+ Gunther began to upgrade its accounting software in October 1996.  At the beginning of its fiscal year 1998, which began on April 1, 1997, in conjunction with its upgrade of the accounting software system, Gunther implemented a change in the process for accounting for the costs incurred to manufacture subassemblies that became a part of Gunther systems. 
+
+ In fiscal year 1998, most Gunther systems were built by making subassemblies, such as folders and inserters, and then adding the subassemblies to the frame of a custom-ordered Gunther system.  When the completed subassemblies were moved into inventory, Gunther's accounting system automatically made entries that overstated assets and understated expenses throughout fiscal year 1998.  To correct this situation, Gunther needed to make manual adjusting entries to reduce its assets and increase its expenses.  Gunther did not make the necessary entries.  As a result, Gunther overstated net income by approximately $240,000 in the first fiscal quarter, overstated net income by approximately $207,000 in the second fiscal quarter and overstated net income by approximately $318,000 in the third fiscal quarter of 1998. 
+
+ b. Gunther Understates Machine Costs by Failing to Record Deposits 
+
+ When customers ordered a Gunther system, they had to pay an up front cash deposit of 40% to 50% of the sales price so that Gunther could buy parts to build the system.  An additional 40% was paid to Gunther when the machine was completed, and the balance of the sales price was paid when the customer received and accepted the system.   
+
+ Gunther recorded deposits for machines on a percentage of completion schedule to calculate the balance sheet accounts "costs in excess of billings" and "billings in excess of costs".  The percentage of completion schedule calculated "costs in excess of billings," which was an asset on the balance sheet, by subtracting the deposits that were recorded on the schedule from the total revenues on the schedule.  Because the deposits were understated on the schedule, when Gunther reconciled the schedule to the general ledger, the adjustment created an overstatement of assets and an understatement of cost of sales.  
+
+ During fiscal year 1998, Gunther failed to record approximately $1.4 million of deposits, involving approximately 30 contracts, on the percentage of completion schedule.  Specifically, during the second quarter, deposits totaling approximately $32,000 were left off the schedule, which caused net income to be overstated by approximately $32,000.  In the third quarter, deposits totaling approximately $311,000 were left off the schedule, which caused net income to be overstated by approximately $311,000.  During the fourth quarter, Gunther left off the schedule approximately $1,072,000 of the deposits that Gunther received in the fourth quarter.   Gunther's failure to record all of these deposits caused its assets to be overstated by almost $1.4 million in fiscal year 1998.  Conversely, Gunther's expenses were understated by a corresponding $1.4 million. 
+
+ 3. Gunther Learns of the Misstatements 
+
+ Upon learning, during the 1998 audit, of the misstatements relating to the subassemblies, Gunther promptly reported the misstatements in a press release and cautioned investors not to rely on the previously issued interim financial statements.  When Gunther learned of additional misstatements and determined that the 1998 results would need to be restated, the company promptly issued another press release.  Gunther also cooperated with the staff in its investigation of this matter.  As noted below, in Section IV, the Commission considered Gunther's prompt remedial acts and cooperation in imposing the relief set forth in this Order.
+
+   D. Violations  
+
+ 1. Gunther Violated the Reporting, Record-Keeping and Internal Controls Provisions of the Exchange Act 
+
+ Section 13(a) of the Exchange Act, and Rules 13a-1 and 13a-13 thereunder, require issuers whose securities are registered with the Commission pursuant to the Exchange Act to file annual and quarterly reports.  Such reports must be true and correct.   See   SEC v. Kalyek, Inc. , 425 F. Supp. 310, 316 (S.D. N.Y. 1975).  Rule 12b-20 requires that such reports include all material information necessary to make the required statements, in the light of the circumstances under which they are made, not misleading.  Financial statements incorporated in Commission filings must comply with Regulation S-X which, in turn, requires conformity with GAAP.  17 C.F.R. ' 210.4-01(a)(1).   
+
+ Gunther violated Section 13(a) of the Exchange Act, and Rules 13a-1, 13a-13 and 12b-20 of the Exchange Act, by filing materially false and misleading annual reports on Form 10-KSB during fiscal years 1997 and 1998, and by filing materially false and misleading quarterly reports on Form 10-QSB during fiscal year 1998.  Gunther materially overstated its net income in fiscal year 1997 and the first three quarters of fiscal year 1998 and also materially overstated its assets in fiscal year 1998. 
+
+ Section 13(b)(2)(A) of the Exchange Act requires that every issuer of securities registered pursuant to Section 12 of the Exchange Act make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect its transactions and disposition of assets.  Gunther violated Section 13(b)(2)(A) of the Exchange Act by maintaining false and misleading books and records in fiscal years 1997 and 1998, which, among other things, materially overstated its net income in fiscal year 1997 and the first three quarters of fiscal year 1998.  Among other things, Gunther maintained false and misleading books and records when it improperly recognized revenue for service contracts that should have been deferred, improperly included accounts receivables in its assets when contracts for the sale of systems had not been signed by the end of the fiscal year, failed to record a significant invoice from its largest vendor at year end, improperly reversed a liability, overstated assets and understated expenses related to machine subassemblies and failed to properly record deposits for systems. 
+
+ Section 13(b)(2)(B) of the Exchange Act requires issuers to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP.  Gunther violated Section 13(b)(2)(B) of the Exchange Act by failing to devise and maintain a system of internal accounting controls sufficient to prevent, among other things, the overstatement of service revenues based on an incomplete schedule, the failure to timely record a significant invoice from its largest vendor, the overstatement of assets and understatement of expenses related to machine subassemblies and the failure to properly record deposits. 
+
+ IV. 
+
+ Based on the foregoing, the Commission deems it appropriate to accept the Respondent's Offer and to impose the relief specified therein.  In determining to accept the Offer, the Commission considered remedial acts promptly undertaken by Respondent and cooperation afforded the Commission staff. 
+
+ IT IS HEREBY ORDERED that, pursuant to Section 21C of the Exchange Act, Respondent Gunther International, Ltd., cease and desist from committing or causing any violation, and any future violation, of Sections 13(a), 13(b)(2)(A) and (B) of the Exchange Act, and Rules 12b-20, 13a-1 and 13a-13. 
+
+ By the Commission  
+
+ Jonathan G. Katz 
+Secretary 
+
+ Endnotes 
+
+  1  The findings herein are made pursuant to the Respondent's Offer and are not binding on any other person or entity in this or any other proceeding. 
+
+  2  Because some of the fiscal year 1997 misstatements related to recognition of revenue during fiscal year 1997 that should have been recognized in fiscal year 1998, Gunther reported a smaller net loss in the 1998 restatement than in the Form 10-KSB that it originally filed for fiscal year 1998.   
+
+  3  Until mid-March 1997, Gunther recorded its service billings in a deferred revenue account as each bill was sent to the customer.  That account recorded all invoices, whether or not the service had yet been performed. 
+
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diff --git a/raw/aaer/2001/AAER-1455.txt b/raw/aaer/2001/AAER-1455.txt
new file mode 100644
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+++ b/raw/aaer/2001/AAER-1455.txt
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+ Litigation Release No. 17151 / September 26, 2001 
+
+ Accounting and Auditing Enforcement Release No. 1455 
+
+ SEC Settles Charges against Thomas Butler for His Invovlement in Financial Reporting Fraud at Cylink Corporation 
+
+ Securities and Exchange Commission v. John Daws, Thomas Butler and Mark Folit, United States District Court for the Northern District of California, Civil Action No. C 01-3362 VRW 
+
+ The Securities and Exchange Commission announced that on July 23, 2001, the Honorable Ronald M. Whyte, United States District Judge for the Northern District of California, issued a Final Judgment of Permanent Injunction and Other Relief against Thomas Butler, the former Vice President of Sales of Cylink Corporation.  Without admitting or denying the Commission's allegations, Butler consented to the entry of a final judgment that permanently enjoins him from violating the antifraud provisions (Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder); from circumvention of Cylink's internal controls and falsification of records (Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder); and from aiding and abetting Cylink's violations of the periodic reporting and books and records provisions (Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder)  In addition, the final judgment orders him to disgorge ill-gotten gains of $50,000 to pay prejudgment interest and to pay a civil penalty of $100,000. 
+
+ The Commission's complaint, filed on September 27, 2000, alleged that in order to meet Cylink's ambitious revenue goals, Butler, in conjunction with other former Cylink officers, led the Company to recognize revenue on numerous transactions that violated Cylink's own revenue recognition policy, generally accepted accounting principles or both for the first two quarters of fiscal 1998.  For example, the complaint alleges that in the second quarter of fiscal 1998, Cylink recognized over $900,000 in revenue on a transaction that was not final because the customer still had up to 90 days to cancel the order.  In another instance alleged in the complaint, Cylink recognized revenue on orders from a distributor even though the defendants had reason to believe the distributor could not pay for the product.  The complaint also alleges that Cylink recognized revenue on software product orders that were contingent on the customers' rights to exchange the software for Cylink hardware products.  Cylink overstated its quarterly revenue by as much as 97.5% during the period of the fraud, according to the Complaint. 
+
+ After the fraud was uncovered, Cylink issued restated financials that sharply reduced its results for the periods in question.  For the first quarter of fiscal 1998, the Company restated revenue from $15.8 million to $8 million (a 97.5% overstatement) and net income from continuing operations of $1.1 million to a net loss from continuing operations of $3.4 million.  For the second quarter of fiscal 1998, the Company restated revenue from $18 million to $12.4 million (a 45% overstatement) and net income of $1.7 million to a net loss of $1.7 million.   
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diff --git a/raw/aaer/2001/AAER-1459.txt b/raw/aaer/2001/AAER-1459.txt
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+ SECURITIES AND EXCHANGE ACT OF 1934
+ Release No.  44860 / September 27, 2001
+  ACCOUNTING AND AUDITING ENFORCEMENT
+ Release No.  1459 / September 27, 2001
+  ADMINISTRATIVE PROCEEDING
+ File No.  3-10591
+
+         IN THE MATTER OF   
+   PAUL S. JUREWICZ    
+        Respondent.   
+				    
+    : : : : : : :   
+   ORDER INSTITUTING  
+ PROCEEDINGS PURSUANT 
+ TO SECTION 21C OF THE 
+ SECURITIES EXCHANGE ACT 
+ OF 1934, MAKING FINDINGS 
+ AND IMPOSING A CEASE- 
+ AND-DESIST ORDER      I . 
+
+   The Securities and Exchange Commission (Commission) deems it appropriate to institute cease-and-desist proceedings against Respondent Paul S. Jurewicz (Respondent) pursuant to Section 21C of the Securities Exchange Act of 1934 (Exchange Act).  
+
+  II.  
+
+   Accordingly, IT IS HEREBY ORDERED that a proceeding pursuant to Section 21C of the Exchange Act be, and hereby is, instituted. 
+
+  III.  
+
+   In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (Offer), which the Commission has determined to accept.  In determining to accept Respondent's Offer of Settlement, the Commission considered remedial acts promptly undertaken by Respondent and cooperation afforded the Commission staff.  Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the Commission's findings contained herein, except to the Commission's jurisdiction over him and the subject matter of this proceeding, which are admitted, Respondent consents to the entry of this Order Instituting Proceedings Pursuant to Section 21C of the Exchange Act, Making Findings and Imposing a Cease-and-Desist Order (Order). 
+
+  IV.  
+
+ On the basis of the Order and Respondent's Offer, the Commission makes the following findings:  1   
+
+   Respondent   
+
+  Paul S. Jurewicz , a resident of Libertyville, Illinois, was the Chief Financial Officer of Sabratek Corporation ("Sabratek" or "Company"), from July 1998 to April 1999. 
+
+   Overview   
+
+ Sabratek was a medical products manufacturer of infusion pumps and flush syringes, located in Skokie, Illinois.  At all relevant times, the Company's securities were registered pursuant to Section 12(g) of the Exchange Act and traded on Nasdaq.  At all relevant times, Sabratek filed reports with the Commission pursuant to Section 13(a) of the Exchange Act. 
+
+ From the first quarter of 1998 through the first quarter of 1999, certain employees of Sabratek engaged in a scheme to overstate the Company's reported revenue, resulting in the material misrepresentation of its results of operations and inflation of its stock price.  This scheme included improper recognition of revenue from purported sales of infusion pumps and from consulting services that were largely not performed.  Sabratek overstated net sales by $30.7 million (62% greater than actual net sales) and operating income by $18.3 million over the five quarters.  Over these five quarters, the Company reported operating income of $10.3 million instead of a loss from operations of approximately $8.0 million.   
+
+ Respondent, the Company's Chief Financial Officer from July 1998 to April 1999, contributed to Sabratek's misrepresentations by causing to be prepared and reviewing the Company's financial statements, and by signing the Company's Form 10-Q for the third quarter of 1998, Form 10-K for 1998, and the Company's management representation letters to its auditor for these periods.  At the time that he signed these Forms 10-Q and 10-K and the representation letters, Respondent was reckless in not knowing that the Sabratek's financial results were materially overstated.  Respondent also did not devise and maintain a system of internal accounting controls to ensure that the Company's revenue from sales and billings was accurately recorded. 
+
+ From August 1999, when Sabratek reported that its operating results for the second quarter of 1999 would be significantly below Wall Street estimates and that its release of earnings information would be delayed, to November 1999, when its stock was delisted, the Company lost $202 million (98%) in market capitalization. 
+
+   Facts   
+
+  The Improper Recognition of Pump Sales Revenue  
+
+ In 1998, Sabratek experienced a decline in the demand for its infusion pumps and suspended distribution of its flush syringes because of issues with the Food and Drug Administration.  These were the two primary sources of Sabratek's revenue.  Despite these setbacks, Sabratek desired to present itself as a growing business.  To do so, certain employees of Sabratek engaged in a scheme to inflate its revenue and income.  As Sabratek's Chief Financial Officer from July 1998 to April 1999, Respondent prepared and reviewed the financial statements included in its public filings with the Commission. 
+
+ During 1998, Sabratek improperly recognized sales revenue from fictitious sales of pumps that were not ordered by customers, but were fraudulently parked at third-party warehouses.  Sabratek also induced its customers to purchase pumps by offering consignment or right-of-return terms and promising to assist in the resale of these pumps to other customers. Generally Accepted Accounting Principles did not permit the recognition of these sales as revenue.  All of these transactions occurred at the end of quarters. 
+
+ During his employment at Sabratek, Respondent was familiar with accounting rules concerning the recognition of revenue for sales transactions.  Before he signed the Company's Form 10-Q for the third quarter of 1998, Respondent knew that Sabratek was recognizing a material amount of revenue from an $8.2 million pump sale at the end of the quarter, in which the customer had the right to return any pumps that it could not subsequently resell to others.  Respondent also was aware that Sabratek was filling this transaction in large part with pumps that purportedly had been sold in a $4.3 million transaction that had been recognized at the end of the second quarter of 1998.  Despite this knowledge, Respondent allowed Sabratek to recognize the revenue on the transaction in the third quarter, and did not question the recognition of revenue for the other transaction in the second quarter. 
+
+ Before he signed the Company's Form 10-K for 1998, Respondent also knew or was reckless in not knowing that Sabratek had recognized revenue on a $2.5 million pump transaction at the end of the first quarter of 1998 and another $2.5 million pump transaction at the end of the third quarter of 1998 in which these customers had not agreed to pay these amounts, but only pay for pumps as they ordered them.  By the end of 1998, Respondent had information indicating that these customers had actually only ordered and paid for approximately $800,000 of the pumps.  Respondent was also aware that Sabratek had been treating a $383,000 first quarter 1998 pump transaction as a consignment sale.  Respondent thus knew or was reckless in not knowing that Sabratek materially overstated its financial results for the third quarter of 1998 and the year of 1998 by improperly recognizing revenue from pump sales. 
+
+  The Improper Recognition of Consulting Revenue    
+
+ During 1998, Sabratek created $2.7 million in inflated billings for consulting services that were largely not provided by the Company.  Of this amount, $600,000 was recognized in revenue for the fourth quarter of 1998.  Sabratek had inadequate documentation to support the amounts billed for this purported consulting work.  Although Respondent was aware that it was unlikely that Sabratek provided these services in the fourth quarter of 1998, he did not determine whether Sabratek executives ever performed any of these consulting services.  Therefore, Respondent was reckless in not knowing that Sabratek's financial results for the year of 1998 were materially overstated as a result of the improper recognition of revenue from the consulting billings. 
+
+  The Form 10-Q for the Third Quarter of 1998  
+
+ As a result of the scheme to overstate its revenue, Sabratek reported net sales of $18.8 million and operating income of $3.9 million in its Form 10-Q for the period ended September 30, 1998, when it actually had net sales of approximately $12.5 million and operating income of approximately $1.1 million.  Respondent signed this filing with the Commission.   Respondent knowingly or recklessly allowed Sabratek to improperly recognize certain revenue from pump sales in this public filing, as described above. 
+
+  The Form 10-K for 1998   
+
+ As a result of the scheme to overstate its revenue, Sabratek reported net sales of $66.9 million and operating income of $8.6 million in its Form 10-K for the year ended December 31,1998, when it actually had net sales of approximately $46 million and sustained an operating loss of approximately $3 million.  Respondent signed this filing with the Commission.  Respondent knowingly or recklessly allowed Sabratek to improperly recognize revenue from pump sales and consulting billings in this public filing, as described above.  
+
+  The Management Representation Letters   
+
+ Sabratek provided its auditor with a management representation letter in connection with the 1998 audit of Sabratek.  In this letter, signed by Respondent, Sabratek falsely represented that there were no side agreements with customers that allowed for the return of merchandise, except for defect or other conditions covered by customary warranties.  Respondent knew or was reckless in not knowing this statement was false because he was aware that Sabratek had given a customer in a material transaction the right to return unsold pumps.  Sabratek also provided a management representation letter to its auditor in connection with the quarterly review of the financial information included in the Form 10-Q for the third quarter of 1998.  This letter, signed by Respondent, represented that material transactions were properly recorded in the accounting records underlying the financial information. Respondent knew or was reckless in not knowing that this statement was false because he was aware of a material pump sale that was improperly recognized at the end of the third quarter, as described above. 
+
+   Violations   
+
+ Section 10(b) of the Exchange Act and Rule 10b-5 thereunder prohibit the use of devices, schemes or artifices to defraud in connection with the purchase or sale of securities.  Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder require issuers of registered securities to file accurate reports with the Commission.  Section 13(b)(2)(A) of the Exchange Act requires companies that are registered under Section 12 of the Exchange Act to maintain accurate books, records and accounts.  Rule 13b2-1 prohibits any person from, directly or indirectly, falsifying or causing to be falsified any book, record, or account required to be kept pursuant to Section 13(b)(2) of the Exchange Act.  Section 13(b)(2)(B) of the Exchange Act requires companies to devise and maintain an adequate system of internal accounting controls.  Rule 13b2-2, promulgated under Section 13(b)(2) of the Exchange Act, prohibits any officer or director from, directly or indirectly, lying to an accountant in connection with an audit or the preparation of reports required to be filed with the Commission. 
+
+ Sabratek violated Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder by, among other things, making false statements in the Company's Form 10-Q for the third quarter of 1998 and its Form 10-K for 1998, relating to Sabratek's revenue from pump sales and consulting billings.  Sabratek also violated Section 13(b)(2)(A) of the Exchange Act by failing to maintain accurate books, records and accounts for the third quarter of 1998 and the year of 1998.  Sabratek further violated Section 13(b)(2)(B) of the Exchange Act by failing to devise and maintain an adequate system of internal accounting controls to ensure, among other things, that its revenue from sales and billings was accurate.   
+
+ When Respondent prepared and reviewed Sabratek's financial statements and signed the Company's filings with the Commission that misleadingly overstated the Company's revenue and income, as described above, he violated Section 10(b) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder, and caused the Company's violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder.  When Respondent signed the management representation letters to Sabratek's auditors that included false statements that there were no side agreements and that material transactions were properly recorded, as described above, he violated Rule 13b2-2 under the Exchange Act.  Respondent also caused Sabratek's violations of Section 13(b)(2)(B) of the Exchange Act by failing to devise and maintain an adequate system of internal accounting controls to ensure, among other things, that its revenue from sales and billings was accurate.  
+
+  V.  
+
+ Based on the foregoing, the Commission deems it appropriate to accept the offer submitted by Respondent. 
+
+ Accordingly, IT IS HEREBY ORDERED that pursuant to Section 21C of the Exchange Act that Respondent cease and desist from committing or causing any violation and any future violation of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1, 13b2-2 thereunder. 
+
+ IT IS FURTHER ORDERED that Respondent shall, within sixty (60) days of the entry of this Order, pay disgorgement and prejudgment interest in the total amount of  $17,907.00  to the United States Treasury.  Such payment shall be: (A) made by United States postal money order, certified check, bank cashier's check or bank money order; (B) made payable to the United States Securities and Exchange Commission; (C) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Alexandria, VA 22312-0003; and (D) submitted under cover letter that identifies Paul S. Jurewicz as a Respondent in these proceedings and the file number of these proceedings, a copy of which shall be sent simultaneously to Pravin B. Rao, Branch Chief, Division of Enforcement, Securities and Exchange Commission, Midwest Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. 
+
+   By the Commission. 
+
+                     Jonathan G. Katz
+                     Secretary 
+ 
+
+ 
+ Footnote 
+       1      The findings herein are made pursuant to Jurewicz's Offer and are not binding on any other person or entity in this or any other proceeding.    
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diff --git a/raw/aaer/2001/AAER-1462.txt b/raw/aaer/2001/AAER-1462.txt
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+++ b/raw/aaer/2001/AAER-1462.txt
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+              Millionaire.com and Robert L. White
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+       
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+ Litigation Release No. 17167 / October 2, 2001
+
+  Accounting and Auditing Enforcement Release No. 1462 / October 2, 2001
+
+   Securities and Exchange Commission v. Millionaire.com and Robert L. White , Civial Action No. 9:01-3897-23 (S.C., Beaufort Division, filed October 1, 2001)
+
+  On Monday, October 1, 2001, the U.S. Securities and Exchange Commission (SEC) filed a complaint in the U.S. District Court for South Carolina against Millionaire.com (Millionaire), the publisher of OPULENCE Magazine, and its president, Robert L. White.  The SEC alleges in its complaint that Millionaire violated the antifraud, reporting, record keeping and internal controls provisions of the federal securities laws, and that White aided and abetted Millionaire's violations.   
+
+ The SEC alleges that in a press release issued December 21, 1998, Millionaire falsely claimed that it had sold $8 million of advertising space in its magazine.  The SEC further alleges that in a press release issued December 24, 1998, Millionaire falsely claimed that it had entered into a definitive agreement to purchase an established regional auction house.  In addition, the SEC alleges that on October 5, 2000, Millionaire filed with the Commission a quarterly report for the period ended June 30, 2000, that failed to disclose that Millionaire had lost its contractual right to exclusive use of the Millionaire and Billionaire trademarks.  Finally, the SEC alleges that Millionaire failed to comply with the record keeping and internal controls provisions of the federal securities laws.  The complaint charges White with aiding and abetting Millionaire's violations. 
+
+ Millionaire and White have consented, without admitting or denying the SEC's allegations, to the entry by the Court of a permanent injunction, enjoining future violations by Millionaire and White of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20 and 13a-13, thereunder.  White has also agreed to pay a $25,000 civil penalty.   
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diff --git a/raw/aaer/2001/AAER-1463.txt b/raw/aaer/2001/AAER-1463.txt
new file mode 100644
index 0000000000000000000000000000000000000000..20aed478e8450ecc0a39f4dbff8202c95427370d
--- /dev/null
+++ b/raw/aaer/2001/AAER-1463.txt
@@ -0,0 +1,1498 @@
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+              Chiquita Brands International, Inc.
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+        Chiquita Brands International, Inc.
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+ Securities Exchange Act of 1934
+ Release No.  44902 / October 3, 2001
+  Accounting and Auditing Enforcement
+ Release No.  1463
+  Administrative Proceeding File No. 3-10613
+
+        In the Matter of                 
+  CHIQUITA BRANDS   			
+ INTERNATIONAL, INC.   			
+  Respondent.      
+							    
+    : : : : : : :   
+  ORDER INSTITUTING PROCEEDINGS
+ PURSUANT TO SECTION 21C OF
+ THE SECURITIES EXCHANGE ACT
+ OF 1934, MAKING FINDINGS, AND
+ IMPOSING A CEASE-AND-DESIST
+                   ORDER    I. 
+
+   The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Chiquita Brands International, Inc. ("Chiquita"). 
+
+   II. 
+
+   In anticipation of the institution of these proceedings, Chiquita has submitted an Offer of Settlement ("Offer") that the Commission has determined to accept.  Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission, or to which the Commission is a party, and prior to a hearing and without admitting or denying the findings contained herein, except as to jurisdiction over it and over the subject matter of this proceeding, which Chiquita admits, Chiquita consents to the entry of this Order Instituting Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order ("Order").  The Commission has determined that it is appropriate to accept the Offer from Chiquita, and accordingly is issuing this Order.  1   
+
+ III. 
+
+   Based on the foregoing, the Commission finds that: 
+
+   A.  Respondent  
+
+    Chiquita Brands International, Inc.  is a New Jersey corporation with its headquarters in Cincinnati, Ohio.  The common stock of Chiquita is registered with the Commission pursuant to Section 12(b) of the Exchange Act and is listed on the New York Stock Exchange.  
+
+   B.  Other Relevant Entities and Persons  
+
+    C.I. Bananos de Exportacion S.A.  ("Banadex") is an indirectly wholly-owned subsidiary of Chiquita with its headquarters in Medellin, Colombia.  Banadex indirectly reports to Chiquita. 
+
+    Comercio Exterior Asesores Limitada  ("CEA") is a Colombian entity licensed by the Colombian government to act as an intermediary between corporations and Colombian customs officials. 
+
+   C.  Facts  
+
+   Chiquita's Colombian operations consist of, among other things, a number of banana farms located throughout the country and an import/export port facility located in Turbo.  The Turbo port facility is owned and operated by Banadex, an indirect wholly-owned subsidiary of Chiquita.  Beginning in 1993, the Colombian government licensed the Turbo facility as a location where goods could be stored pending inspection by customs officials. 
+
+   In 1995, the Colombian government issued a decree requiring all current license holders to submit renewal applications.  Banadex learned of the decree through CEA, its intermediary with Colombian customs.  Under Colombian law, companies are required to hire licensed customs brokers who interact with customs officials on behalf of the company. 
+
+   In September 1995, the Banadex employee in charge of material and supplies advised Banadex management that renewal of the port facility's customs license was in jeopardy because of two previous citations for failure to comply with Colombian customs regulations.  The employee further advised management that replacing the Turbo facility would cost approximately $1 million.  Without the knowledge or consent of any Chiquita employee and in contravention of Chiquita's policies, Banadex's chief administrative officer authorized Banadex's CEA agent to make a payment to Colombian customs officials to obtain the license renewal.  The chief administrative officer directed Banadex's security officer and controller to make and process the payment. 
+
+   Banadex's CEA agent later advised the company that for the Colombian peso equivalent of approximately $30,000 the citations would be overlooked and the license renewal granted.  Banadex agreed to pay two installments - approximately $18,000 in advance and the remainder after renewal.  Both installments were made by Banadex's security officer from a Banadex account used for discretionary expenses.  The initial installment was incorrectly identified in the company's books and records as a maritime donation ("Donacion Maritima").  The second installment was incorrectly identified as relating to a maritime agreement ("Acuerdo Maritima").  Banadex did not request permission from, or otherwise inform, any Chiquita employee within the United States regarding the transaction. 
+
+   Chiquita's policies and procedures contain strict guidelines regarding the use of a discretionary expenses account.  Banadex did not comply with Chiquita's procedure requiring that Banadex's books and records accurately reflect the transaction.  During 1996, Chiquita's internal auditing staff made management aware of a number of instances in which Banadex had not provided documentation required by Chiquita's internal accounting control procedures regarding discretionary expenses. 
+
+   Chiquita had strict policies prohibiting payments of the kind made to the customs officials.  To monitor and enforce those policies, Chiquita required quarterly identification and disclosure of all payments to government officials or employees, political candidates, or political parties.  Contrary to Chiquita's established procedure, Banadex employees failed to identify and disclose the payment to customs officials on the disclosure forms submitted for the relevant quarters. 
+
+   In April 1997, Chiquita internal audit discovered the September 1996 payment during an audit review of Banadex.  After conducting an internal investigation, Chiquita took corrective action, which included terminating the responsible Banadex employees and reinforcing its internal controls with respect to its Colombian operations. 
+
+ IV. 
+
+   Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, the "books and records" and "internal controls" provisions of the Foreign Corrupt Practices Act, require reporting companies to make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect their transactions and disposition of assets, and to devise and maintain a reasonable system of internal accounting controls.  Such companies are also responsible for ensuring that their wholly-owned foreign subsidiaries comply with Sections 13(b)(2)(A) and 13(b)(2)(B). 
+
+   Based upon the foregoing, the Commission concludes that Banadex employees made inaccurate entries in the documents recording the transaction and Banadex's general ledger to conceal the payment to customs officials.  These inaccurate entries by Banadex constitute a violation by Chiquita of Section 13(b)(2)(A) by failing to maintain books and records which accurately reflected Banadex's transactions and dispositions of assets.  The Commission further finds that Chiquita violated Section 13(b)(2)(B) by failing to maintain a system of internal accounting controls to ensure that Banadex's books and records accurately and fairly reflected the disposition of Banadex's assets. 
+
+ V. 
+
+   Based upon the foregoing, the Commission deems it appropriate to accept the Offer submitted by Chiquita. 
+
+ Accordingly, IT IS HEREBY ORDERED, pursuant to Section 21C of the Exchange Act, that Chiquita cease and desist from committing or causing any violation, and committing or causing any future violation, of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. 
+
+   By the Commission. 
+
+                     Jonathan G. Katz
+                     Secretary 
+ 
+
+ 
+ Footnote 
+       1       This matter is related to SEC v. Chiquita Brands International, Inc., Civ. No. 1:01CV02079 (D.D.C.)(October 3, 2001)(ordering $100,000 penalty by consent).    
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diff --git a/raw/aaer/2001/AAER-1465.txt b/raw/aaer/2001/AAER-1465.txt
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+              Roys Poyiadjis, Lycourgos Kyprianou and AremisSoft Corp.
+           
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+        Roys Poyiadjis, Lycourgos Kyprianou and AremisSoft Corp.
+       
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+ Litigation Release No.  17172  /  October 4, 2001 
+
+ Accounting and Auditing Enforcement Release No. 1465  / October 4, 2001 
+
+ SEC Obtains Emergency Relief against Aremissoft Corporation and Two Former Officers for Financial Fraud, Insider Trading 
+
+ Securities and Exchange Commission v. Roys Poyiadjis, Lycourgos Kyprianou and AremisSoft Corp., Civil Action No. 01-CV-8903 (S.D.N.Y.) 
+
+ On October 4, 2001, the Commission filed a civil injunctive action against AremisSoft Corporation, an international software company with offices in New Jersey, London, Cyprus, and India, and two former officers, Roys Poyiadjis and Lycourgos Kyprianou, alleging that they overstated the value of the Company's contracts, revenues and recent acquisitions, and that the two former officers engaged in massive insider trading during the period of the reporting fraud.  On the same day, the Honorable Charles S. Haight, Jr., United States District Judge for the Southern District of New York, granted the Commission's motion for emergency relief against AremisSoft, Poyiadjis and Kyprianou.   
+
+ Based on evidence that all three defendants engaged in financial fraud and Poyiadjis and Kyprianou, both former chairmen and CEO's of the Company, also engaged in insider trading, the Court's Order restrains the defendants from violations of the anti-fraud, reporting and other provisions of the federal securities laws pending a hearing on the Commission's motion for a preliminary injunction.  The Court's Order freezes the assets of Poyiadjis and Kyprianou, and directs them to repatriate to the United States the proceeds of their sales of AremisSoft stock.  The Order also grants the Commission's request for expedited discovery.   
+
+ According to the Commission's complaint:  
+
+  On December 17, 1999, AremisSoft announced: "the signing of a $37.5 million agreement to automate the nationwide healthcare system of Bulgaria."  Poyiadjis and Kyprianou publicly touted the Bulgarian contract as of major significance for the Company's business prospects.  The Company recognized approximately $7.1 million in revenue from this contract during 2000 and $1 million more in the first quarter of 2001.  In fact, the value of the Bulgarian contract is no more than $3.7 million, and the Company can presently substantiate only about $1.7 million of the revenue recognized on it.    
+
+ AremisSoft's  "Emerging Markets Group," headquartered in Cyprus, reported roughly $89 million out of a total of $120 million in sales revenue during 2000.  Most of this amount, however, was based on purported sales to entities that either do not exist as operating businesses or did not purchase product from AremisSoft.  AremisSoft falsified its books and records to conceal that it was obtaining no cash from these purported sales.   
+
+ AremisSoft, through its Emerging Markets Group, acquired three private software companies during 2000: e-nnovations.com; e-ChaRM India Pvt Ltd.; and Denon International Ltd.  The value of $32.7 million that AremisSoft reported for these acquisitions, however, was many times that actually paid by AremisSoft for the three companies.  Further, AremisSoft reported falsified operating histories for the acquired companies.   
+
+ Knowing or recklessly disregarding facts indicating that the Company's public disclosure was materially false, as described above, Poyiadjis and Kyprianou sold millions of shares of AremisSoft stock, acting through various offshore entities.  Although they claimed in Commission filings to have "gifted" their AremisSoft securities to entities in which they had no interest, in fact both retained control over and a beneficial interest in the proceeds of the sales.   
+
+ The Commission charges that, through the above conduct AremisSoft, Poyiadjis and Kyprianou violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder.  The complaint further alleges that AremisSoft violated Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder, and that Poyiadjis and Kyprianou aided and abetted the Company's violations of all of the foregoing provisions and are liable for AremisSoft's violations as controlling persons of AremisSoft.  Finally, the complaint alleges that Poyiadjis and Kyprianou violated Section 16(a) of the Exchange Act.   A hearing on whether a preliminary injunction should be issued against the defendants is scheduled for October 18, 2001. 
+
+ The Commission would like to acknowledge the Office of the U.S. Attorney for the Southern District of New York and the Federal Bureau of Investigation for the assistance they provided in this matter. 
+
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diff --git a/raw/aaer/2001/AAER-1467.txt b/raw/aaer/2001/AAER-1467.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d35e7c3375fc2a37a3cfa5c830efc8c82b48ed7b
--- /dev/null
+++ b/raw/aaer/2001/AAER-1467.txt
@@ -0,0 +1,1383 @@
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+ Litigation Release No.  17189 / October 15, 2001
+
+  Accounting and Auditing Enforcement Release No.  1467 / October 15, 2001 
+
+  SEC CHARGES SIX FORMER SENOR EXECUTIVES AND EMPLOYEES IN MASSIVE FINANCIAL REPORTING FRAUD SCHEME AT MCKESSON HBOC, INC.
+
+   SECURITIES AND EXCHANGE COMMISSION v. JAY LAPINE,  United States District Court for the Northern District of California, Civil Action No. C-01-3650 (VRW)
+
+   SECURITIES AND EXCHANGE COMMISSION V. MICHAEL SMERASKI, TIMOTHY HEYERDAHL, DEBORAH MATTIFORD, ELAINE DECKER, AND DAVID HELD , United States District Court for the Northern District of California, Civil Action No. C-01-3651 (MMC)
+
+    On September 27, 2001, the United States Securities and Exchange Commission filed securities fraud charges against the former General Counsel, Senior Vice President of Finance, Chief Financial Officer, Senior Vice President in charge of  Enterprise Sales, and two other former gatekeepers of the financials of HBO & Company ("HBOC"), later a subsidiary of McKesson HBOC, Inc. (now known as McKesson Corporation).  The Commission alleges that each of the senior managers played integral roles in a scheme to "cook the books" of the company.  The wrongdoing pervaded the top levels of HBOC's legal, finance, accounting, sales and other departments.  This massive financial reporting fraud scheme began at Atlanta-based HBOC in 1997, and continued after its January 1999 merger with San Francisco-based McKesson Corporation.  When the fraud was first disclosed in April 1999, McKesson HBOC shares tumbled from approximately $65 to $34, a decline that slashed the company's market value by more than $9 billion. 
+
+ These complaints follow the Commission's action on September 28, 2000, in which the Commission brought fraud charges against the former co-Presidents and the former head of sales of HBOC at the same time that the co-Presidents were indicted by the United States Attorney's Office for their direction of the financial fraud scheme. Those actions are pending. 
+
+ The complaints filed September 27, 2001 were filed in federal district court in San Francisco, and the Commission alleged that the six former top officers and employees of HBOC participated in the scheme by booking revenue on incomplete deals, backdating contracts, falsifying the company's financial records, and/or lying to the outside auditors to conceal the fraud.  Four of the defendants simultaneously settled these charges.  Named were the following: 
+
+   Jay Lapine , former General Counsel of HBOC and later the HBOC division of McKesson HBOC, is alleged to have negotiated "side letters" to customer contracts so that software revenue could be booked prematurely.  He also backdated documents on a fraudulent $20 million software deal that was negotiated and signed in April 1999 to make it appear that it had been concluded in the previous quarter.  Lapine lives in Alpharetta, Georgia. 
+
+  Michael Smeraski , former Senior Vice President of Enterprise Sales of HBOC and later McKesson HBOC, closed deals with side letters that were hidden from the contract accounting department, backdated contract documents on deals closed after quarter-end, and directed his salespeople to do the same.  Smeraski is a resident of Medford, New Jersey.    
+
+  Timothy S. Heyerdahl , a Certified Public Accountant and former Senior Vice President of Finance and Treasury of HBOC, repeatedly made end-of-quarter entries in the company's books to fraudulently inflate the company's net income--including simply deleting significant expense amounts--and lied to the outside auditors to hide the fraud.  Heyerdahl lives in Smyrna, Georgia.   
+
+  Deborah Mattiford , former director of HBOC's Contract and Administration Department, violated her duty to be a gatekeeper and ensure that all software sales contracts were complete when forwarded to accounting for revenue recognition.  She instructed her staff to separate from the contracts any side letters containing revenue-preventing contingencies before forwarding the contracts to accounting, and instructed her staff to alter the company's books and records to conceal the scheme.  Mattiford lives in Marietta, Georgia.    
+
+  Elaine Decker , a former Certified Public Accountant and former Manager of Contract Accounting at HBOC, also participated in the fraud by abdicating her gatekeeper role over the recording of software revenue when she repeatedly booked revenue on contracts where she knew it was improper to do so.  Decker lives in Alpharetta, Georgia. 
+
+  David Held , a Certified Public Accountant and former Chief Financial Officer of HBOC and later the HBOC division of McKesson HBOC, approved recognition of revenue on a $20 million transaction for the March 1999 quarter despite knowing that the deal had been negotiated and finalized in April, after quarter-end.  Held resides in Alpharetta, Georgia.    
+  As a result of the fraud, the financial statements of HBOC, and later McKesson HBOC, were materially false and misleading during at least the period January 1998 through April 1999.  The Commission's complaints allege that all of the defendants violated the antifraud, internal controls, and books and records provisions of the federal securities laws (Sections 10(b) and 13(b)(5) of the Exchange Act of 1934 and Rule 13b2-1).  One complaint also alleges that Smeraski, Heyerdahl, and Decker violated the antifraud provision in connection with the offer or sale of securities (Section 17(a) of the Securities Act of 1933).  The complaints further allege that Lapine, Heyerdahl, Decker, Held and Mattiford aided and abetted the company's violations of the requirement to file accurate periodic reports with the Commission (Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder, except that Held is not alleged to have violated Section 13(b)(2) (A)). In addition, one complaint further alleges that Heyerdahl violated the rule against lying to auditors (Rule 13b2-2 under Section 13(b)(5) of the Exchange Act).  The complaints also claim that Lapine, Smeraski, Heyerdahl, and Mattiford were unjustly enriched through significant bonuses tied to meeting earnings expectations, or through sales of HBOC stock while the price was inflated due to their fraud, and seeks to compel disgorgement of these sums.  The complaints further seek to enjoin Smeraski, Lapine, and Heyerdahl from serving as officers or directors of public companies. 
+
+   Simultaneous with the filing of the Commission's civil complaints, Heyerdahl, Mattiford,  Decker, and Held consented, without admitting or denying the allegations in the complaints, to the entry of a permanent injunction against all of the alleged violations.  Heyerdahl also agreed to disgorge $521,492.18 in ill-gotten gains (including interest), to pay a civil penalty of $100,000, and to be enjoined for five years from serving as an officer or director of a public company.  Heyerdahl further agreed to an order in an administrative proceeding to be filed by the Commission denying him the privilege of practicing before the Commission as an accountant for five years.  In addition to the injunctive relief, Mattiford also agreed to pay disgorgement and interest totaling $27,438.72 and a civil penalty of $55,000.  Decker agreed to pay a civil penalty of $35,000, and agreed to an order in an administrative proceeding to be filed by the Commission denying her the privilege of practicing before the Commission as an accountant for three years.   Finally, Held agreed to pay a civil penalty of $15,000 and an order in an administrative proceeding to be filed by the Commission denying him the privilege of practicing before the Commission as an accountant for three years.  
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diff --git a/raw/aaer/2001/AAER-1469.txt b/raw/aaer/2001/AAER-1469.txt
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--- /dev/null
+++ b/raw/aaer/2001/AAER-1469.txt
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+              NexPub, Inc., formerly known as PrintontheNet.com, Inc.
+           
+     
+ 
+
+   
+
+     
+
+      
+      
+             
+        NexPub, Inc., formerly known as PrintontheNet.com, Inc.
+       
+
+             
+   
+
+
+        
+                   
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+  
+    
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+   
+
+             
+                        
+              Securities Act of 1933 
+Release No. 8025 / October 18, 2001 
+
+ Securities Exchange Act of 1934 
+Release No. 44951 / October 18, 2001 
+
+ Accounting and Auditing Enforcement 
+Release No. 1469 / October 18, 2001 
+
+ Administrative Proceeding 
+File No. 3-10623 
+
+  
+
+ 
+	 
+		 
+			 
+			 
+			  In the Matter of  
+
+			 NexPub, Inc., 
+			formerly known as PrintontheNet.com, Inc., 
+
+			 Respondent. 
+
+			  
+
+			  
+			 
+			  : 
+			: 
+			: 
+			: 
+			: 
+			: 
+			: 
+			: 
+			:  
+			 
+			  ORDER INSTITUTING PROCEEDINGS, MAKING FINDINGS, AND IMPOSING A CEASE-AND-DESIST ORDER  
+		 
+	 
+ 
+
+  I.  
+
+ The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative cease-and-desist proceedings be, and hereby are, instituted against NexPub, Inc., formerly known as PrintontheNet.com, Inc., (hereinafter "NexPub," "PrintontheNet," or "Respondent"), pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Section 21C of the Securities Exchange Act of 1934 ("Exchange Act"). 
+
+  II.  
+
+ In anticipation of the institution of these proceedings, NexPub has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except that NexPub admits the jurisdiction of the Commission over it and over the subject matter of these proceedings, NexPub consents to the issuance of this Order Instituting Proceedings, Making Findings, and Imposing a Cease-And-Desist Order ("Order") by the Commission. 
+
+  III.  
+
+ On the basis of this Order and Respondent's Offer, the Commission finds that:  1   
+
+ A. NexPub, formerly known as PrintontheNet.com, is a Delaware corporation based in Fort Lauderdale, Florida. NexPub's common stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act, and at all relevant times was quoted on the Over-The-Counter Bulletin Board. 
+
+ B. On January 14, 2000, PrintontheNet filed a Form 8-K with the Commission announcing that it had agreed to merge with PrintAmerica Interactive, Inc. ("PrintAmerica"), a related, privately-owned company. The Form 8-K included audited and unaudited financial statements that failed to disclose that, as a result of the merger, PrintontheNet was assuming certain loan guarantees previously entered into by PrintAmerica. The primary loan underlying these guarantees, in the aggregate principal amount of approximately $7 million, was in default at the time PrintontheNet filed its Form 8-K. PrintontheNet's failure to disclose the existence of the loan guarantees and that the primary underlying loan was in default violated Generally Accepted Accounting Principles ("GAAP"), specifically Statement of Financial Accounting Standards No. 5. 
+
+ C. The unaudited financial statements included in PrintontheNet's Form 8-K also materially overstated PrintAmerica's net income for the nine month period ended September 30, 1999, and materially understated PrintontheNet's and PrintAmerica's combined pro forma net loss for this period. Specifically, the unaudited financial statements for PrintAmerica stated that PrintAmerica had net income of $96,371 for the nine month period ended September 30, 1999, when, in fact, PrintAmerica had a net loss of approximately $430,000. In addition, the unaudited combined pro forma financial statements misrepresented that PrintontheNet and PrintAmerica had a combined net loss of $196,793 for the nine month period ended September 30, 1999, when the actual amount of their combined loss was approximately $811,000. 
+
+ D. On January 20, 2000, PrintontheNet commenced a private placement offering of common stock that eventually raised approximately $3.04 million from investors. The offering closed on February 17, 2000. The private placement memorandum sent to prospective investors in the offering failed to disclose that PrintontheNet had assumed the PrintAmerica loan guarantees described above, and contained summary financial information that materially understated, by approximately $600,000, PrintontheNet's and PrintAmerica's combined net loss for the nine month period ended September 30, 1999. The private placement memorandum also attached as an exhibit the misleading financial statements included in the Form 8-K that PrintontheNet filed with the Commission on January 14, 2000. In addition, on January 31, 2000, PrintontheNet, by its former president, signed a guarantee on a $7.5 million bank loan to an entity related to PrintontheNet through common ownership. PrintontheNet did not disclose to investors that it had signed this additional loan guarantee until after the private placement offering had already closed. 
+
+ E. By June 2000, PrintontheNet had replaced its president and chief executive officer as well as the members of its board of directors that had served during the periods in which the events, described in Sections III.B. through III.D. above, had occurred. Under this new management, on June 15, 2000, PrintontheNet filed with the Commission its Form 10-K for the year ended December 31, 1999. The Form 10-K disclosed the existence of the loan guarantees, that the underlying debt had been in default in early 2000, that PrintontheNet had entered into a settlement agreement pursuant to which the loan guarantees had been released, and that investors in the private placement offering had been given the opportunity to rescind their investments. The Form 10-K also disclosed that certain members of senior management, who PrintontheNet had determined were responsible for causing the events described in Sections III.B. through III.D. above, had resigned from their positions as officers and directors of PrintontheNet. In addition, the Form 10-K disclosed that PrintontheNet's Form 8-K filed on January 14, 2000 had misstated that PrintAmerica's net income for the nine month period ended September 30, 1999 had been approximately $96,000 when, in fact, PrintAmerica had a net loss of approximately $245,000. The Form 10-K further stated that PrintontheNet was in the process of correcting certain other misstated financial information for the nine month period ended September 30, 1999, and might in the future be required to amend the Form 8-K it filed in January 2000. 
+
+ F. In November 2000, PrintontheNet filed a Form 8-K/A in which it revised certain portions of its Form 8-K filed in January 2000. The Form 8-K/A disclosed that PrintAmerica had, in fact, a $430,101 net loss for the nine month period ended September 30, 1999, which resulted in PrintAmerica and PrintontheNet having a combined pro forma net loss for this period of $811,196. In addition, the Form 8-K/A, consistent with the Form 10-K filed in June 2000, disclosed the existence of the loan guarantees, that the underlying debts had been in default in early 2000, and that the guarantees had been released pursuant to a settlement agreement with the lenders. 
+
+ G. As a result of the conduct described above, PrintontheNet violated, and committed or caused violations of: 
+
+ a. Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, by filing a Form 8-K with the Commission and disseminating a private placement memorandum to investors that contained false and misleading statements of material facts, and omitted to state material facts necessary to make the statements made not misleading. 
+
+ b. Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-11 thereunder by filing with the Commission a Form 8-K that contained false and misleading information, and omitted to state material facts necessary to make the statements made not misleading. 
+
+ c. Section 13(b)(2) of the Exchange Act and Rule 13b2-1 thereunder by failing to maintain books, records and accounts that, in reasonable detail, accurately and fairly reflected its transactions and dispositions of assets and failed to maintain a system of internal accounting controls sufficient to permit the preparation of financial statements in conformity with GAAP. 
+
+  IV.  
+
+ Based upon the foregoing, the Commission deems it appropriate to accept the Offer submitted by NexPub. 
+
+ Accordingly, IT IS HEREBY ORDERED, pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, that NexPub cease and desist from committing or causing any violation and any future violation of Section 17(a) of the Securities Act and Sections 10(b), 13(a), and 13(b)(2) of the Exchange Act and Rules 10b-5, 12b-20, 13a-11, and 13b2-1 thereunder. 
+
+ By the Commission. 
+
+ Jonathan G. Katz 
+Secretary 
+
+ Footnote 
+
+  
+
+ 
+	 
+		 
+			   1    
+			 The findings herein are made pursuant to NexPub's Offer and are not binding on any other person or entity in this or any other proceeding. 
+		 
+	 
+ 
+ 
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diff --git a/raw/aaer/2001/AAER-1472.txt b/raw/aaer/2001/AAER-1472.txt
new file mode 100644
index 0000000000000000000000000000000000000000..23a80ec93167c2b23c84a60f1b94aada48f13720
--- /dev/null
+++ b/raw/aaer/2001/AAER-1472.txt
@@ -0,0 +1,1379 @@
+
+
+ 
+ 
+   
+     
+ 
+ 
+ 
+ 
+ 
+ 
+
+     
+     
+     SEC.gov | Hollywood Trenz, Inc., Edward R. Showalter, Tracy A. Braime, and Robert E. Burton, Jr. 
+     
+     
+     
+     
+     
+     
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+              Hollywood Trenz, Inc., Edward R. Showalter, Tracy A. Braime, and Robert E. Burton, Jr.
+           
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+        Hollywood Trenz, Inc., Edward R. Showalter, Tracy A. Braime, and Robert E. Burton, Jr.
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+ Washington, D.C. 
+
+ Litigation Release No. 17204 / October 25, 2001 
+
+ Accounting and Auditing Enforcement Release No. 1472 / October 25, 2001 
+
+   Securities and Exchange Commission v. Hollywood Trenz, Inc., Edward R. Showalter, Tracy A. Braime, and Robert E. Burton, Jr. , Civil Action No. 98-1106 (RMU) (D.D.C. May 4, 1998).  
+
+  SEC Obtains Final Judgments Against Remaining Defendants in S-8 Scheme  
+
+ The Securities and Exchange Commission today announced that on May 15, 2001 and October 11, 2001, the Honorable Ricardo M. Urbina, United States District Judge for the District of Columbia, entered final judgments of permanent injunction and other relief against defendants Edward R. Showalter and Tracy A. Braime.  These judgments conclude a civil action filed by the Commission on May 4, 1998 against Hollywood Trenz, Inc. ("HTI") and various individuals. 
+
+ In its Complaint, the Commission alleged, among other things, that Showalter, HTI's Chairman of the Board, President, Chief Executive Officer, and Chief Financial Officer, orchestrated two fraudulent schemes to raise capital illegally.  In the first scheme, HTI materially overstated the value of the primary asset of a wholly-owned subsidiary, a portfolio of defaulted bank loans, in reports filed with the Commission and disseminated to the public.  In the second scheme, HTI fraudulently raised millions of dollars by issuing HTI stock to nominee consultants pursuant to Form S-8 registration statements.  While the registered offerings were all purportedly to compensate HTI's employees or consultants for  bona fide  services, in at least nine of these cases the free-trading S-8 stock was used to raise capital for or pay expenses on behalf of HTI, often pursuant to undisclosed agreements between Showalter and the consultants.  According to the Complaint, Showalter directed the nominees to transfer the great majority of their shares to various investors, HTI creditors and consultants, and, in exchange for their cooperation, these nominees were permitted to retain the remaining shares.   
+
+ The Commission further alleged that Tracy A. Braime, then Showalter's wife, was one of HTI's principal nominee consultants.  At Showalter's direction, she transferred millions of shares of S-8 stock and loaned the proceeds from sales of other S-8 shares to HTI, where it was used to pay HTI's payroll and various creditors and consultants, as well as many of Showalter's personal expenses.  Proceeds from the sale of S-8 stock received by Braime were also used to make the downpayment and monthly mortgage payments on an expensive home where Showalter and Braime lived.  In total, the Commission alleged that Showalter and Braime were unjustly enriched by proceeds from the sale of at least 2.1 million shares of S-8 stock. 
+
+ During the litigation, on September 30, 2000, the Court (the Honorable Alan Kay, United States Magistrate Judge) ordered that Showalter and his then attorney, Joseph E. Altschul, jointly and severally, pay to the Commission its expenses in the amount of $5,600 incurred in making a motion to compel production of documents from Showalter and a third party corporation Showalter controlled, which was also represented by Altschul.  This obligation was subsequently paid. 
+
+ On December 4, 2000, the Court ruled that Showalter was in default based upon his repeated violations of Court orders including his failures to appear for scheduled hearings and conferences.  On May 15, 2001, the Court entered a Final Judgment of Permanent Injunction and Other Equitable Relief against Showalter, permanently enjoining him from violating, among other things, the antifraud, registration, reporting, and internal control provisions of the federal securities laws.  Specifically, the Final Judgment against Showalter enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b), 13(a), 13(b)(2), and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 13b2-1, and 13b2-2 thereunder.  The Final Judgment further orders him to pay disgorgement in the amount of $538,400, together with prejudgment interest in the amount of $213,560; orders him to pay a civil penalty of $150,000; and bars him from serving as an officer or director of a public company. 
+
+ On October 11, 2001, the Court entered a Final Judgment against Braime.  In agreeing to settle this matter, Braime consented to a permanent injunction enjoining her from violating Sections 5(a) and 5(c) of the Securities Act, without admitting or denying the facts alleged in the Commission's Complaint.  Moreover, the proposed final judgment against Braime holds her jointly and severally liable with Showalter for disgorgement of $368,000 plus prejudgment interest thereon, but waives payment of disgorgement and does not impose a civil penalty based upon sworn representations concerning her financial condition.  
+
+ See also Litigation Release No.  15730  (May 4, 1998). 
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diff --git a/raw/aaer/2001/AAER-1474.txt b/raw/aaer/2001/AAER-1474.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9dff0b408cb206f576ffe9010bd27b1092c6c16b
--- /dev/null
+++ b/raw/aaer/2001/AAER-1474.txt
@@ -0,0 +1,1373 @@
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+           
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+
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+             
+        Richard P. Smyth, Arnold E. Johns, Jr., Michael J. Becker and Alan T. Davis
+       
+
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+ Litigation Release No.17211 / October 30, 2001
+
+  Accounting and Auditing Enforcement Release No. 1474
+
+  SECURITIES AND EXCHANGE COMMISSION V. RICHARD P. SMYTH, ARNOLD E. JOHNS, JR., MICHAEL J. BECKER AND ALAN T. DAVIS, Civil Action No. 1:01-CV-1344 (N.D. Ga.)
+
+  SEC OBTAINS PERMANENT INJUNCTION AGAINST MICHAEL J. BECKER
+
+  The Securities and Exchange Commission ("Commission") announced today that on October 11, 2001, the Honorable Clarence Cooper of the United States District Court for the Northern District of Georgia entered an order of permanent injunction and other relief against Michael J. Becker ("Becker") of Marietta, Georgia for engaging in violations of the antifraud provisions of the securities laws during his tenure as chief financial officer of Vista 2000, Inc. ("Vista"), a now defunct consumer products company formerly headquartered in Roswell, Georgia.  Judge Cooper's order permanently enjoined Becker from further violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder.  Becker was ordered to pay disgorgement and pre-judgment interest in amounts to be resolved upon motion of the Commission at a later date.  Becker consented to the entry of the order, without admitting or denying the allegations of the Commission's complaint.
+
+
+
+  The Securities and Exchange Commission previously sued Becker and three other men for various violations of the federal securities law.  The other defendants are Arnold E. Johns, Jr. of Atlanta, Georgia, Alan T. Davis of Gainesville, Georgia and Richard P. Smyth of Fernandina Beach, Florida.  Like Becker, Johns and Smyth are former officers of Vista.  Johns was a director of Vista and its president, and Smyth was Vista's founder and chief executive officer.  Davis was Vista's outside auditor.  The litigation is continuing as to Johns and Davis.  Smyth was previously enjoined by separate order of the court.
+
+  The Commission's complaint alleged a wide-range of securities law violations, including that misstatements were made by Vista in filings with the Commission.  The allegations against Becker included that he recorded various transactions at Vista in contravention of generally accepted accounting principles, and engaged in insider trading in Vista securities at a time when Vista's revenues, income, earnings per share, and assets were overstated.
+
+
+
+   See also :   L.R. 17175  (October 5, 2001);  L.R. 17044  (June 21, 2001)
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diff --git a/raw/aaer/2001/AAER-1477.txt b/raw/aaer/2001/AAER-1477.txt
new file mode 100644
index 0000000000000000000000000000000000000000..61eaf9d4ebc8563c5c026baf3b35a6f61eb40bfc
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@@ -0,0 +1,1368 @@
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+     SEC.gov | Digital Lightware, Inc. and Bryan J. Zwan 
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+              Digital Lightware, Inc. and Bryan J. Zwan
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+        Digital Lightware, Inc. and Bryan J. Zwan
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+ Litigation Release No. 17262  /  December 7, 2001.
+
+  Accounting and Auditing Enforcement Release No.  1477
+
+   FORMER CEO OF DIGITAL LIGHTWAVE, INC. SETTLES SEC CHARGES FOR AIDING AND ABETTING COMPANY'S VIOLATIONS OF FEDERAL SECURITIES LAWS 
+
+   Securities and Exchange Commission v. Digital Lightwave, Inc. and Bryan J. Zwan , Civil Action No. 8:00-CV-614-T-26F  (M.D. Florida, filed March  29, 2000)
+
+    The Securities and Exchange Commission (Commission) announced that the United States District Court for the Middle District of Florida issued an order enjoining Bryan J. Zwan, founder and former Chief Executive Officer of Tampa, Florida based Digital Lightwave, Inc. (Digital), from violating or aiding and abetting violations of certain of the federal securities laws.  Among other things, the order enjoins Zwan from violating the provision of the securities laws prohibiting making materially false statements to auditors, and from aiding or abetting books and records violations by public companies.  Zwan consented to the entry of the injunction without admitting or denying the allegations of the Commission's complaint. In conjunction with the entry of the injunction, the Court ordered Zwan to pay a $10,000 civil money penalty.
+
+    The Commission's settlement with Zwan was the last outstanding action of several matters related to a fraudulent earnings management scheme, books and records violations, and other violations, that the Commission's complaint alleged had taken place at Digital during two quarters in 1997.  Without admitting or denying the Commission's allegations, Digital previously consented to an injunction against violating the antifraud, books and records, and other provisions of the federal securities laws.  Other individuals who are or had been officers of Digital previously settled administrative proceedings brought by the Commission, without admitting or denying the Commission's findings.
+
+    On October 23, 2001, the United States District Court entered a Final Judgment of Permanent Injunction and other Relief as to Bryan J. Zwan ("Final Judgment").  The Final Judgment enjoins Zwan from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder, and from violating Rule 13b2-2 promulgated under the Exchange Act.  The Final Judgment also orders Zwan to pay a $10,000 civil money penalty.
+
+    See also  LR-16491A ; In the Matter of Seth P. Joseph, Securities Exchange Act of 1934 Release No.  34-42588 ; Accounting and Auditing Release No. 1244 and In the Matter of Beth A. Morris and Steven H. Grant, Securities Exchange Act of 1934 Release No.  34-42587 ; Accounting and Auditing Release No. 1243.
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diff --git a/raw/aaer/2001/AAER-1478.txt b/raw/aaer/2001/AAER-1478.txt
new file mode 100644
index 0000000000000000000000000000000000000000..915db375b03e165604c09d80ea41231fd29565d0
--- /dev/null
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+              Corrine Davies
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+ SECURITIES EXCHANGE ACT OF 1934
+ Release No.   45158 / December 14, 2001    
+  ACCOUNTING AND AUDITING ENFORCEMENT
+ Release No.   1478
+  ADMINISTRATIVE PROCEEDING
+ File No.     3-10654  
+
+        In the Matter of     
+  CORRINE DAVIES,     
+          Respondent.  
+    
+  : : : : : : :   
+ 
+ ORDER INSTITUTING PUBLIC
+ PROCEEDINGS PURSUANT
+ TO SECTION 21C OF THE
+ SECURITIES EXCHANGE ACT
+ OF 1934, MAKING FINDINGS,
+ AND ORDERING RESPONDENT
+ TO CEASE AND DESIST    I.
+
+    The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be, and they hereby are, instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Corrine Davies ("Davies").
+
+  II.
+
+    In anticipation of the institution of these administrative proceedings, the Respondent has submitted an offer of settlement (the "Offer"), which the Commission has determined to accept.  Solely for the purpose of these proceedings and any other proceeding brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings contained herein, except that Respondent admits that the Commission has jurisdiction over her and the subject matter of these proceedings, the Respondent by her Offer, consents to the entry of the findings and the imposition of the cease-and-desist order set forth below.
+
+  III.
+
+    The Commission makes the following findings:  1     A.   FACTS 
+
+      1.   Summary 
+
+      a. This case involves financial reporting fraud perpetrated by the senior officers of I. & J. Bagel, Inc. ("I&J"), a California-based entity and wholly-owned subsidiary of Manhattan Bagel Inc. ("Manhattan Bagel" or the "Company"), which, during the relevant period, manufactured and distributed bagel dough and cream cheese products to a network of 220 franchised, licensed and Company-owned bagel bakery stores operating in 15 states and Canada.
+
+      b.  In 1995 and 1996, I&J's Chairman of the Board, Alan Boren ("Boren"), and its president, Eric Cano ("Cano"), orchestrated a scheme to inflate the Company's net income by, among other things, recording fictitious sales on I&J's books.  The effect of these particular misrepresentations was to overstate Manhattan Bagel's consolidated net income before taxes by $206,000 in the year ended December 31, 1995.   Boren's brother, Philip Borini ("Borini"), implemented the fraud by (i) procuring false confirmations for the Company's auditors with respect to the fictitious sales, and (ii) making payments against the fictitious bagel sales using money provided by Boren.  Respondent Davies contributed to Borini's efforts by signing false audit confirmations and orally making false representations to the Company's auditors concerning bagels supposedly purchased by one of two fictitious accounts.  
+
+      c. As a result of her conduct, Davies caused violations of Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder and violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. 
+
+                           2.   Respondent 
+
+      a.  Davies , age 37, was at all relevant times employed at Veatch Carlson Grogan & Nelson ("Veatch Carlson") as Borini's assistant.  Veatch Carlson was a 24 person law firm and purportedly was a large customer of I&J.    Davies resides in Los Angeles, California.
+
+      b.  Other Relevant Entities and Individuals 
+
+      c.  Manhattan Bagel  was incorporated in the State of New Jersey with its principal executive offices in Eatontown, New Jersey.  On November 19, 1997, Manhattan Bagel filed a voluntary petition for reorganization under Chapter 11 of the federal Bankruptcy Act.  On July 28, 1998, New World Coffee & Bagels, Inc. ("NWC") entered into an acquisition agreement with Manhattan Bagel whereby NWC would acquire 100% of Manhattan Bagel.  NWC's acquisition of Manhattan Bagel was closed and approved by the United States Bankruptcy Court for the District of New Jersey in November 1998.  Prior to becoming a wholly-owned subsidiary of NWC, Manhattan Bagel's common stock was registered with the Commission pursuant to Section 12(g) of the Exchange Act and quoted on the National Association of Securities Dealers Automated Quotations System ("NASDAQ") under the symbol BGLS.  
+
+       d. I&J  was acquired by Manhattan Bagel on June 29, 1995 as a wholly-owned subsidiary of the Company.   At the time of the acquisition, I&J owned and licensed approximately 17 bagel bakery stores in the Los Angeles area.  
+
+      e.  Boren , age 36, was employed by Manhattan Bagel as the Chairman of the Board of I&J from June 1995  to December 1995, when he resigned.  Boren and his wife were the largest shareholders of Manhattan Bagel from June 1995 to March 1996.
+
+      f.  Cano  was employed by Manhattan Bagel as the President of I&J from June 1995  to April 1996, when he resigned.  He was a consultant to the Company from April 1996 to June 1996. 
+
+
+
+      g.  Borini , age 46, is Boren's brother.  He is not an attorney, but was, at all relevant times, the Executive Director of Veatch Carlson.
+
+                          3.   Discussion   
+
+                a.   Overview 
+
+      (1) Beginning in the second quarter of 1995, just prior to the acquisition, Boren and Cano implemented a scheme to inflate I&J's operating results, by, among other things, creating fictitious bagel sales for two purported wholesale customers, including Veatch Carlson.  
+
+      (2) After the markets closed on June 20, 1996, Manhattan Bagel announced that following the installation of new management at I&J, Manhattan Bagel "ha[d] uncovered certain improper bookkeeping entries and accounting practices," and  further stated that Manhattan Bagel's independent auditors had advised that, based on the findings to date, Manhattan Bagel would be required to restate its first quarter 1996 financial results.  
+
+      (3) On June 21, 1996, the price of Manhattan Bagel common stock fell approximately 35%, declining from $21.25 to $13.75 on record volume.
+
+      (4) Manhattan Bagel's June 20 Announcement addressed only some of the misrepresentations then contained on its books as a result of the fraudulent scheme.  Manhattan Bagel had not, at the time of the announcement, uncovered a number of other significant misrepresentations, including the fictitious sales, because Boren, Cano and Borini were then actively engaged in efforts to conceal the true facts from the Company's auditors - an effort that continued through August 1996.  Davies was reckless in not knowing that her conduct contributed to these efforts.
+
+      (5) The above-referenced conduct caused Manhattan Bagel to make material misrepresentations in its financial statements for the six months ended June 30, 1995, the nine months ended September 30, 1995, and the year ended December 31, 1995.   These materially inaccurate financial statements were included in periodic reports filed with the Commission, including among others the Form 10-QSB filed on August 15, 1995, Form 10-QSB filed on November 15, 1995, Form 10-KSB filed on March 19, 1996, the Form 10-QSB filed on May 15, 1996 and the Form 10-QSB filed on August 19, 1996.
+
+             b.   Fictitious Sales 
+
+       (1)  At the year ended December 31, 1995, I&J's books showed sales to Veatch Carlson totaling $120,335, all in the last three quarters of the year.  All of these sales were fictitious. 
+
+       (2)  To conceal the fictitious nature of the sales, Boren and Borini instructed Davies to sign two audit confirmations of the Veatch Carlson account balances and, in addition, to confirm orally to the Company's auditors that the account balance was correct.  Davies carried out these instructions.  In each instance, the confirmation Davies provided to the auditors was false. 
+
+       (3)  On or about February 12, 1996, Veatch Carlson received a request from the Company's auditors, asking that it confirm a receivable balance of $61,635 as of December 31, 1995.  The auditors' request was made in connection with the 1995 year-end audit.  Upon learning of the request, Boren called Davies and told her to get the confirmation signed.  Davies signed it.  The confirmation was false.   Moreover, Davies was reckless in not knowing that the confirmation was false.
+
+      (4) On July 23, 1996, the engagement partner contacted Davies by telephone and asked whether she could confirm that Veatch Carlson owed I&J $61,635 as of June 30, 1996.   Davies orally provided this confirmation to the engagement partner in the course of the conversation.  This oral confirmation was false.  Moreover, Davies was reckless in not knowing that the confirmation was false.
+
+      (5) The engagement partner specifically asked Davies to confirm that the balance was owed for goods and services that Veatch Carlson received from I&J, and she agreed to sign an account receivable confirmation to that effect.   The engagement partner sent Davies a confirmation request that same day, which she signed at the August 8, 1996 meeting discussed below.  
+
+      (6) On August 8, 1996, an attorney for the auditors visited Borini and Davies at the offices of Veatch Carlson to ask about the sales to Veatch Carlson during 1995.  The engagement partner attended by conference call.  During that meeting, Borini falsely stated that Veatch Carlson had purchased bagels and related products from I&J during 1995 and had owed the amounts previously confirmed.  Then, in the presence of the auditors' attorney, Davies signed the account receivable confirmation that the engagement partner had sent her in July.   The confirmation confirmed the balance that purportedly remained outstanding as of June 30, 1996.  The confirmation was false.  Moreover, Davies was reckless in not knowing that the confirmation was false.
+
+              B.    LEGAL DISCUSSION 
+
+      1.   Violations of Exchange Act Section 10(b) and Rule 10b-5 
+
+      a. Section 10(b) of the Exchange Act and Rule 10b-5 prohibit any person, in connection with the purchase or sale of securities, from making any untrue statement of a material fact, or omitting to state a material fact, using any device, scheme or artifice to defraud, or engaging in any transaction, practice, or course of business which operates as a fraud.   See   Basic, Inc. v. Levinson , 485 U.S. 224, 231-32 (1988).
+
+      b. Boren, Cano and Borini each violated Section 10(b) of the Exchange Act and Rule 10b-5 by knowingly or recklessly engaging in conduct resulting in material misstatements and omissions in, among other filings, Manhattan Bagel's Forms 10-QSB for the quarters ended June 30, 1995, September 30, 1995, March 31, 1996 and June 30, 1996 and in its Form 10-KSB for the year ended December 31, 1995.
+
+      c. By her conduct described above, Davies contributed to these violations of Section 10(b) of the Exchange Act and Rule 10b-5.
+
+      2.   Violations of Exchange Act Section 13(b)(5) and Rule 13b2-1 
+
+      a. Section 13(b)(5) of the Exchange Act prohibits any person from, among other things, knowingly falsifying any book, record, or account of an issuer as described in Section 13(b)(2).  The knowing falsification of the books, records, or accounts of a subsidiary of an issuer is deemed to be a violation of Section 13(b)(5) of the Exchange Act.  See   SEC v. Larry E. Leslie , Litigation Release No. 13651 (May 26, 1993).
+
+      b. As described above, Boren, Cano and Borini knowingly or recklessly falsified the books, records, and accounts of I&J, a subsidiary of Manhattan Bagel.  Thus, they each violated Section 13(b)(5) of the Exchange Act.
+
+      c. By her conduct described above, Davies contributed to these violations of Section 13(b)(5) of the Exchange Act.  
+
+      d. Rule 13b2-1 prohibits any person from directly or indirectly falsifying, or causing to be falsified, any book, record, or account subject to Section 13(b)(2)(A) of the Exchange Act.  Section 13(b)(2)(A) of the Exchange Act requires that every issuer of securities registered pursuant to Section 12 of the Exchange Act make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect its transactions and disposition of assets.
+
+      e. As described above, Boren, Cano and Borini directly and indirectly falsified and caused to be falsified books, records, and accounts of I&J which were subject to the requirement by Section 13(b)(2)(A) of the Exchange Act that such books, records, and accounts be accurate.  These individuals thus violated Exchange Act Rule 13b2-1.  
+
+      f. By her conduct described above, Davies contributed to these violations of Exchange Act Rule 13b2-1.  
+
+      3.   Manhattan Bagel's Periodic Reporting Violations 
+
+      a. Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 require issuers to file annual and quarterly reports with the Commission.  An issuer violates these provisions if it files materially false or misleading reports.   GAF v. Milstein , 453 F.2d 720 (2d Cir. 1971);  SEC v. Koenig , 469 F.2d 198 (2d Cir. 1972);  SEC v. Great American Industries, Inc. , 407 F.2d 453 (2d Cir.),  cert. denied   395 U.S. 920 (1969).  Rule 12b-20 requires that such reports include any additional information that may be necessary in order to make the statements made not misleading.  
+
+      b. At all relevant times, Manhattan Bagel was a reporting company subject to the provisions of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13.  Manhattan Bagel's reports on Form 10-QSB for the quarters ended June 30, 1995, September 30, 1995, March 31, 1996, and June 30, 1996 and on Forms 10-KSB for the year ended December 31, 1995 were materially inaccurate and misleading, as were a number of subsequent filings that incorporated the prior filings by reference.  Accordingly, Manhattan Bagel violated Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13.
+
+      c. Section 13(b)(2)(A) of the Exchange Act requires issuers to make and keep books, records, and accounts which, in reasonable detail, accurately and fairly reflect its transactions and dispositions of assets.  Manhattan Bagel violated Section 13(b)(2)(A) of the Exchange Act by failing to make and keep books, records, and accounts that accurately, and in reasonable detail, reflected certain revenue and expense transactions by its wholly-owned subsidiary, I&J.
+
+      d. By her conduct described above, Davies contributed to Manhattan Bagel's violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13.
+
+    C.    VIOLATIONS 
+
+    Based on the foregoing, Davies caused violations of Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder, and violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder.
+
+  IV.
+
+    In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to by Davies in her Offer.
+
+    Accordingly, IT IS ORDERED, that:
+
+    Pursuant to Section 21C of the Exchange Act, Davies cease and desist from committing or causing any violation and any future violations of Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder, and from causing any violations and any future violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder.
+
+    By the Commission.
+
+                Jonathan G. Katz
+               Secretary
+  
+
+ 
+ Footnote 
+     1       The Commission makes the findings herein pursuant to the Respondent's Offer.  These findings are not binding on any other person or entity in this or any other proceeding.    
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diff --git a/raw/aaer/2001/AAER-1480.txt b/raw/aaer/2001/AAER-1480.txt
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@@ -0,0 +1,1381 @@
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+ Litigation Release No. 17291 / December 27, 2001
+
+  Accounting and Auditing Enforcement Release No. 1480 / December 27, 2001
+
+   SECURITIES AND EXCHANGE COMMISSION V. NELSON BARBER  (United States District Court for the District of Columbia, C. A. No. 1:01CV02670).
+
+    On December 27, 2001, the Securities and Exchange Commission filed a civil injunctive action in U.S. District Court against Nelson Barber, the former Chief Financial Officer of Fine Host Corporation, alleging that Barber caused Fine Host to engage in an extensive financial fraud.  Fine Host, a provider of food and beverage services to sports arenas, prisons, and schools, was at that time a public company with common stock listed for trading on the Nasdaq National Market System and a market capitalization that reached approximately $390 million.  When the fraud was detected, the stock lost essentially all of its value.  Fine Host subsequently entered a reorganization proceeding under Chapter 11 of the U.S. Bankruptcy Code, from which it emerged as a private company.
+
+    According to the Commission's complaint: 
+
+      The fraud predated Fine Host's June 1996 initial public offering by several years and continued through the third quarter of the fiscal year ended December 31, 1997;  
+
+       The primary mechanism of the fraudulent scheme was the improper capitalization of millions of dollars of company expenses as assets;  
+
+       Barber also caused Fine Host to manipulate acquisition reserve accounts, income from vendor rebates, and other items for the purpose of managing reported earnings;
+
+       In February 1998 Fine Host issued a restatement of its financial statements indicating that from 1992 through the third quarter of 1997, Fine Host overstated its pretax income by over $49 million.  For fiscal years 1994, 1995 and 1996, Fine Host overstated its pretax income by 149%, 213%, and 197%, respectively.  For the first, second, and third quarters of fiscal 1997, the Company overstated its pretax income by 324%, 320%, and 170%, respectively.
+   The Complaint alleges that Barber, through the conduct described above, violated Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Sections 10(b), and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5, 13b2-1, and 13b2-2, promulgated thereunder, and aided and abetted Fine Host's violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B), of the Exchange Act and Rules 13a-1 and 13a-13 thereunder.
+
+    In settlement of the Commission's claims, Barber, without admitting or denying the allegations of the Complaint, consented to the entry of a Final Judgment of the District Court: 1) permanently enjoining him from violating or aiding and abetting violations of each of the above provisions of the securities laws; 2) permanently barring him from acting as an officer or director of any public company; and 3) ordering him to pay a $20,000 civil penalty, pursuant to Section 21(d)(3) of the Exchange Act.  
+
+    In related matters, the Commission issued settled administrative actions against three certified public accountants:  Rachel Eckhaus, the former assistant controller of Fine Host; Jeffrey Bascik, the engagement partner for the Deloitte & Touche audits of Fine Host's financial statements for the affected periods; and Barbara Horvath, the Deloitte & Touche manager on certain of those audit engagements.  Without admitting or denying the Commission's findings, each respondent consented to the entry of a Commission Order finding, among other things, that the respondent engaged in improper professional conduct for purposes of Rule 102(e)(1) of the Commission's Rules of Practice.  The Order in Horvath's case censures her and the Orders in Eckhaus's and Bacsik's cases deny them both the privilege of appearing or practicing before the Commission as an accountant, with the right to request reinstatement after two years. 
+
+    For further information on the related matters, see Exchange Act Release Nos.   34-45195 ,  34-45196 ,  34-45197 . 
+
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+          SEC Complaint  in this matter.    
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diff --git a/raw/aaer/2009/AAER-2914.pdf b/raw/aaer/2009/AAER-2914.pdf
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+UNITED STATES OF AMERICA 
+BEFORE the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 59204 / January 6, 2009 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 2914 / January 6, 2009 
+ADMINISTRATIVE PROCEEDING                                                                                                
+FILE NO. 3-13325 
+In the Matter of 
+R.K. DHAWAN, CHARTERED 
+ACCOUNTANT 
+Respondent. 
+ORDER INSTITUTING PUBLIC 
+ADMINISTRATIVE PROCEEDINGS 
+AND IMPOSING TEMPORARY 
+SUSPENSION PURSUANT TO RULE 
+102(e)(3) OF THE COMMISSION’S 
+RULES OF PRACTICE
+ I. 
+The Securities and Exchange Commission ( “Commission”) deems it appropriate and in 
+the public interest that public administrative proceedings be, and hereby are, instituted pursuant 
+to Rule 102(e)(3)1 of the Commission’s Rules of Practice against R.K. Dhawan (“Respondent” 
+or “Dhawan”). 
+II. 
+The Commission finds that: 
+A. RESPONDENT 
+1. Dhawan, a chartered accountant in India, is the founding partner of R.K. 
+Dhawan & Co. (“Dhawan & Co.”). He was responsible for the reviews and audits of AremisSoft 
+  Rule 102(e)(3)(i) provides, in relevant part, that:  The Commission, with due regard to the public interest and 
+without preliminary hearing, may, by order, … su spend from appearing or practicing before it any … a ccountant … 
+who has been by name … pe rmanently enjoined by any court of competent jurisdiction, by reason of his or her 
+misconduct in an action brought by the Commission, from violating or aiding and abetting the violation of any 
+provision of the Federal securities laws or of the rules and regulations thereunder. 
+1
+Corporation (“AremisSoft”) subsidiaries conducted by Dhawan & Co. He is a citizen of India, 
+where he currently resides. 
+B. CIVIL INJUNCTION 
+2. On September 23, 2008, the U.S. District Court for the Southern District 
+of New York entered a final default judgment against Dhawan, permanently enjoining him from 
+future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the 
+Securities Exchange Act of 1934 (“Exchange Act”) and Exchange Act Rule 10b-5 and from 
+aiding and abetting future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the 
+Exchange Act, and Exchange Act Rules 12b-20, 13a-1 and 13b2-1. Securities and Exchange 
+Commission v. Savvides & Partners/PKF Cyprus, Pavlos Meletiou, et. al., 06 CV 2223 (CSH) 
+(S.D.N.Y.). 
+3. The Commission’s complaint alleged, among other things, that Dhawan 
+and Co. issued audit reports on nine AremisSoft subsidiaries in 2000 signed by its partner 
+Dhawan that falsely stated that the audits were conducted in accordance with U.S. Generally 
+Accepted Auditing Standards (“GAAS”) and that the AremisSoft subsidiaries’ financial 
+statements were presented in conformity with U.S. Generally Accepted Accounting Principles 
+(“GAAP”). The complaint further alleged that the companies’ false financial statements were 
+included as part of AremisSoft’s consolidated financial statements filed with AremisSoft’s year 
+2000 Form 10-K.  The complaint alleged that five of the nine companies were never in fact 
+acquired by AremisSoft and four were shells with insignificant assets, revenues, and income.  
+The complaint also alleged that Dhawan had no training or experience in U.S. GAAS or U.S. 
+GAAP. 
+III. 
+Based upon the foregoing, the Commission finds that a court of competent jurisdiction 
+has permanently enjoined Dhawan from violating the Federal securities laws within the meaning 
+of Rule 102(e)(3)(i)(A) of the Commission’s Rules of Practice.  In view of these findings, the 
+Commission deems it appropriate and in the public interest that Dhawan be temporarily 
+suspended from appearing or practicing before the Commission as an accountant. 
+IT IS HEREBY ORDERED that Dhawan be, and hereby is, temporarily suspended from 
+appearing or practicing before the Commission as an accountant.  This Order shall be effective 
+upon service on the Respondent. 
+IT IS FURTHER ORDERED that Dhawan may within thirty days after service of this 
+Order file a petition with the Commission to lift the temporary suspension.  If the Commission 
+within thirty days after service of the Order receives no petition, the suspension shall become 
+permanent pursuant to Rule 102(e)(3)(ii). 
+If a petition is received within thirty days after service of this Order, the Commission 
+shall, within thirty days after the filing of the petition, either lift the temporary suspension, or set 
+the matter down for hearing at a time and place to be designated by the Commission, or both.  If 
+a hearing is ordered, following the hearing, the Commission may lift the suspension, censure the 
+2
+
+petitioner, or disqualify the petitioner from appearing or practicing before the Commission for a 
+period of time, or permanently, pursuant to Rule 102(e)(3)(iii). 
+This Order shall be served upon Dhawan by registered mail at his last known address. 
+By the Commission. 
+       Elizabeth M. Murphy 
+       S ecretary 
+3
diff --git a/raw/aaer/2009/AAER-2918.pdf b/raw/aaer/2009/AAER-2918.pdf
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diff --git a/raw/aaer/2009/AAER-2926.txt b/raw/aaer/2009/AAER-2926.txt
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@@ -0,0 +1,120 @@
+ 
+ 
+ 
+ 
+ 
+ UNITED STATES OF AMERICA 
+ Before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+ 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No.  59296 / January 26, 2009 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 2926 / January 26, 2009 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No.  3-13350 
+ 
+ 
+In the Matter of 
+ 
+Jordan H. Mintz,  
+ 
+             Respondent. 
+ 
+ 
+ORDER INSTITUTING PUBLIC 
+ADMINISTRATIVE PROCEEDINGS 
+PURSUANT TO RULE 102(e) OF THE 
+COMMISSION’S RULES OF PRACTICE, 
+MAKING FINDINGS AND IMPOSING 
+REMEDIAL SANCTIONS 
+                    
+   
+ 
+I. 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
+public interest that public administrative proceedings be, and hereby are, instituted against Jordan 
+H. Mintz (“Respondent” or “Mintz”) pursuant to Rule 102(e)(3)(i) of the Commission’s Rules of 
+Practice.1 
+ 
+                                                 
+1  Rule 102(e)(3)(i) provides, in relevant part, that: 
+ 
+ The Commission, with due regard to the public interest and without  preliminary hearing, 
+may, by order, . . . suspend from appearing or practicing before it any . . . attorney . . . who has 
+been by name . . . [p]ermanently enjoined by any court of competent jurisdiction, by reason of 
+his or her misconduct in an action brought by the Commission, from violating or aiding and 
+abetting the violation of any provision of the Federal securities laws or of the rules and 
+regulations thereunder. 
+ 2
+II. 
+In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (“Offer”) which the Commission has determined to accept.  Solely for the purpose of 
+these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
+which the Commission is a party, and without admitting or denying the findings herein, except as 
+to the Commission’s jurisdiction over him and the subject matter of these proceedings, and the 
+findings contained in Section III(1) and (3) below, which are admitted, Respondent consents to the 
+entry of this Order Instituting Public Administrative Proceedings Pursuant to Rule 102(e) of the 
+Commission’s Rules of Practice, Making Findings and Imposing Remedial Sanctions (“Order”), as 
+set forth below. 
+III. 
+ On the basis of this Order and Respondent’s Offer, the Co mmission finds that: 
+1. Mintz, 52, is and has been an attorney licensed to practice in the States of Texas and 
+New York.  From January 1996 until October 2000, Mintz was a Vice President in the Tax Division 
+of Enron Corp. (“Enron”).  In October 2000, Mintz became the General Counsel of Enron Global 
+Finance, a position he held during the charged conduct and maintained until February 2002.  Mintz 
+is currently a Vice President and the Chief Tax Officer in the Tax Department of the Finance 
+Division at Kinder Morgan.  Neither the Tax Department, nor the Finance Division are part of, or 
+report to, the General Counsel’s Office at Kinder Morgan.  Mintz does not provide any legal advice 
+in his current position, does not supervise any employees that provide legal advice as part of the 
+General Counsel’s Office at Kinder Morgan, and is not required to be an attorney to serve in his 
+current position.  Mintz plans to remain in his current position and perform the same duties 
+following settlement of this matter.  
+2. Enron was, at all relevant  times, an Oregon corporation with its principal place of 
+business in Houston, Texas.  Until its bankruptcy filing in December 2001, Enron was the seventh 
+largest corporation in the United States based upon reported revenue.  In the previous ten years, 
+Enron had evolved from a regional natural gas provider to a commodity trader of natural gas, 
+electricity, and other physical commodities with retail operations in energy and other products.  
+Enron also created and traded financial products.  At all relevant times, the common stock of Enron 
+was registered with the Commission pursuant to Section 12(b) of the Securities Exchange Act of 
+1934 (“Exchange Act”) and traded on the New York Stock Exchange. 
+3. On January 20, 2009, the U.S.  District Court for the Southern District of Texas, 
+Houston Division, entered a final judgment by consent against Mintz, permanently enjoining him 
+from violating Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(b)(5) and 14(a) of 
+the Exchange Act and Exchange Act Rules 10b-5, 13b2-1, 13b2-2 and 14a-9, and aiding and 
+abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Exchange Act Rules 
+12b-20, 13a-1, and 13a-13.  Securities and Exchange Commission v. Jordan H. Mintz, et al., Civil 
+Action Number H-07-1027 (S.D. Tex.).  Mintz was also ordered to pay $1 in disgorgement and a 
+$25,000 civil money penalty. 
+ 3
+4. Among other things, the Commission’s complaint alleges that Mintz and co-
+defendant Rex R. Rogers, the former Associate General Counsel for Enron, intentionally failed to 
+disclose in Enron’s 2000 proxy statement millions of dollars paid to the former Chief Financial 
+Officer, Andrew Fastow.  The complaint further alleges that Mintz completed a fraudulent related 
+party transaction with an entity controlled by Fastow and failed to disclose the transaction when 
+required in Enron’s 2000 proxy statement.  The complaint also alleges that Mintz and Rogers made 
+misleading statements regarding the Fastow related entities in Enron’s second quarter Form 10-Q. 
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent’s Offer. 
+ Accordingly, IT IS HEREBY ORDERED, effective immediately, that Mintz is suspended 
+from appearing or practicing before the Commission as an attorney for two years.  Before 
+appearing and resuming practice before the Commission as an attorney, Mintz must submit an 
+affidavit to the Commission’s Office of the General Counsel truthfully stating, under penalty of 
+perjury, that he has complied with this Order, that he is not subject to any suspension or disbarment 
+as an attorney by a court of the United States or of any state, territory, district, commonwealth, or 
+possession, and that he has not been convicted of a felony or misdemeanor involving moral 
+turpitude as set forth in Rule 102(e)(2) of the Commission’s Rules of Practice. 
+  
+ By the Commission. 
+ 
+ 
+ 
+       E l i z a b e t h  M .  M u r p h y  
+       S e c r e t a r y  
+ 
+ 
+` 
\ No newline at end of file
diff --git a/raw/aaer/2009/AAER-2928.txt b/raw/aaer/2009/AAER-2928.txt
new file mode 100644
index 0000000000000000000000000000000000000000..34a8ba1551ed7062b33d1571de9ecb14af8bdc03
--- /dev/null
+++ b/raw/aaer/2009/AAER-2928.txt
@@ -0,0 +1,168 @@
+ 
+ 
+ 
+ UNITED STATES OF AMERICA 
+ Before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No.  59317 / January 29, 2009 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 2928 / January 29, 2009 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13355 
+ 
+In the Matter of 
+ 
+ Michelle V. Nguyen (CPA), 
+ 
+Respondent. 
+ 
+ORDER INSTITUTING 
+ADMINISTRATIVE PROCEEDINGS 
+PURSUANT TO RULE 102(e) OF THE 
+COMMISSION’S RULES OF PRACTICE, 
+MAKING FINDINGS, AND IMPOSING 
+REMEDIAL SANCTIONS 
+ 
+ 
+ 
+I. 
+ 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
+public interest that public administrative proceedings be, and hereby are, instituted against 
+Michelle V. Nguyen (“Respondent” or “Nguyen”) pursuant to Rule 102(e)(3)(i) of the 
+Commission’s Rules of Practice.
+1   
+ 
+II. 
+ 
+ In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
+                                                
+ 
+1  Rule 102(e)(3)(i) provides, in relevant part, that: 
+ 
+ The Commission, with due regard to the public interest and without  preliminary hearing, 
+may, by order, . . . suspend from appearing or practicing before it any . . . accountant . . . who has 
+been by name . . . permanently enjoined by any court of competent jurisdiction, by reason of his 
+or her misconduct in an action brought by the Commission, from violating or aiding and abetting 
+the violation of any provision of the Federal securities laws or of the rules and regulations 
+thereunder. 
+ 2
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings  
+herein, except as to the Commission’s jurisdiction over her and the subject matter of these 
+proceedings, and the findings contained in Section III.3. below, which are admitted, Respondent 
+consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Rule 102(e) 
+of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions 
+(“Order”), as set forth below.   
+ 
+III. 
+ 
+ On the basis of this Order and Responde nt’s Offer, the Commission finds that:  
+ 
+ 1. Nguyen, age 48, is an d has been a certified public accountant licensed to 
+practice in the States of California and Maryland.  
+ 
+ 2. Meridian Holdings, Inc.  (“Meridian”) was, at all relevant times, a Colorado 
+corporation with its principal executive offices in Culver City, California.  In 2004, Meridian 
+maintained its principal executive office in Los Angeles, California and its common stock was 
+registered with the Commission  pursuant to Section 12(g) of the Securities Exchange Act of 1934 
+(“Exchange Act”), and listed on the NASDAQ Bulletin Board. 
+ 
+ 3. On September 28, 20 07, the Commission filed a complaint against Nguyen 
+in SEC v. Meridian Holdings, Inc., et al.
+, Case No. CV 07-06335 DDP (SSx) (C.D. Cal.).  On 
+January 6, 2009, the court entered an order permanently enjoining Nguyen, by consent, from 
+violating Section 10(b) of the Exchange Act, and Rules 10b-5 and 13b2-1 thereunder, and aiding 
+and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act, and Rules 12b-20 
+and 13a-13 thereunder.  Nguyen was also ordered to pay a $15,000 civil money penalty. 
+ 
+  4. The Commission’s complaint alleged,  among other things, that during the 
+2004 calendar year, Nguyen acted as Meridian’s principal financial officer and interim chief 
+financial officer for purposes of Meridian’s public filings with the Commission and prepared the 
+condensed consolidated financial information included in Meridian’s quarterly reports filed with 
+the Commission.  The Commission’s complaint further alleged that Nguyen, at the direction of 
+Meridian’s Chief Executive Officer and Chairman of the Board, participated in a fraudulent 
+scheme which resulted in materially false and misleading financial statements being included in 
+Meridian’s quarterly reports on Form 10-QSB for the second and third quarters of 2004.  The 
+Commission’s complaint also alleged that Nguyen engaged in improper accounting practices 
+that materially increased Meridian’s quarterly revenue and net income in a departure from 
+generally accepted accounting principles (“GAAP”).  These practices included, among other 
+things, creating the condensed consolidated financial statements included in Meridian’s second 
+and third quarter 2004 Forms 10-QSB filed with Commission, which included, as assets and 
+income, a $30 million default judgment award plus accumulated interest thereon.  By 
+recognizing the default judgment and interest thereon as income in its 2004 second and third 
+quarter reports, Meridian reported positive earnings per share for each quarter.  Absent the 
+default judgment and interest, Meridian would have reported losses per share for each quarter.  
+ 3
+Additionally, the Commission’s complaint alleged Nguyen caused Meridian to record the default 
+judgment and interest thereon as a $31 million asset on Meridian’s balance sheets, resulting in 
+the default judgment constituting 85% of Meridian’s total assets.  The Commission’s complaint 
+alleged that the inclusion of the default judgment and interest in Meridian’s financial statements 
+was both contrary to GAAP and materially false and misleading because Nguyen had no 
+reasonable basis to conclude that that Meridian would be able to collect any, let alone all, of the 
+default judgment and interest.   
+ 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent Nguyen’s Offer. 
+ 
+ Accordingly, it is hereby ORDERED, effective immediately, that: 
+ 
+ A. Nguyen is suspended from appearing or practicing before the Commission as an 
+accountant.   
+ 
+ B. After three years from the date of this  order, Respondent may request that the 
+Commission consider her reinstatement by submitting an application (attention: Office of the 
+Chief Accountant) to resume appearing or practicing before the Commission as: 
+      
+       1. a preparer or reviewer, or  a person responsible for the preparation or 
+review, of any public company’s financial statements that are filed with the Commission.  Such 
+an application must satisfy the Commission that Respondent’s work in her practice before the 
+Commission will be reviewed either by the independent audit committee of the public company 
+for which she works or in some other acceptable manner, as long as she practices before the 
+Commission in this capacity; and/or 
+      
+  2.    an independent accountant.  Such an application must satisfy the 
+Commission that: 
+      
+           (a) Respondent, or the public accounting firm with which she is 
+associated, is registered with the Public Company Accounting Oversight Board (“Board”) in 
+accordance with the Sarbanes-Oxley Act of 2002, and such registration continues to be effective; 
+ 
+   (b) Respondent, or the registered public accounting firm with which 
+she is associated, has been inspected by the Board and that inspection did not identify any 
+criticisms of or potential defects in the Respondent’s or the firm’s quality control system that 
+would indicate that the Respondent will not receive appropriate supervision; 
+ 
+   (c) Respondent has resolved all di sciplinary issues with the Board, and 
+has complied with all terms and conditions of any sanctions imposed by the Board (other than 
+reinstatement by the Commission); and 
+ 
+ 4
+   (d) Respondent acknowledges her responsibility, as long as 
+Respondent appears or practices before the Commission as an independent accountant, to 
+comply with all requirements of the Commission and the Board, including, but not limited to, all 
+requirements relating to registration, inspections, concurring partner reviews and quality control 
+standards.   
+      
+C. The Commission will consider an application by Respondent to resume 
+appearing or practicing before the Commission provided that her state CPA license is 
+current and she has resolved all other disciplinary issues with the applicable state boards of 
+accountancy.  However, if state licensure is dependent on reinstatement by the 
+Commission, the Commission will consider an application on its other merits.  The 
+Commission’s review may include consideration of, in addition to the matters referenced 
+above, any other matters relating to Respondent’s character, integrity, professional conduct, 
+or qualifications to appear or practice before the Commission. 
+ 
+ By the Commission. 
+ 
+ 
+ 
+       E l i z a b e t h  M .  M u r p h y  
+       S e c r e t a r y  
\ No newline at end of file
diff --git a/raw/aaer/2009/AAER-2929.txt b/raw/aaer/2009/AAER-2929.txt
new file mode 100644
index 0000000000000000000000000000000000000000..090fb065da19bc474c1444b4f58bd0a429f449f8
--- /dev/null
+++ b/raw/aaer/2009/AAER-2929.txt
@@ -0,0 +1,1371 @@
+
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 20876 / January 30, 2009 
+
+ Accounting And Auditing Release No. 2929 / January 30, 2009 
+
+  Securities and Exchange Commission v. Lumenis Ltd., Sagi A. Genger and Kevin Morano , (United States District Court for the Southern District of New York, Civil Action No. 06-3225-LAK) 
+
+ FINAL JUDGMENT ENTERED AGAINST FORMER OFFICER OF LUMENIS, LTD. CHARGED IN FRAUDULENT SCHEME TO INFLATE REVENUE 
+
+ The Securities and Exchange Commission announced today that a final judgment by consent was entered on September 9, 2008 by the United States District Court for the Southern District of New York against Kevin Morano, the former Chief Financial Officer of Lumenis, Ltd., in a previously-filed action alleging that Morano participated in a series of fraudulent transactions that resulted in the publication of materially false financial statements by Lumenis in 2002 and 2003. The final judgment against Morano, of Pennington, New Jersey, permanently enjoins Morano from violating the antifraud and other provisions of the federal securities laws and orders him to pay a $55,000 civil penalty. More recently, on January 15, 2009, the Court determined not to enter an order barring Morano from serving as an officer or director of a publicly traded company. 
+
+ The Commission's complaint, filed on April 26, 2006, alleged that from at least late 2001 through early 2003, Morano and other defendants engaged in a fraudulent scheme to inflate revenue and misrepresent other important financial metrics so as to deceive investors as to the company's true financial condition. According to the complaint, the scheme involved the improper recognition of a series of sales transactions that resulted in Lumenis' publication of materially false and misleading financial statements in six consecutive financial reporting periods, starting with those for the year ended December 31, 2001. The complaint alleged that Morano allowed Lumenis to recognize revenue and profits from a number of the improper transactions while knowingly or recklessly disregarding the various conditions that should have precluded recognition. 
+
+ The final judgment enjoined Morano from violating Section 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 13a-14, 13b2-1 and 13b2-2 thereunder, and from aiding and abetting future violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. The final judgment also imposed a civil penalty against Morano in the amount of $55,000. Morano consented to the entry of the final judgment without admitting or denying the allegations of the complaint. In addition, on September 29, 2008, the Commission issued an Order suspending Morano from appearing or practicing before the Commission as an accountant for five years based on the Court's entry of an order enjoining Morano from violating federal securities laws. 
+
+ Morano was the last remaining defendant in this matter, and the settlement with him concludes the Commission's case. Morano's two co-defendants (Lumenis and its former Chief Operating Officer, Sagi Genger) previously agreed to settle SEC charges against them. Judgments by consent were entered against them on May 2, 2006. In addition, the Commission previously issued an Order finding that an audit partner at Lumenis' former auditor engaged in improper professional conduct pursuant to Rule 102(e)(1)(ii) of the Commission's Rules of Practice and suspended him from appearing and practicing before the Commission as an accountant for three years. Finally, the Commission issued an order on April 26, 2006 revoking the registration of Lumenis' securities. 
+
+ For further information, see Exchange Act Release No.  53724  (April 26, 2006); Litigation Release No.  19675  (April 27, 2006); and Exchange Act Release No.  58672  (September 29, 2008). 
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diff --git a/raw/aaer/2009/AAER-2931.pdf b/raw/aaer/2009/AAER-2931.pdf
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+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934  
+Release No. 59499 / March 4, 2009 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 2941 / March 4, 2009 
+ 
+ADMINISTRATIVE PROCEEDING  
+File No. 3-13388 
+ 
+In the Matter of 
+ 
+KRISPY KREME DOUGHNUTS, INC., 
+ 
+Respondent. 
+ 
+ 
+ORDER INSTITUTING CEASE-AND-
+DESIST PROCEEDINGS PURSUANT TO 
+SECTION 21C OF THE SECURITIES 
+EXCHANGE ACT OF 1934, MAKING 
+FINDINGS, AND IMPOSING A CEASE-
+AND-DESIST ORDER 
+ 
+I. 
+ 
+The Securities and Exchange Commission ("Commission") deems it appropriate that 
+cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the 
+Securities Exchange Act of 1934 ("Exchange Act") against Krispy Kreme Doughnuts, Inc. 
+("Krispy Kreme" or "Respondent"). 
+ 
+II. 
+ 
+In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the "Offer") which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the 
+findings herein, except as to the Commission's jurisdiction over it and the subject matter of these 
+proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 
+Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, 
+Making Findings, and Imposing a Cease-and-Desist Order ("Order"), as set forth below. 
+ 
+III. 
+ 
+On the basis of this Order and Respondent's Offer, the Commission finds
+1 that:  
+ 
+                                                 
+1     The findings herein are made pursuant to Respondent's Offer of Settlement and are not 
+binding on any other person or entity in this or any other proceeding. 
+ 
+1. Krispy Kreme is a North Carolina corporation with its principal place of business 
+in Winston-Salem, North Carolina.  Since approximately 1937, Krispy Kreme has been engaged 
+in the business of making and selling doughnuts, initially through a single store in Winston-
+Salem and subsequently through multiple stores across the United States owned either by Krispy 
+Kreme or franchisees.  Since April 2000, shares of Krispy Kreme’s common stock have been 
+registered with the Commission pursuant to Section 12(b) of the Exchange Act and since May 
+2001 they have been listed on the New York Stock Exchange.   
+ 
+Background 
+ 
+2. Between approximately February 2003 and May 2004, Krispy Kreme fraudulently 
+inflated or otherwise misrepresented its earnings for the fourth quarter of its 2003 fiscal year, 
+which ended on February 2, 2003, and each quarter of its 2004 fiscal year, and its full year 
+results for fiscal 2004, which ended on February 1, 2004.  By this misconduct, the Respondent 
+avoided lowering its earnings guidance and improperly reported for each of those quarters what 
+had become a prime benchmark of its historical performance, i.e., reporting quarterly earnings 
+per share of common stock (“EPS”) that exceeded its previously announced EPS guidance by 
+one cent. 
+3. In the 1990s, Krispy Kreme, which initially operated in the southeastern United 
+States, began expanding nationally through a franchise program through which it opened new 
+stores and increased its annual revenue.   
+4. Although Krispy Kreme calculated and disclosed quarterly various indices of its 
+sales growth and geographical expansion, Krispy Kreme internally placed primary emphasis on 
+only two measures of financial performance, namely, continual quarter over quarter growth of its 
+quarterly EPS and whether that growth resulted in quarterly earnings that exceeded by at least 
+one cent consensus analyst’s expectations or, when issued, Krispy Kreme’s own quarterly EPS 
+guidance. 
+5. In the first three years after Krispy Kreme became a public issuer in April 2000, 
+Krispy Kreme’s EPS growth increased at an annual rate of 80%, 67%, and 47%, respectively.   
+Additionally, Krispy Kreme reported EPS that tracked closely and—in almost every quarter—
+exceeded both consensus analyst’s expectations and its own EPS guidance by at least $.01. 
+6. Beginning in fiscal 2002 and in much of fiscal 2003, Krispy Kreme’s common 
+stock routinely traded at a multiple of over 50 times annual EPS.  In fiscal 2004, Krispy Kreme’s 
+stock traded between 30 and 50 times annual EPS. 
+ 
+The Incentive Plan
+ 
+ 
+7. From April 2000 through the end of fiscal year 2004, Krispy Kreme’s senior 
+executives were compensated annually with a combination of salary, stock option grants, and 
+cash bonuses, the last of which was paid pursuant to Krispy Kreme’s Senior Executive Incentive 
+Compensation Plan (“Incentive Plan”).  Under the Incentive Plan, as disclosed in Krispy 
+Kreme’s proxy statement, bonuses for all executive officers were contingent upon Krispy Kreme 
+meeting or exceeding goals for two performance measures:  (i) the attainment of a certain level 
+ 2
+of return on assets, measured by earnings before interest, taxes and depreciation, and 
+amortization, and (ii) a percentage increase in EPS.   
+8. For fiscal years 2002 and 2003, Krispy Kreme set a quarterly EPS target of 
+earnings that exceeded by at least one cent Wall Street expectations, or when issued, Krispy 
+Kreme’s quarterly guidance.  The EPS target – meeting EPS guidance plus one cent – had to be 
+achieved to trigger the payment of incentive compensation under the Incentive Plan.  In these 
+fiscal years, Krispy Kreme achieved this targeted EPS and paid incentive compensation that 
+consisted of all amounts that Krispy Kreme earned in excess of its EPS target.   
+9. Krispy Kreme accrued for incentive compensation on a quarterly basis by 
+recording incentive compensation expense in the amount of all earnings in excess of the amount 
+needed to achieve the targeted EPS for that quarter.  Thus, during fiscal year 2002 and fiscal year 
+2003, Krispy Kreme’s method of accruing for the Incentive Plan effectively acted as a “ceiling” 
+on its earnings.   
+10. Beginning in the second quarter of fiscal year 2003, Krispy Kreme experienced 
+delays in new store openings, which adversely affected Krispy Kreme’s rate of earnings growth 
+and reduced the amount of incentive compensation expense accrued quarterly.  Although Krispy 
+Kreme had sufficient earnings to make an incentive compensation accrual in the second and third 
+quarters of fiscal 2003, the accruals were significantly less than in previous quarters.   
+11. Furthermore, for fiscal year 2003, the incentive compensation paid at the end of 
+the fiscal year was less than had been previously accrued.  The lower level of incentive 
+compensation payment resulted from a reversal of $873,261 of previously accrued incentive 
+compensation expense, which increased earnings by $528,323 and enabled Krispy Kreme to 
+report earnings for the fourth quarter of fiscal year 2003 that met its EPS guidance plus $0.01.  In 
+making this disclosure, Krispy Kreme did not also disclose that but for the occurrence of the 
+reversal that it would not have reported that result.   
+12. As implemented, the Incentive Plan operated as a de facto reserve accounting 
+mechanism which, within certain limits, virtually guaranteed that reported quarterly EPS would 
+equal Krispy Kreme’s quarterly guidance plus $0.01.  Specifically, under Generally Accepted 
+Accounting Principles (“GAAP”), (see Accounting Principles Board Opinion No. 28, ¶¶ 12, 15, 
+16, and 26).  Krispy Kreme should have accounted for the plan by periodically comparing a real-
+time estimate of its projected, pre-incentive compensation expense EPS for the full fiscal year to 
+its full-year EPS target and then reconciling the then-projected payout under the plan with 
+amounts accrued to date for incentive compensation expense.  However, despite the fact that 
+Krispy Kreme consistently maintained a real-time estimate of its EPS for the full fiscal year, 
+Krispy Kreme accounted for the plan by booking the difference between Krispy Kreme’s actual 
+quarterly EPS results and its quarterly target EPS, i.e., achieving EPS guidance plus one cent.  
+This accounting, in effect, created a “collar” on shareholder earnings, i.e., in good quarters, 
+excess profits were accrued to fund the Incentive Plan and in weak quarters, accruals to the 
+Incentive Plan were reversed to improve earnings, with shareholders consistently being told that 
+Krispy Kreme had exceeded its EPS guidance by $0.01—no more and no less. 
+13. In the first quarter of fiscal 2004, Krispy Kreme’s performance improved from the 
+last quarter of fiscal year 2003, which, combined with a one-time, disclosed partial reversal of 
+previously accrued litigation expense, resulted in Krispy Kreme having sufficient earnings to 
+report EPS of $0.22—or EPS guidance for the first quarter plus $0.02— and accrue $2,050,000 
+ 3
+14. Beginning in the second quarter of fiscal 2004, as sales growth continued to 
+slacken, Krispy Kreme reduced the incentive compensation accrual causing it to exceed its EPS 
+guidance.  Specifically, at the end of that quarter, Krispy Kreme made a net $949,999 reversal in 
+previously accrued incentive compensation expense, which increased after-tax earnings by 
+$569,999.  By effecting the $949,999 reversal, Krispy Kreme increased its earnings for the 
+quarter and reported EPS of $0.21 for the quarter, equaling its previously announced EPS 
+guidance plus $0.01.  In making this disclosure, Krispy Kreme did not also disclose that but for 
+the occurrence of the reversal it would not have reported that result.  
+15. In the third quarter of fiscal 2004, Krispy Kreme made no additional incentive 
+compensation accruals and, instead, reversed the remaining available balance in the account, i.e., 
+$833,332.  This increased Krispy Kreme’s after-tax earnings by $499,999 and Krispy Kreme 
+reported EPS of $0.23 for the quarter, equaling its previously announced EPS guidance plus 
+$0.01. 
+16. Each of the incentive compensation accruals or reversals described above was the 
+next to last entry done by Krispy Kreme before its books were closed for the quarter, with the 
+last entry being for the provision for taxes.   
+ 
+Round-Trip Transactions 
+ 
+17. In each of the second, third and fourth quarters of fiscal 2004, Krispy Kreme 
+engaged in a round-trip transaction in connection with the reacquisition of a franchise.  Each 
+transaction followed essentially the same pattern, Krispy Kreme paid money to the franchise 
+with the understanding that the franchise would pay the money back to Krispy Kreme in a pre-
+arranged manner that would allow Krispy Kreme to record additional pre-tax net income in an 
+amount roughly equal to the funds originally paid to the franchise.   
+ 
+First Round Trip Transaction 
+ 
+18. The first of the round-trip transactions occurred in June 2003, the second quarter 
+of fiscal 2004, in connection with the reacquisition of a franchise in Texas.  In connection with 
+this reacquisition, Krispy Kreme increased the price it paid for the franchise by $800,000, i.e., 
+from $65,000,000 to $65,800,000, in return for the franchise purchasing from Krispy Kreme 
+certain doughnut making equipment.   
+19. The purchase of the equipment was made at the request of Krispy Kreme and was 
+arranged after the parties had orally agreed to the $65 million reacquisition price.  But for the 
+ 4
+$800,000 increase in that price, the franchise would not have agreed to purchase the equipment.  
+On the day of the closing, as Krispy Kreme paid $65.8 million to the franchise, Krispy Kreme 
+debited the franchise’s bank account for $744,000, which was the aggregate list price of the 
+equipment.  This additional revenue boosted Krispy Kreme’s quarterly net income by 
+approximately $365,000 after taxes. 
+ 
+Second Round Trip Transaction 
+ 
+20. The second round-trip transaction occurred at the end of October 2003, four days 
+from the closing of Krispy Kreme’s third quarter of fiscal 2004, in connection with the 
+reacquisition of a franchise in Michigan. 
+21. In this reacquisition transaction, Krispy Kreme agreed to increase the price it paid 
+for the franchise by $535,463, which represented an approximation of the total of two disputed 
+amounts that Krispy Kreme claimed it was owed by the Michigan franchise.  
+22. As a result, when the reacquisition closed, Krispy Kreme paid an increased 
+purchase price of $535,463, and recorded the transaction on its books and records as if it had 
+been reimbursed for the two disputed amounts.  This overstated Krispy Kreme’s net income in 
+the third quarter by approximately $310,000 after taxes. 
+ 
+Third Round Trip Transaction 
+ 
+23. The third round-trip transaction occurred in January 2004, in the fourth quarter of 
+fiscal 2004, in connection with Krispy Kreme’s reacquisition of the remaining interests in a 
+franchise in California.   
+24. Krispy Kreme owned a majority interest in the California franchise and, 
+beginning in or about October 2003, initiated negotiations with the remaining interest holders for 
+acquisition of their interests.  During those negotiations, the principal manager of the California 
+franchise, who individually owned 25% of the franchise, ceased to manage the California 
+franchise and Krispy Kreme, through its employees, assumed management responsibility.  
+25. During the course of negotiations, Krispy Kreme demanded payment of a 
+“management fee” in consideration for Krispy Kreme’s handling of the management duties since 
+October 2003.  A few days before the closing and only about a week before quarter-end, Krispy 
+Kreme engaged a round-trip means that provided the former franchise manager with funds that 
+he could then use to pay a management fee to Krispy Kreme. 
+26. Specifically, Krispy Kreme proposed that the former franchise manager would 
+receive a distribution from his capital account, which he could then pay back to Krispy Kreme as 
+a management fee.  No adjustment was made to the purchase price for his interest in the 
+California franchise to reflect this distribution.  As a result, the former franchise manager 
+received the full value for his franchise interest, including his capital account, plus an additional 
+amount provided that he paid back that amount as the management fee.  Krispy Kreme, acting 
+through the California franchise, made a distribution to the former franchise manager in the 
+ 5
+amount of $597,415, which he immediately transferred back to Krispy Kreme as payment of the 
+management fee.  Krispy Kreme booked this fee as income, thereby overstating Krispy Kreme’s 
+net income in the fourth quarter by approximately $361,000.   
+27. In May 2004, Krispy Kreme disclosed disappointing earnings for the first quarter 
+of fiscal 2005 and lowered its future earnings guidance.  Subsequently, as a result of the conduct 
+described above, as well as the discovery of other accounting errors, on January 4, 2005, Krispy 
+Kreme announced that it would restate its financial statements for fiscal 2003 and 2004.  The 
+restatement reduced net income for fiscal years 2003 and 2004 by $2,420,000 and $8,524,000, 
+respectively.  Krispy Kreme also forced the retirement or resignation of a number of senior 
+executives who were identified as bearing some degree of responsibility for events leading to the 
+restatement.   
+28. Krispy Kreme materially misstated its earnings in its financial statements filed 
+with the Commission between the fourth quarter of fiscal 2003 and the fourth quarter of fiscal 
+2004.  In each of these periods, Krispy Kreme falsely reported that it had achieved earnings 
+equal to its EPS guidance plus one cent in the fourth quarter of fiscal 2003 through the third 
+quarter of fiscal 2004 or, in the case of the fourth quarter of fiscal 2004, earnings that met its 
+EPS guidance. 
+ 
+Krispy Kreme’s Violations
+ 
+ 
+29. As a result of the conduct described above, Krispy Kreme violated Section 13(a) 
+of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder, which require 
+every issuer of a security registered pursuant to Section 12 of the Exchange Act file with the 
+Commission information, documents, and annual, quarterly, and current reports as the 
+Commission may require, and mandate that periodic reports contain such further material 
+information as may be necessary to make the required statements not misleading. 
+30. Because Krispy Kreme improperly accounted for its Incentive Plan and 
+improperly accounted for three franchise reacquistions, its books, records and accounts did not, 
+in reasonable detail, accurately and fairly reflect its transactions and dispositions of assets. 
+31. In addition, Krispy Kreme failed to implement internal accounting controls 
+relating to its Incentive Plan and franchise reacquisitions which were sufficient to provide 
+reasonable assurances that its accounts were accurately stated in accordance with generally 
+accepted accounting principles. 
+32. As a result of the conduct described above, Krispy Kreme violated Section 
+13(b)(2)(A) of the Exchange Act, which requires reporting companies to make and keep books, 
+records, and accounts which, in reasonable detail, accurately and fairly reflect their transactions 
+and dispositions of their assets. 
+33. Lastly, as a result of the conduct described above, Krispy Kreme violated Section 
+13(b)(2)(B) of the Exchange Act, which requires all reporting companies to devise and maintain 
+a system of internal accounting controls sufficient to provide reasonable assurances that 
+transactions are recorded as necessary to permit preparation of financial statements in accordance 
+with generally accepted accounting principles. 
+ 6
+ 
+Krispy Kreme’s Remedial Efforts 
+ 
+34. In determining to accept the offer, the Commission considered remedial acts 
+promptly undertaken by Respondent and cooperation afforded the Commission staff. 
+ 
+Undertakings 
+ 
+35. Respondent shall cooperate fully with the Commission in any and all 
+investigations, litigations or other proceedings relating to or arising from the matters described in 
+the Order.  In connection with such cooperation, Respondent has undertaken: 
+ 
+  a. To produce, without service of a notice or subpoena, any and all 
+documents and other information requested by the Commission's staff; 
+ 
+  b. To use its best efforts to cause its employees to be interviewed by the 
+Commission's staff at such times as the staff reasonably may direct; 
+ 
+  c. To use its best efforts to cause its employees to appear and testify 
+truthfully and completely without service of a notice or subpoena in such investigations, 
+depositions, hearings or trials as may be requested by the Commission's staff; and 
+ 
+  d. That in connection with any testim ony of Respondent to be conducted at 
+deposition, hearing or trial pursuant to a notice or subpoena, Respondent: 
+ 
+(i)  Agrees that any such notice or  subpoena for Respondent’s appearance 
+and testimony may be served by regular mail on th eir attorney, Jerome F. Birn, Jr., Esq., at 
+Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304-1050; and 
+ 
+(ii.)  Agrees that any such notice or subpoena for Respondent’s appearance 
+and testimony in an action pending in a United States District Court may be served, and may 
+require testimony, beyond the territorial limits imposed by the Federal Rules of Civil Procedure. 
+ 
+36. In determining whether to accept the Offer, the Commission has considered these 
+undertakings.  
+ 7
+ 8
+ 
+IV. 
+ 
+In view of the foregoing, the Commission deems it appropriate to impose the sanction 
+agreed to in Respondent Krispy Kreme's Offer. 
+ 
+Accordingly, it is hereby ORDERED that: 
+ 
+ A. Pursuant to Section 21C of the Exchange Act, Respondent Krispy Kreme cease 
+and desist from committing or causing violations and future violations of Sections 13(a), 
+13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 
+promulgated thereunder. 
+ 
+  
+ 
+By the Commission. 
+ 
+ 
+ 
+Elizabeth M. Murphy 
+Secretary 
\ No newline at end of file
diff --git a/raw/aaer/2009/AAER-2943.txt b/raw/aaer/2009/AAER-2943.txt
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+++ b/raw/aaer/2009/AAER-2943.txt
@@ -0,0 +1,1391 @@
+
+
+ 
+ 
+   
+     
+ 
+ 
+ 
+ 
+ 
+ 
+
+     
+     
+     SEC.gov | Pediatrix Medical Group, Inc. 
+     
+     
+     
+     
+     
+     
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+              Pediatrix Medical Group, Inc.
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 20927 / March 5, 2009 
+
+ Accounting and Auditing Release No. 2943 / March 5, 2009 
+
+  Securities and Exchange Commission v. Pediatrix Medical Group, Inc. , Case No. 09-80366-CIV-RYSKAMP (S.D. Fla.) 
+
+ Pediatrix Medical Group Settles Charges of Stock Option Backdating 
+
+
+ 
+
+ The Securities and Exchange Commission today charged Pediatrix Medical Group, Inc. (now known as Mednax Services, Inc.) with backdating stock options grants to executives and employees and with reporting false financial information to shareholders.  Pediatrix Medical Group, Inc. ("Pediatrix"), is a physician services provider headquartered in Sunrise, Florida.  The Commission's complaint alleges that from approximately 1997 through 2000, Pediatrix, by the actions of a now-deceased former senior financial officer, granted options at below-market prices ("in-the-money" options).  Pediatrix has agreed to settle the Commission's charges without admitting or denying the allegations.  
+
+ The Commission's complaint, filed in federal court in Miami, alleges that on numerous occasions, Pediatrix used hindsight to select favorable exercise prices for employee and officer stock option grants without accurately reporting the financial impact of the grants to investors.  According to well-established accounting standards, Pediatrix was required to record an expense for in-the-money options.  Pediatrix allegedly avoided those expenses by retrospectively picking dates on which Pediatrix's stock was trading at lower prices and dating and pricing grants of stock options as if they had been granted on those earlier dates.  
+
+ According to the Commission's complaint, Pediatrix's intentional backdating of stock option grants resulted in material misstatements and omissions in certain of the Forms 10-Q, 10-K, registration statements, and proxy statements that the company filed with the Commission.  More specifically, the complaint alleges that Pediatrix failed to recognize a total of $8.8 million in compensation expense for the in-the-money value of the backdated stock options, resulting in an overstatement of Pediatrix's pretax income by approximately 6.74 percent in the relevant time period.  Moreover, the complaint alleges that Pediatrix's filings contained material misstatements with respect to how it priced and accounted for its stock options.   
+
+ Without admitting or denying the Commission's allegations, Pediatrix consented to be enjoined from violating Section 17(a) of the Securities Act, Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Exchange Act, and Rules 10b-5, 12b-20, 13a-1, 13a-13, and 14a-9 thereunder. The Commission took into account the cooperation that Pediatrix provided Commission staff during its investigation. 
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diff --git a/raw/aaer/2009/AAER-2953.txt b/raw/aaer/2009/AAER-2953.txt
new file mode 100644
index 0000000000000000000000000000000000000000..43f825101c9f09248c7180d2416356fda44b8a3a
--- /dev/null
+++ b/raw/aaer/2009/AAER-2953.txt
@@ -0,0 +1,1373 @@
+
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+     SEC.gov | Mercury Interactive, LLC (f/k/a Mercury Interactive Corporation), Amnon Landan, Sharlene Abrams, Douglas Smith, and Susan Skaer 
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+              Mercury Interactive, LLC (f/k/a Mercury Interactive Corporation), Amnon Landan, Sharlene Abrams, Douglas Smith, and Susan Skaer
+           
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+        Mercury Interactive, LLC (f/k/a Mercury Interactive Corporation), Amnon Landan, Sharlene Abrams, Douglas Smith, and Susan Skaer
+       
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 20964 / March 20, 2009 
+
+ Accounting and Auditing Release No. 2953 / March 20, 2009 
+
+  Securities and Exchange Commission v. Mercury Interactive, LLC (f/k/a Mercury Interactive Corporation), Amnon Landan, Sharlene Abrams, Douglas Smith, and Susan Skaer , Case No. 07-2822 (RS). (N.D. Cal., filed May 31, 2007) 
+
+ Sharlene Abrams, Former Chief Financial Officer of Mercury Interactive, LLC, to be Permanently Enjoined and to Pay Civil Penalties and Disgorgement for Stock Option Backdating and Other Fraudulent Conduct; Abrams Also to be Barred from Serving as an Officer and Director of a Public Company 
+
+ The Securities and Exchange Commission today settled civil fraud charges against Sharlene Abrams, a former Chief Financial Officer of Mercury Interactive, LLC, arising from an alleged scheme to backdate stock option grants and from other alleged misconduct. 
+
+ On May 31, 2007, the Commission charged Abrams and three other former senior Mercury officers with perpetrating a fraudulent and deceptive scheme from 1997 to 2005 to award themselves and other Mercury employees undisclosed, secret compensation by backdating stock option grants and failing to record hundreds of millions of dollars of compensation expense. The Commission's complaint alleges that during this period certain of these executives, including Abrams, backdated stock option exercises, made fraudulent disclosures concerning Mercury's "backlog" of sales revenues to manage its reported earnings, and structured fraudulent loans for option exercises by overseas employees to avoid recording expenses. 
+
+ Without admitting or denying the allegations in the Commission's complaint, Abrams consented to the entry of a final judgment permanently enjoining her from violating and/or aiding and abetting violations of the antifraud, financial reporting, record-keeping, internal controls, false statements to auditors, securities ownership reporting and proxy provisions of the federal securities laws, and barring her from serving as an officer or director of a public company. Abrams will pay $2,287,914 in disgorgement, of which $1,498,822 represents the "in-the-money" benefit from her exercise of backdated option grants, and a $425,000 civil penalty. Under the terms of the settlement, Abrams' disgorgement of her "in-the-money" benefitâ€"$1,498,822â€"would be deemed satisfied by her previous voluntary payment of that amount to Mercury. The settlement is subject to the approval of the United States District Court for the Northern District of California. 
+
+ As part of the settlement, and following the entry of the proposed final judgment, Abrams, without admitting or denying the Commission's findings, has consented to the entry of Commission order, pursuant to Rule 102(e)(3) of the Commission's Rules of Practice, suspending her from appearing or practicing before the Commission as an accountant. 
+
+ The Commission previously filed settled charges in this matter against Mercury and three former outside directors of Mercury. On May 31, 2007, the Commission filed civil fraud charges against Mercury based on the stock option backdating scheme and other fraudulent conduct noted above. Mercury, which was acquired by Hewlett-Packard Company on Nov. 8, 2006, after the alleged misconduct, settled the matter by agreeing to pay a $28 million penalty and to be permanently enjoined. See  Litigation Release No. 20136  (May 31, 2007). On September 17, 2008, the Commission filed settled charges against three former outside directors of Mercury alleging that they recklessly approved backdated stock option grants and reviewed and signed public filings that contained materially false and misleading disclosures about the company's stock option grants and company expenses. The outside directors settled the matter by consenting to permanent injunctions and the payment by each director of a $100,000 penalty. See  Litigation Release No. 20724  (Sept. 17, 2008). Mercury and the outside directors settled the charges without admitting or denying the allegations in the Commission's complaint. 
+
+ The Commission's litigation against the other senior Mercury officers is continuing. 
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diff --git a/raw/aaer/2009/AAER-2954.txt b/raw/aaer/2009/AAER-2954.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ee9b75c1d79c9595ddb4553ead5bb0fa23564a9d
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+ UNITED STATES OF AMERICA 
+ before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 59637 / March 27, 2009 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 2954 / March 27, 2009 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13416 
+: 
+: 
+: 
+In the Matter of : ORDER INSTITUTING 
+: ADMINISTRATIVE PROCEEDINGS 
+JUDITH KUDLA (CPA), : PURSUANT TO RULE 102(e) OF THE  
+: COMMISSION’S RULES OF PRACTICE, 
+Respondent. : MAKING FINDINGS, AND IMPOSING 
+: REMEDIAL SANCTIONS 
+: 
+____________________________________ : 
+I. 
+The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
+public interest that public administrative proceedings be, and hereby are, instituted against Judith 
+Kudla (“Respondent” or “Kudla”) pursuant to Ru le 102(e)(3)(i) of the Commission’s Rules of 
+Practice.1 
+II. 
+In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) whic h the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Rule 102(e)(3)(i) provides, in relevant part, that: 
+The Commission, with due regard to the public  interest and without preliminary hearing, 
+may, by order, . . . suspend from appearing or practicing before it any . . . accountant . . . who has 
+been by name . . . permanently enjoined by any c ourt of competent jurisdiction, by reason of his 
+or her misconduct in an action brought by the Co mmission, from violating or aiding and abetting 
+the violation of any provision of the Federal secu rities laws or of the rules and regulations 
+thereunder. 
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+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisd iction over her and the subject matter of these 
+proceedings, and the findings contained in Section III.3. below, which are admitted, Respondent 
+consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Rule 102(e) 
+of the Commission’s Rules of Practice, Maki ng Findings, and Imposing Remedial Sanctions 
+(“Order”), as set forth below.   
+III. 
+On the basis of this Order and Respondent’s Offer, the Commission finds that: 
+1. Judith Kudla, age 50, is and has been a certified public accountant licensed 
+to practice in the State of Michigan since a pproximately 1984.  Kudla served as Director of 
+Finance in Delphi Corporation’s (“Delphi”) information technology (“IT”) department from June 
+1999 to April 2002, when she was separated by th e company.  In that position, Kudla was 
+consulted for Generally Accepted Accountin g Principles (“GAAP”) accounting guidance 
+concerning IT department transactions. 
+2. Delphi was, at all relevant times,  an auto parts supplier headquartered in 
+Troy, Michigan.  It was incorporated in Delaware in 1998.  At all relevant times, Delphi’s common 
+stock was registered with the Commission pursuant to Section 12(b) of the Securities Exchange 
+Act of 1934 (“Exchange Act”) and was listed on the New York Stock Exchange (“NYSE”) under 
+the symbol “DPH.” 
+3. On October 30, 2006, the Commission filed a complaint against Kudla and 
+others in SEC v. Delphi Corporation and Judith Kudla, et al. (Civil Action No. 2:06-cv-14891-AC-
+SDP). On March 26, 2009, the court entered an or der permanently enjoining Kudla, by consent, 
+from future violations of Sec tion 17(a) of the Securities Act of  1933 (“Securities Act”), and 
+Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder, and 
+aiding and abetting violations of Sections 10 (b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the 
+Exchange Act and Rules 10b-5, 12b-20, and13a-1 th ereunder.  Kudla was al so ordered to pay a 
+$30,000 civil money penalty. 
+4. The Commission’s complaint alle ged, among other things, that Kudla 
+engaged in a fraudulent scheme which resulted in  Delphi filing material ly false and misleading 
+financial statements in the company’s annual re port on Form 10-K for the fiscal year ended 
+December 31, 2001, which were incorporated by reference into offering documents filed by Delphi 
+in connection with its 2003 notes and preferred s ecurities offerings.  Specifically, the Complaint 
+alleged that Delphi improperly recorded a $20 million payment from an IT company in December 
+2001, made in connection with a new IT contr act between the IT company and Delphi, as a 
+reduction in expense, although the payment was in substance a loan which Delphi was required to 
+repay with interest. The Complaint alleged that, when the IT contract was signed, Delphi agreed to 
+repay the $20 million over 5 years with interest, through an intentionally opaque scheme involving 
+accelerated payments on other IT company service invoices, and using a supplier finance program; 
+because the $20 million was refundable, it contra vened GAAP to record the $20 million as an 
+immediate reduction of IT expense instead of a Delphi liability to the IT company.  In connection 
+-2-
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+with the payment, Delphi allegedly entered into a false side letter with the IT company which was 
+intended to mislead Delphi’s auditors as to the correct accounting treatment for the transaction. 
+The Complaint alleged that Kudla actively participated in meetings and discussions leading to the 
+signing of the relevant contract and a false $20 million payment side letter and then was involved 
+in drafting and approving the false work orders through which the repayment was accomplished.   
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent Kudla’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+A. Kudla is suspended from appearing or  practicing before the Commission as an 
+accountant. 
+B. After three (3) years from the date of th is order, Respondent may request that the 
+Commission consider her reinstatement by submitting an application (attention: Office of the Chief 
+Accountant) to resume appearing or practicing before the Commission as: 
+1. a preparer or reviewer, or a person respons ible for the preparation or 
+review, of any public company’s financial statemen ts that are filed with the Commission.  Such 
+an application must satisfy th e Commission that Respondent’s work  in her practice before the 
+Commission will be reviewed either by the inde pendent audit committee of the public company 
+for which she works or in some other acceptable manner, as long as she practices before the 
+Commission in this capacity; and/or
+ 2. an independent accountant. Such an applicatio n must satisfy the 
+Commission that: 
+(a) Respondent, or the public accounting firm with which she is 
+associated, is registered with the Public Co mpany Accounting Oversight Board (“Board”) in 
+accordance with the Sarbanes-Oxley Act of 2002, and such registration continues to be effective; 
+(b) Respondent, or the registered public accounting firm with which 
+she is associated, has been inspected by the Bo ard and that inspection did not identify any 
+criticisms of or potent ial defects in the Respondent’s or the firm’s quality control system that 
+would indicate that the Respondent will not receive appropriate supervision; 
+(c) Respondent has resolved all disciplinary issues with the Board, and 
+has complied with all terms and conditions of a ny sanctions imposed by the Board (other than 
+reinstatement by the Commission); and 
+(d) Respondent acknowledges her responsibility, as long as 
+Respondent appears or practices  before the Commission as an independent accountant, to 
+comply with all requirements of the Commission a nd the Board, including, but not limited to, all 
+-3-
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+requirements relating to registration, inspections , concurring partner reviews and quality control 
+standards. 
+C. The Commission will consider an application by Respondent to resume appearing 
+or practicing before th e Commission provided that  her state CPA license is current and she has 
+resolved all other disciplinary issues with the appli cable state boards of accountancy.  However, 
+if state licensure is dependent on reinst atement by the Commission, the Commission will 
+consider an application on its other merits.  The Commission’s review may include consideration 
+of, in addition to the matters referenced above, any other ma tters relating to Respondent’s 
+character, integrity, professional conduct, or qualifications to a ppear or practice before the 
+Commission. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+-4-
\ No newline at end of file
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+     SEC.gov | Delphi Corporation, Judith Kudla, et al. 
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+        Delphi Corporation, Judith Kudla, et al.
+       
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+                   CORRECTED  
+
+ U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 20975 / March 27, 2009 
+
+ Accounting and Auditing Enforcement Release No. 2955 / March 27, 2009 
+
+  Securities and Exchange Commission v. Delphi Corporation, Judith Kudla, et al. , 06-CV-14891-AC-SDP (E.D. Mich.) (filed October 30, 2006) 
+
+ SEC SETTLES WITH DEFENDANT IN DELPHI ACCOUNTING FRAUD CASE 
+
+ The Securities and Exchange Commission today announced settlement of pending charges against Judith Kudla, the former Director of Finance in the information technology ("IT") department of Delphi Corporation. On March 26, 2009, United States District Judge Avern Cohn entered a Final Judgment by consent enjoining Kudla from future violations of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 13b2-1 thereunder, and aiding and abetting violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and13a-1 thereunder. Kudla was also ordered to pay a $30,000 civil money penalty. Kudla settled the Commission's claims without admitting or denying the Commission's allegations. In addition, separately, without admitting or denying the Commission's findings, Kudla consented to the institution of administrative proceedings pursuant to Rule 102(e)(3) of the Commission's Rules of Practice, suspending her from appearing or practicing before the Commission as an accountant, with a right to re-apply after three years, based on the entry of the injunction. 
+
+ The Commission's complaint against Kudla alleged that as a result of her participation in a fraudulent scheme, Delphi filed materially false and misleading financial statements in the company's 2001 Form 10-K. According to the Complaint, Delphi improperly recorded a $20 million payment from an IT company in December 2001, made in connection with a new contract between the IT company and Delphi. The scheme in which Kudla participated was one of four schemes alleged in the Commission's complaint. 
+
+ The litigation against six individual defendants continues. 
+
+ Additional materials: Litigation Release No.  19891  (October 30, 2006); Accounting and Auditing Release Nos.  2500  (October 30, 2006),  2501  (October 30, 2006),  2502  (October 30, 2006),  2503  (October 30, 2006),  2791  (February 26, 2008), and  2792  (February 26, 2008) 
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diff --git a/raw/aaer/2009/AAER-2956.txt b/raw/aaer/2009/AAER-2956.txt
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+              WMDS, Inc. One Universe Online, Inc., Seng Tan, James Bunchan and Christian Rochon
+           
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+        WMDS, Inc. One Universe Online, Inc., Seng Tan, James Bunchan and Christian Rochon
+       
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 20978 / March 30, 2009 
+
+ Accounting and Auditing Release No. 2956 / March 30, 2009 
+
+  SEC v. WMDS, Inc. One Universe Online, Inc., Seng Tan, James Bunchan and Christian Rochon  (United States District Court for the District of Massachusetts, Civil Action No. 05-12268-RCL) 
+
+ FINAL JUDGMENTS ENTERED AGAINST INDIVIDUALS AND ENTITIES RESPONSIBLE FOR INVESTMENT SCHEME TARGETING CAMBODIAN IMMIGRANTS 
+
+ The Securities and Exchange Commission ("Commission") announced today that on March 26, 2009, the United States District Court for the District of Massachusetts entered final judgments against five defendants in a civil action filed in November 2005 involving a fraudulent investment scheme targeting Cambodian immigrants. The Commission's action charged that defendants WMDS, Inc. ("WMDS"), OneUniverseOnLine, Inc. ("1UOL"), James Bunchan, Seng Tan and Christian Rochon falsely promised members of the Cambodian immigrant community guaranteed monthly returns on investments that purportedly would pass on to future generations. The complaint alleged that the defendants emphasized their shared Cambodian heritage with their victims, and that certain written solicitation documents drew a parallel between investing in WMDS and fulfilling the American dream. In fact, according to the complaint, the defendants were operating a fraudulent pyramid scheme that ceased making the promised monthly payments in mid-2005. 
+
+ The complaint alleged that the defendants violated the anti-fraud provisions of the federal securities laws, specifically Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and also violated the registration provisions of Sections 5(a) and 5(c) of the Securities Act. On January 24, 2006, the Commission amended its complaint to add Bunchan's former wife as a relief defendant. The Commission's case is pending as to the relief defendant. 
+
+ The final judgments entered by the Court against Bunchan, Tan, Rochon, WMDS and 1UOL came in response to a Commission motion for default judgments and (1) permanently enjoin the defendants from future violations of Sections 17(a) and 5(a) and 5(c) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and (2) require the defendants, jointly and severally, to disgorge $26,261,133.16 in ill-gotten gains, such amount to be reduced by any amount forfeited or paid as part of a related criminal proceeding. 
+
+ On November 28, 2007, Bunchan and Tan each were sentenced by the United States District Court for the District of Massachusetts in a related criminal action after being convicted of mail fraud, conspiracy and money laundering in connection with the fraudulent investment scheme. Bunchan was sentenced to 35 years in prison and Tan was sentenced to 20 years in prison. On August 7, 2008, Rochon was sentenced by the same court based on his June 4, 2007 guilty plea to mail fraud, conspiracy and money laundering in connection with the fraudulent investment scheme. Rochon was sentenced to 5 years probation, with the first year to be served in home confinement. 
+
+ For further information, please see: Litigation Release Nos.  19464  (November 16, 2005),  19483  (December 5, 2005),  19547  (January 30, 2006),  20172  (June 29, 2007),  20378  (November 30, 2007), and  20677  (August 8, 2008). 
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diff --git a/raw/aaer/2009/AAER-2959.pdf b/raw/aaer/2009/AAER-2959.pdf
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+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 59767 / April 14, 2009 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 2963 / April 14, 2009 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13445 
+In the Matter of 
+Stratum Holdings, Inc., 
+Respondent. 
+ORDER INSTITUTING CEASE-AND-
+DESIST PROCEEDINGS PURSUANT TO 
+SECTION 21C OF THE SECURITIES 
+EXCHANGE ACT OF 1934, MAKING 
+FINDINGS, AND IMPOSING A CEASE-
+AND-DESIST ORDER 
+I. 
+The Securities and Exchange Commission (“Commission”) deems it appropriate 
+that cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C 
+of the Securities Exchange Act of 1934 (“Exchange Act”), against Stratum Holdings, Inc. 
+(“Stratum” or “Respondent”).  
+II. 
+In anticipation of the institution of these proceedings, Respondent has submitted 
+an Offer of Settlement (the “Offer”) which the Commission has determined to accept.  
+Solely for the purpose of these proceedings and any other proceedings brought by or on 
+behalf of the Commission, or to which the Commission is a party, and without admitting 
+or denying the findings herein, except as to the Commission’s jurisdiction over it and the 
+subject matter of these proceedings, which are admitted, Respondent consents to the entry 
+of this Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the 
+Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist 
+Order (“Order”), as set forth below.   
+ 
+ 
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+  
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+   
+ 
+  
+ 
+ 
+ 
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+ 
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+        
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+ 
+III. 
+On the basis of this Order and Respondent’s Offer, the Commission finds that: 
+1. Stratum is a Nevada corporation located in Houston, Texas.  Stratum has 
+two wholly-owned subsidiaries: CYMRI, LLC (“CYMRI”) and Decca Consulting Ltd. 
+(“Decca”). CYMRI owns working intere sts in roughly 70 operated and non-operated 
+wells in South Texas and South Louisiana.  Decca provides consulting services to the 
+Canadian energy market.  The company’s common stock (symbol “STTH”) is quoted on 
+the OTC Bulletin Board and the Pink Sheets operated by Pink OTC Markets Inc. 
+2. Stratum failed to comply with Items 307 and 308T of Regulation S-B in 
+its 10-KSB report filed on April 8, 2008 for the fiscal year ended December 31, 2007, as 
+a result of which the Respondent violated Exchange Act Section 13(a) and Rules 13a-1 
+and 13a-15 of the Exchange Act thereunder. 
+IV. 
+In view of the foregoing, the Commission deems it appropriate to impose the 
+sanctions agreed to in Respondent Stratum’s Offer. 
+Accordingly, it is hereby ORDERED that: 
+Pursuant to Section 21C of the Exchange Act, Respondent Stratum cease and desist 
+from committing or causing any violations and any future violations of Section 13(a) of the 
+Exchange Act and Rules 13a-1 and 13a-15 thereunder.  
+By the Commission. 
+       Elizabeth M. Murphy 
+       S e c r e t a r y 
+2 
diff --git a/raw/aaer/2009/AAER-2966.txt b/raw/aaer/2009/AAER-2966.txt
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@@ -0,0 +1,101 @@
+   
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+                                                 
+    
+UNITED STATES OF AMERICA  
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934  
+Release No. 59817 / April 23, 2009 
+ACCOUNTING AND AUDITING ENFORCEMENT  
+Release No. 2966 / April 23, 2009 
+ADMINISTRATIVE PROCEEDING  
+File No. 3-11714 
+: ORDER GRANTING APPLICATION FOR 
+: REINSTATEMENT TO APPEAR AND PRACTICEIn the Matter of : BEFORE THE COMMISSION AS AN ACCOUNTANT 
+: RESPONSIBLE FOR THE PREPARATION OR Bryan E. Palbaum, CPA  : REVIEW OF FINANCIAL STATEMENTS REQUIRED 
+: TO BE FILED WITH THE COMMISSION 
+On October 20, 2004, Bryan E. Palbaum (“Palbaum”) was denied the privilege of 
+appearing or practicing as an accountant before the Commission as a result of settled public 
+administrative proceedings instituted by the Commission against Palbaum pursuant to Rule 
+102(e)(1)(ii) of the Commission's Rules of Practice.1  This order is issued in response to 
+Palbaum’s application for reinstatement to appear and practice before the Commission as an 
+accountant responsible for the preparation or review of financial statements required to be filed 
+with the Commission. 
+Palbaum was alleged to have engaged in improper professional conduct in connection 
+with performing the reviews and audits of the financial statements filed by Gemstar-TV Guide 
+International, Inc. (“Gemstar”) from the fiscal year ended March 31, 2000 through the fiscal year 
+ended March 31, 2002. During most of this time, Palbaum was employed as the co-engagement 
+partner for KPMG LLP’s audits and reviews of the financial statements of Gemstar.  The 
+Commission alleged that Palbaum failed to exercise professional care and skepticism, failed to 
+obtain sufficient competent evidential matter and over-relied on Gemstar’s management 
+representations with respect to the audit and review of Gemstar’s financial statements.  In 
+addition, Palbaum failed to take appropriate action to correct disclosures that did not comply 
+with GAAP and were inconsistent with Gemstar’s financial statements.  Finally, Palbaum failed 
+to render accurate audit reports. 
+1 See Accounting and Auditing Enforcement Release No. 2125 dated October 20, 2004.  Palbaum was permitted, 
+pursuant to the order, to apply for reinstatement after three years upon making certain showings. 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+                                                 
+ 
+ 
+ 
+    
+    
+ 
+In his capacity as a preparer or reviewer, or as a person responsible for the preparation or 
+review, of financial statements of a public company to be filed with the Commission, Palbaum 
+attests that he will undertake to have his work reviewed by the independent audit committee of 
+any company for which he works, or in some other manner acceptable to the Commission, while 
+practicing before the Commission in this capacity.  Palbaum is not, at this time, seeking to 
+appear or practice before the Commission as an independent accountant.  If he should wish to 
+resume appearing and practicing before the Commission as an independent accountant, he will 
+be required to submit an application to the Commission showing that he has complied and will 
+comply with the terms of the original suspension order in this regard.  Therefore, Palbaum’s 
+suspension from practice before the Commission as an independent accountant continues in 
+effect until the Commission determines that a sufficient showing has been made in this regard in 
+accordance with the terms of the original suspension order. 
+Rule 102(e)(5) of the Commission’s Rules of Practice governs applications for 
+reinstatement, and provides that the Commission may reinstate the privilege to appear and 
+practice before the Commission “for good cause shown.”
+2  This “good cause” determination is 
+necessarily highly fact specific. 
+On the basis of information supplied, representations made, and undertakings agreed to 
+by Palbaum, it appears that he has complied with the terms of the October 20, 2004 order 
+denying him the privilege of appearing or practicing before the Commission as an accountant, 
+that no information has come to the attention of the Commission relating to his character, 
+integrity, professional conduct or qualifications to practice before the Commission that would be 
+a basis for adverse action against him pursuant to Rule 102(e) of the Commission's Rules of 
+Practice, and that Palbaum, by undertaking to have his work reviewed by the independent audit 
+committee of any company for which he works, or in some other manner acceptable to the 
+Commission, in his practice before the Commission as a preparer or reviewer of financial 
+statements required to be filed with the Commission, has shown good cause for reinstatement.  
+Therefore, it is accordingly, 
+ORDERED pursuant to Rule 102(e)(5)(i) of the Commission's Rules of Practice that 
+Bryan E. Palbaum, CPA is hereby reinstated to appear and practice before the Commission as an 
+accountant responsible for the preparation or review of financial statements required to be filed 
+with the Commission. 
+By the Commission. 
+Elizabeth Murphy 
+Secretary 
+2 Rule 102(e)(5)(i) provides: 
+“An application for reinstatement of a person permanently suspended or disqualified under paragraph (e)(1) or (e)(3) 
+of this section may be made at any time, and the applicant may, in the Commission’s discretion, be afforded a 
+hearing; however, the suspension or disqualification shall continue unless and until the applicant has been reinstated 
+by the Commission for good cause shown.” 17 C.F.R. § 201.102(e)(5)(i). 
+2
+ 
\ No newline at end of file
diff --git a/raw/aaer/2009/AAER-2967.txt b/raw/aaer/2009/AAER-2967.txt
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+++ b/raw/aaer/2009/AAER-2967.txt
@@ -0,0 +1,1387 @@
+
+
+ 
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+              Michael Strauss, Stephen Hozie and Robert Bernstein
+           
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+        Michael Strauss, Stephen Hozie and Robert Bernstein
+       
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21014 / April 28, 2009 
+
+ Accounting and Auditing Enforcement Release No. 2967 / April 28, 2009 
+
+  Securities and Exchange Commission v. Michael Strauss, Stephen Hozie and Robert Bernstein , Civil Action No.  09-CV-4150 (RB)  (S.D.N.Y. April 28, 2009) 
+
+ On April 28, 2009, the Securities and Exchange Commission filed a civil action in the United States District Court for the Southern District of New York against former senior officers at American Home Mortgage Investment Corp., Michael Strauss, Stephen Hozie and Robert Bernstein. The Commission alleges that Strauss and Hozie engaged in accounting fraud and made false and misleading disclosures that were designed to conceal from investors that American Home Mortgage's financial condition and prospects had significantly worsened in the first four months of 2007. 
+
+ The complaint alleges that Strauss and Hozie fraudulently understated American Home Mortgage's first quarter 2007 loan loss reserves by tens of millions of dollars, converting the company's loss into a fictional profit. In fact, as Strauss and Hozie knew, the company's own analysis showed that American Home Mortgage needed significant additional reserves. The analysis also showed that the company's losses on its delinquent second liens were mounting quickly and that American Home Mortgage would lose at least 72% of the value of these loans after the properties went through foreclosure. Strauss and Hozie knowingly failed to reserve adequately for the expected losses caused by these delinquent loans. 
+
+ According to the SEC's complaint, Strauss and Hozie made misleading disclosures concerning, among other things, the riskiness of the mortgages the company originated and held and the company's liquidity. Strauss and Hozie also failed to disclose the fact that, during the month of April 2007, American Home Mortgage was forced to sell the majority of its multi-billion dollar mortgage-backed securities portfolio to meet pressing liquidity demands. The complaint further alleges that Strauss, Hozie and Bernstein misled American Home Mortgage's auditor about the adequacy of the reserves. 
+
+ The complaint alleges that Strauss and Hozie violated the antifraud provisions of the federal securities laws, specifically Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint further charges (i) Strauss and Hozie with aiding and abetting American Home Mortgage's violations of Section 10(b) and Rules 10b-5 and 13a-11 of the Exchange Act; (ii) Strauss, Hozie and Bernstein with aiding and abetting American Home Mortgage's violations of the reporting, books and records, and internal control provisions under Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder; and (iii) Strauss, Hozie and Bernstein with direct violations of Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder. Finally, the complaint charges Strauss and Hozie with violations of the officer certification provisions under Rule 13a-14 of the Exchange Act. The Commission's complaint seeks permanent injunctions against future violations, disgorgement of ill-gotten gains plus prejudgment interest and the imposition of civil penalties. The complaint also seeks officer and director bars against Strauss and Hozie. 
+
+ Strauss has agreed to settle the SEC's charges without admitting or denying the allegations. He will be permanently enjoined from violating the antifraud, reporting, record-keeping, and internal controls provisions of the federal securities laws and will pay approximately $2.2 million in disgorgement and prejudgment interest and a $250,000 penalty. Strauss will also be barred from serving as an officer or director of a public company for five years. The litigation is ongoing with respect to the other defendants. 
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diff --git a/raw/aaer/2009/AAER-2969.txt b/raw/aaer/2009/AAER-2969.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ffb764352b9900037b47ca88e061153dbb4d7a8a
--- /dev/null
+++ b/raw/aaer/2009/AAER-2969.txt
@@ -0,0 +1,1387 @@
+
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+ 
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21039 / May 15, 2009 
+
+ Accounting and Auditing Enforcement Release No. 2969 / May 15, 2009 
+
+  Securities and Exchange Commission v. Gary A. Ray , United States District Court for the Central District of California, Civil Action No. CV 09-3430 R (CTx) 
+
+ SEC CHARGES HOME BUILDER'S FORMER HUMAN RESOURCES EXECUTIVE WITH STOCK OPTIONS BACKDATING 
+
+ The Securities and Exchange Commission yesteday filed a complaint in the United States District Court for the Central District of California against Gary A. Ray, the former vice president of human resources at KB Home, Inc., a Los Angeles-based homebuilder. 
+
+ The SEC's complaint alleges that Ray used hindsight to pick advantageous grant dates for KB Home's annual stock option grants in order to enrich himself and others at KB Home. On many occasions, the grant dates coincided with dates of low monthly closing prices for the company's common stock. 
+
+ The SEC's complaint further alleges that Ray continued to use hindsight for stock option grant dates even after the Sarbanes-Oxley Act of 2002 imposed stricter reporting requirements. The complaint alleges that, because of the backdating scheme, KB Home filed proxy statements with the SEC that inaccurately stated that KB Home granted options at market value on the date of the grant. In addition, the complaint alleges that, by concealing his knowledge about stock option backdating at KB Home, Ray contributed to KB Home's filing of a false and misleading quarterly report with the SEC in 2006. Ray received backdated annual stock option awards amounting to 380,000 shares of KB Home stock and profited more than $480,000 from exercising many of these options. 
+
+ Ray agreed to settle the Commission's charges without admitting or denying the allegations in the complaint. Under the settlement, Ray consented to the entry of an order that (i) permanently enjoins him from future violations of Sections 10(b), 13(b)(5), and 16(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 13b2-1, and 16a-3 thereunder, and aiding and abetting violations of Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Exchange Act and Rules 12b-20, 13a-13, and 14a-9 thereunder; (ii) requires him to pay $540,651.58 in disgorgement and interest and a civil penalty of $50,000; and (iii) bars him from serving as an officer or director of a public company for five years. The settlement is subject to approval by the court. 
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diff --git a/raw/aaer/2009/AAER-2971.txt b/raw/aaer/2009/AAER-2971.txt
new file mode 100644
index 0000000000000000000000000000000000000000..71f67e34e6b134f0e6a368ac60018f36a94010b3
--- /dev/null
+++ b/raw/aaer/2009/AAER-2971.txt
@@ -0,0 +1,1392 @@
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+              WellCare Health Plans, Inc.
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21044 / May 18, 2009 
+
+ Accounting and Auditing Release No. 2971 / May 18, 2009 
+
+  Securities and Exchange Commission v. WellCare Health Plans, Inc. , Civil Action No. 8:09-CV-00910-T-33-EAJ (M.D. Fla., May 18, 2009) 
+
+ SEC FILES ACTION AGAINST WELLCARE REGARDING SCHEME TO WITHHOLD MONEY FROM FLORIDA HEALTH CARE PROGRAMS; COMPANY TO PAY $10 MILLION PENALTY 
+
+ The Securities and Exchange Commission ("Commission") today filed a settled civil injunctive action against WellCare Health Plans, Inc. ("WellCare"), a managed care services company that administers federal government-sponsored health care programs. According to the Commission's complaint, from at least November 2003 to October 2007, WellCare fraudulently retained over $40 million it was required to return to Florida state agencies under programs that provided mental health services to Medicaid recipients and health care services to uninsured children. As a result, WellCare materially overstated its publicly reported net income and diluted earnings per share in periodic filings made with the Commission. 
+
+ As alleged in the complaint, WellCare executed its scheme by intentionally underpaying refunds it owed to two Florida state health care entities, the Florida Agency for Health Care Administration ("AHCA"), and the Florida Healthy Kids Corporation ("Healthy Kids"). Under these contracts, WellCare received funds, or "premiums," from the state to be used to provide medical and health benefits. To ensure a proper balance between cost savings and quality health care, the state required WellCare to spend a certain percentage of the premiums on eligible medical expenses. If WellCare spent less than the minimum amounts on eligible expenses, it was required to refund some or all of the difference to the state. 
+
+ According to the Commission's complaint, WellCare did not follow the state's guidelines and regulatory framework governing how the company was required to calculate the refunds under each program. Instead, the company evaded the statutory requirements and fraudulently included ineligible payments to a subsidiary and administrative expenses as legitimate medical expenses. In addition, for certain refunds, WellCare considered a range of arbitrary amounts to refund to AHCA, and then reverse-engineered a methodology to arrive at a particular refund target. WellCare also engaged in a rate-swapping scheme whereby it inflated reimbursement rates for its Healthy Kids plan in exchange for lower Medicaid and Medicare rates at two Florida hospitals. In total, through its fraudulent conduct, WellCare reduced the refunds it paid to AHCA by approximately $35 million and to Healthy Kids by approximately $6 million. 
+
+ WellCare's fraudulent retention of over $40 million materially inflated its net income and earnings per share by essentially the same amounts â€" 14% for fiscal year ("FY") 2004, 9% for FY 2005, 13% for FY 2006, and 9% for the first quarter of FY 2007. On January 26, 2009, WellCare filed its Form 10-K for FY 2007 and restated its financial results for its FYs 2004 through 2006 and the first two quarters of FY 2007. 
+
+ Without admitting or denying the allegations in the Commission's complaint, WellCare has consented to the entry of a final judgment for violations of the antifraud provision of the federal securities laws, Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rule 10b-5, the reporting provisions, Section 13(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1 and 13a-13, and the record-keeping and internal controls provisions, Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. In addition, the company has agreed to pay $1 in disgorgement and a $10 million civil penalty. The Commission acknowledges WellCare's cooperation with its investigation. 
+
+ In conducting its investigation, the Commission received assistance from the U.S. Attorney's Office for the Middle District of Florida, the Office of Inspector General for the Department of Health and Human Services and the Federal Bureau of Investigation. 
+
+ The Commission's investigation is continuing. 
+
+   SEC Complaint in this matter  
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diff --git a/raw/aaer/2009/AAER-2973.pdf b/raw/aaer/2009/AAER-2973.pdf
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diff --git a/raw/aaer/2009/AAER-2979.txt b/raw/aaer/2009/AAER-2979.txt
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+ 
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+                                                
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+ 
+ UNITED STATES OF AMERICA 
+ Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 59989 / May 27, 2009 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 2979 / May 27, 2009 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13491 
+In the Matter of 
+Frank P. Sinopoli, CPA,  
+Respondent. 
+ORDER INSTITUTING PUBLIC 
+ADMINISTRATIVE AND CEASE-
+ AND-DESIST PROCEEDINGS 
+PURSUANT TO SECTION 21C OF THE 
+SECURITIES EXCHANGE ACT OF 1934 
+AND RULE 102(e) OF THE 
+COMMISSION’S RULES OF PRACTICE, 
+MAKING FINDINGS, AND IMPOSING 
+REMEDIAL SANCTIONS 
+AND A CEASE-AND-DESIST ORDER 
+I. 
+The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
+public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
+instituted against Frank P. Sinopoli, CPA (“Respondent” or “Sinopoli”) pursuant to Section 21C of 
+the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 102(e)(1)(ii) of the Commission’s 
+Rules of Practice.
+1 
+Rule 102(e)(1)(ii) provides, in pertinent part, that: 
+The Commission may . . . deny, temporarily or permanently, the privilege of appearing or practicing before 
+it . . . to any person who is found . . . to have engaged in … improper professional conduct. 
+1 
+ 
+ 
+ 
+ 
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+  
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+  
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+  
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+                                                
+ 
+      
+ 
+II. 
+In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdiction over him and the subject matter of these 
+proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Public 
+Administrative and Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities 
+Exchange Act of 1934 and Rule 102(e) of the Commission’s Rules of Practice, Making Findings, 
+and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.   
+III. 
+On the basis of this Order and Respondent’s Offer, the Commission finds2 that: 
+A. SUMMARY 
+These proceedings concern Frank P. Sinopoli, a partner with Perkins, Dexter, Sinopoli & 
+Hamm, P.C. (“PDSH”), who audited the financial statements of Geo Securities, Inc. ("GSI") for the 
+fiscal year ended July 31, 2005.  GSI’s financial statements were not prepared in conformity with 
+generally accepted accounting principles (“GAAP”) because they failed to include a material 
+liability, a $949,688 arbitrator’s award, for which GSI was jointly and severally liable.  Sinopoli 
+engaged in improper professional conduct by failing to conduct PDSH’s audit of GSI’s financial 
+statements in accordance with generally accepted auditing standards (“GAAS”).   
+B. RESPONDENT AND RELATED ENTITIES 
+Frank P. Sinopoli, age 56, is a Dallas-based certified public accountant licensed in Texas.  
+In 1980, Sinopoli joined the accounting firm of Perkins, Dexter, Sinopoli & Hamm, P.C., and 
+became an owner in 1984.  During the period relevant to this proceeding, Sinopoli supervised the 
+services performed by Perkins, Dexter, Sinopoli & Hamm, P.C. for Geo Securities, Inc.  These 
+services included annual audits of the financial statements of Geo Securities, Inc. 
+Perkins, Dexter, Sinopoli & Hamm, P.C. is a Dallas-based public accounting firm 
+licensed to practice in Texas.  PDSH is not registered with the Public Accounting Oversight Board 
+and audits no public companies.  
+Geo Securities, Inc. has been a broker-dealer registered with the Commission since 
+September 24, 1998 (File No. 8-50862).  GSI’s sole business has been to the offer and sale of 
+offerings sponsored by its parent, Geo Companies of North America, Inc. (“GCNA”).  On 
+The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any 
+other person or entity in this or any other proceeding. 
+2
+ 
+2 
+ 
+ 
+ 
+ 
+ 
+  
+  
+ 
+   
+ 
+ 
+  
+ 
+ 
+ 
+ 
+                                                
+ 
+   
+  
+ 
+January 10, 2006, after the FWRO Examination staff notified GSI of its net capital deficiency, GSI 
+filed a Rule 17a-11 notice disclosing its violation of Rule 15(c)(3) of the Exchange Act and 
+voluntarily terminated its securities business.   On March 13, 2006, the NASD suspended GSI’s 
+registration for failure to file a financial report.    
+C. 	 FACTS 
+1.	 GSI Failed to Prepare its Financial Statements in Accordance with GAAP and 
+Failed to Comply with Certain Broker-Dealer Net Capital and Books and 
+Records Requirements 
+a. 	 GSI Found Liable for Damages, Legal Fees and Costs by Arbitrator 
+In June 2000, GSI, GCNA, and certain individuals were named as defendants in civil 
+litigation alleging that they fraudulently offered and sold, without registration, joint venture 
+partnership interests (the “Atlanta litigation”).3 On January 9, 2004, the court in the Atlanta 
+litigation issued an order enforcing a settlement agreement in which the defendants, including GSI, 
+agreed to pay damages totaling $217,220 (the “2004 Settlement”) and required the parties to 
+submit to binding arbitration to determine the amount of attorney’s fees, if any, to be awarded to 
+the plaintiffs.  In the subsequent arbitration proceeding, the arbitrator, on April 27, 2005, entered 
+an award in favor of the plaintiffs and against GSI, jointly and severally with the other defendants, 
+in the amount of $949,688 for legal fees and litigation costs (the “Arbitrator’s award”).  On 
+July 15, 2005, the Arbitrator’s award was entered as a judgment in the United States District Court 
+for the Northern District of Georgia, Atlanta Division.   
+b. GSI Failed to Record Liability Arising from Arbitrator’s Award 
+GSI’s financial statements for the fiscal year ended July 31, 2005 were not prepared 
+in conformity with GAAP because they failed to include a material liability for the 
+Arbitrator’s award.  Statement of Financial Accounting Standards No. 5, Accounting for 
+Contingencies (“FAS 5”) required GSI to accrue the Arbitrator’s award as a liability.  
+Paragraph 8 of FAS 5 requires that an estimated loss from a contingent liability be recorded 
+when it is “probable that … a liability has been incurred at the date of the financial 
+statements” and the “amount of the loss can be reasonably estimated.”  Both of these 
+conditions existed with respect to the Arbitrator’s award by April 27, 2005, at the very 
+latest. On that date, GSI’s liability arising from the Atlanta litigation was probable.  
+Similarly, GSI’s loss could be reasonably estimated, as the Arbitrator’s award quantified 
+the exact dollar amount of litigation costs owed.  Accordingly, GSI should have accrued 
+the entire amount of the Arbitrator’s award in its financial statements for periods ended 
+See T.C. Woodworth, et al. v. Geo Securities, Inc., et al., No. 1:00-CV-1495-WBH (N.D. Ga. filed June 14, 
+2000) ), which was subsequently consolidated with Leipman, et al. v. Geo Securities, Inc., et al., No. 1:02-CV-369-
+WBH (N.D. Ga. filed February 8, 2002). 
+3
+ 
+3 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+ 
+ 
+after April 27, 2005, but failed to do so.  Instead, GSI merely disclosed the existence and 
+amount of the Arbitrator’s award. 
+c. 	 GSI Failed to Properly Maintain Books and Records and Required Net 
+Capital and Failed to Make Required Notifications 
+As stated in the NASD Notice to Members No. 00-63, Arbitration Awards, an 
+arbitration award, even if appealed, should be treated as an actual liability for the purposes 
+of calculating net capital pursuant to Rule 15c3-1 under the Exchange Act. Contrary to this 
+guidance, however, GSI elected to treat the Arbitrator’s award as a contingent, rather than 
+actual, liability for the purposes of computing its net capital.  Had GSI properly recorded 
+the Arbitrator’s award as an actual liability, combined with its other liabilities, GSI’s 
+financial statements would have revealed a net capital deficiency of approximately $1 
+million, placing GSI in violation of Rule 15c3-1 under the Exchange Act.  
+In addition, Section 17(a) of the Exchange Act and Rule 17a-3 thereunder require that 
+every registered broker-dealer make and keep current books and records reflecting, among other 
+things, the firm’s liabilities and net capital computations. Rule 17a-5 under the Exchange Act 
+also requires that broker-dealers registered with the Commission, such as GSI, file quarterly 
+Financial and Operational Combined Uniform Single Report (“FOCUS”) reports and annual 
+audited financial statements. Implicit in these provisions is the requirement that information 
+contained in required books, records, or filings be accurate. Rule 17a-11(b)(1) requires broker-
+dealers whose net capital declines below the minimum required pursuant to Rule 15c3-1 to give 
+same-day notice to the Commission of this fact. Rule 17a-11(d) further requires broker-dealers 
+who fail to make or keep current books and records required by Rule 17a-3 to give same-day 
+notice to the Commission of this fact.  Based on the conduct described above, GSI violated 
+Section 17(a) of the Exchange Act and Rules 17a-3, 17a-5, and 17a-11 thereunder. 
+d. 	 GSI Failed to Appropriately Record Expense Sharing Agreement With 
+Its Parent Company 
+NASD Notice to Members No. 00-63 (“NASD Notice 00-63”) states, “[p]ursuant to 
+Exchange Act Rule 17(a)-3(a)(1) and (a)(2), a broker-dealer must make a record reflecting each 
+expense incurred relating to its business and any corresponding liability, regardless of whether the 
+liability is joint or several with any person and regardless of whether a third party has agreed to 
+assume the expense or liability…One  proper method is to record the expense in an amount that is 
+determined according to an allocation made by the third party on a reasonable basis.” 
+Alternatively, NASD Notice 00-63 indicates a broker-dealer may maintain a separate schedule of 
+allocated expenses and liabilities if such amounts are not recorded as a part of its general ledger.  
+GSI had an expense sharing arrangement with its parent, GCNA.  Under this agreement, GCNA 
+agreed to pay rent, utilities, and certain other shared expenses.  Neither GCNA nor GSI made any 
+record allocating such expenses between GCNA and GSI.   Moreover, GSI made no record of its 
+share of costs related to the Atlanta litigation. 
+4
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+ 
+2. Sinopoli Engaged in Improper Professional Conduct 
+Sinopoli was the engagement partner responsible for planning and conducting PDSH’s audit 
+of GSI’s financial statements for the years ended July 31, 2000 through 2005.  GSI’s financial 
+statements for the year ended July 31, 2005, as filed with the Commission, contained an 
+unqualified audit report representing that PDSH had conducted an audit in accordance with GAAS 
+and that GSI’s financial statements were presented in conformity with GAAP. Additionally, the 
+2005 GSI audit report states that PDSH had examined the supplemental information provided in 
+Schedule 1 to the financial statements, Computation of Net Capital Pursuant to Rule 15c3-1 
+(“Schedule 1”) and that Schedule 1 was “fairly stated in all material respects in relation to the basic 
+financial statements taken as a whole.”  In fact, Sinopoli did not conduct PDSH’s audit of GSI’s 
+2005 financial statements (the “2005 GSI audit”) in accordance with GAAS, GSI’s financial 
+statements were not presented in conformity with GAAP, and Schedule 1 materially overstated 
+GSI’s net capital by approximately $900,000.  
+Sinopoli failed to conduct the 2005 GSI audit in accordance with GAAS.  Among other 
+things, he failed to exercise professional skepticism and failed to obtain sufficient competent 
+evidential matter to evaluate adequately and report properly the Arbitrator’s award in GSI’s 
+financial statements.  Furthermore, Sinopoli’s work papers fail to evaluate GSI’s ability to continue 
+as a going concern.  Nonetheless, Sinopoli signed, on behalf of PDSH, an audit report dated 
+September 30, 2005 containing an unqualified opinion incorrectly claiming that PDSH’s audit of 
+GSI’s July 31, 2005 financial statements had been conducted in accordance with GAAS.  The 
+opinion also incorrectly claims that GSI’s audited financial statements present fairly, in all material 
+respects, the financial position of GSI in conformity with GAAP.   
+As discussed in more detail below, Sinopoli engaged in improper professional conduct 
+within the meaning of Rule 102(e)(1) by failing, in repeated instances, to comply with GAAS in 
+performing PDSH’s audit of GSI’s financial statements for the year ended July 31, 2005. 
+a.	 Sinopoli Failed to Evaluate Adequately Litigation, Claims and 
+Assessments 
+Sinopoli knew about the status of the Atlanta litigation and the existence of the Arbitrator’s 
+award at the time he planned and conducted the 2005 GSI audit.  He also knew that a court order 
+had been issued in 2004 enforcing a settlement agreement requiring the defendants, including GSI, 
+to pay $217,220 and requiring the parties to submit proposed legal fees and litigation costs to 
+binding arbitration.  Additionally, Sinopoli regularly assisted GSI in preparing its quarterly FOCUS 
+reports (including reports due for the periods ended March 31, June 30, and July 31, 2005).  
+Furthermore, Sinopoli learned in early May 2005 that the Arbitrator’s award had been entered 
+against GSI and assisted GSI’s management at the time it concluded it should disclose, but not 
+record, the Arbitration award as a liability on its balance sheet. 
+Sinopoli’s planning work papers do not identify litigation, claims, and assessments as an 
+area of significant audit risk.  In fact, the Atlanta litigation represented a significant area of audit risk 
+5
+ 
+ 
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+ 
+   
+ 
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+     
+ 
+ 
+ 
+                                                 
+    
+ 
+  
+ 
+   
+   
+   
+  
+ 
+that GSI’s financial statements could be misstated.  Sinopoli, however, neither identified the 
+attorneys handling the Atlanta litigation nor requested that GSI send an audit inquiry letter to the 
+law firm handling the Atlanta litigation.  Instead, Sinopoli relied upon representations by GSI 
+management regarding GSI’s liability arising from the Arbitrator’s award. By not corresponding 
+with GSI’s outside counsel, Sinopoli failed to obtain sufficient evidential matter, as required by 
+GAAS, to corroborate management’s representations regarding its ability to appeal the Arbitrator’s 
+award and the likelihood that the appeal would be successful, if made.4 
+Sinopoli also did not evaluate objectively whether GSI’s disclosure of the Arbitrator’s award 
+conformed with GAAP.  After the entry of the Arbitrator’s award, GSI should have recorded the 
+award as a liability pursuant to paragraph 8 of FAS 5.  Sinopoli did not document any justification 
+for not following FAS 5, other than GSI management’s representations that it intended to appeal the 
+Arbitrator’s award.  Sinopoli’s reliance on GSI management’s representations, however, was not 
+sufficient for several reasons.  First, the written representation repeated language from the prior 
+year’s representations without reference to the 2004 Settlement or the Arbitrator’s award.  Second, 
+Sinopoli did not request written representations from either GSI’s in-house counsel or GCNA’s sole 
+stockholder, who were both more knowledgeable and better situated than GSI’s president to provide 
+competent, reliable representations regarding the Atlanta litigation.  Furthermore, Sinopoli knew or 
+should have known that GSI’s president did not have a basis to state, in management’s letter of 
+representation to PDSH, that “the loss, if any, resulting from the suits will be paid by our parent 
+[GCNA], and therefore, will not have a material impact on the Company’s financial position, results 
+of operations, or cash flows in future years.”  Nonetheless, Sinopoli relied upon this representation 
+without further inquiry.  As both GCNA and its sole stockholder were also clients of PDSH, 
+Sinopoli could have easily requested written representations. 
+b. Sinopoli Failed to Evaluate GSI as a Going Concern 
+Sinopoli also did not recognize that the Arbitration award raised substantial doubt about 
+GSI’s ability to continue as a going concern.  He, thereby, failed to evaluate GSI’s ability to 
+continue as a going concern, failed to obtain additional information about the conditions raising the 
+concerns and failed to evaluate management’s plans for dealing with the adverse effects of the 
+conditions raising the concerns, as required by GAAS.5  Sinopoli did not determine if GCNA or 
+4 AU§  337, Inquiry of a Client’s Lawyer Concerning Litigation, Claims and Assessments, paragraph .08 states: 
+A letter of audit inquiry to the client’s legal counsel is the auditor’s primary means of obtaining 
+corroboration of the information furnished by management concerning litigation, claims, and 
+assessments.  Evidential matter obtained from the client’s inside general counsel or legal department 
+may provide the auditor with the necessary corroboration.  However, evidential matter obtained from 
+inside legal counsel is not a substitute for information outside counsel refuses to furnish. 
+5 AU § 341, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern. 
+6
+ 
+ 
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+    
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+  
+                                                 
+   
+     
+ 
+ 
+ 
+GCNA’s sole stockholder (who were both, jointly and severally liable with GSI for the Arbitrator’s 
+award) was able or willing to fund GSI’s liability.  In fact, when GSI reported its net capital 
+violation in January 2006, neither GCNA nor its sole stockholder intervened to cure the deficiency, 
+causing GSI to cease operating its securities business.   
+c. 	 Sinopoli Failed to Identify that GSI Did Not Make or Maintain Records 
+Allocating Expenses under its Expense Sharing Arrangement  
+Sinopoli’s planning work papers indicate that the AICPA’s Audit and Accounting Guide for 
+Brokers and Dealers in Securities (the “Audit Guide”) was relevant to the 2005 GSI audit.  Chapter 
+3 of the Audit Guide, Regulatory Considerations, in paragraphs 3.55 to 3.57 refers the auditor to 
+NASD Notice 03-63, which addresses a broker-dealer’s record keeping requirements when the 
+broker-dealer has an expense sharing agreement, such as the arrangement between GSI and GCNA.6 
+Sinopoli, however, failed to identify that GSI did not make or maintain records showing reasonable 
+allocations of rent, utilities, litigation and other expenses.   
+d. Sinopoli Failed to Identify GSI’s Net Capital Deficiency 
+Finally, Sinopoli failed to identify GSI’s net capital deficiency of approximately $900,000 
+as of July 31, 2005.  In planning the 2005 GSI audit, Sinopoli properly identified GSI’s net capital 
+requirements as a significant audit area.  He was also familiar with Rule 15c3-1 of the Exchange 
+Act and referred to this rule during the 2005 GSI audit.  Additionally, Sinopoli examined the 
+supplemental information provided in Schedule 1 to GSI’s financial statements, Computation of Net 
+Capital Pursuant to Rule 15c3-1, as a part of the 2005 GSI audit.  Nonetheless, Sinopoli signed 
+PDSH’s audit report stating that the computation of net capital requirements was “fairly stated in all 
+material respects in relation to the basic financial statements taken as a whole,” when, in fact, it was 
+not.  Because Sinopoli failed to identify GSI’s improper accounting, Sinopoli failed to identify that 
+GSI’s 2005 net capital computation was materially misstated. 
+3.	 Violations 
+a.	 Sinopoli Caused GSI’s Violations of Section 15(c)(3) of the Exchange 
+Act and Rule 15c3-1 
+Section 15(c)(3) of the Exchange Act prohibits brokers or dealers from inducing the 
+purchase or sale of securities while in contravention of Rule 15c3-1, which requires that every 
+broker or dealer shall at all times have and maintain certain minimum net capital requirements. 
+Rule 15c3-1 requires a broker-dealer to maintain a certain minimum ratio of net capital to 
+NASD Notice 03-63 also reiterates the guidance contained in NASD Notice 00-63 that and adverse 
+arbitration awards must be booked as an actual liability at the time of the award regardless if appealed. Sinopoli, 
+however, was unaware of guidance published by the NASD in its Notice to Members No. 00-63 regarding arbitration 
+awards. 
+7
+ 
+6 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+  
+ 
+  
+ 
+ 
+ 
+ 
+ 
+ 
+  
+aggregate indebtedness so that the broker-dealer’s assets will be sufficiently liquid to enable it to 
+meet all of its current obligations.   
+As a result of its conduct as described above, GSI violated Section 15(c)(3) of the 
+Exchange Act and Rule 15c3-1 thereunder.  As a result of his conduct described above, Sinopoli 
+caused, under Section 21C of the Exchange Act, GSI’s violations of Section 15(c)(3) of the 
+Exchange Act and Rule 15c3-1 thereunder. 
+b.	 Sinopoli Caused GSI’s Violations of Section 17(a) of the Exchange Act 
+and Rules 17a-3, 17a-5 and 17a-11 thereunder 
+Section 17(a) of the Exchange Act and Rule 17a-3 thereunder require that every 
+registered broker-dealer make and keep current books and records reflecting, among other things, 
+the firm’s liabilities and net capital computations. Rule 17a-5 requires that a broker-dealer 
+registered with the Commission, such as GSI, file quarterly FOCUS reports with its designated 
+examining authority and annual audited financial statements with the Commission. Implicit in 
+these provisions is the requirement that information contained in required books, records, or 
+filings be accurate. Rule 17a-11(b)(1) requires such broker-dealers whose net capital declines 
+below the minimum required pursuant to Rule 15c3-1 to give notice to the Commission of this 
+fact that day. Rule 17a-11(d) further requires broker-dealers who fail to make or keep current 
+books and records required by Rules 17a-3 to give notice to the Commission of this fact the same 
+day, specifying the books and records which have not been made or which are not current.   
+As a result of its conduct described above, GSI violated Section 17(a) of the Exchange 
+Act and Rules 17a-3, 17a-5, and 17a-11 thereunder.  As a result of his conduct described above, 
+Sinopoli caused, under Section 21C of the Exchange Act, GSI’s violations of Section 17(a) of the 
+Exchange Act and Rules 17a-3, 17a-5 and 17a-11 thereunder. 
+4.	 Findings 
+a. Based on the foregoing, the Commission finds that Sinopoli engaged in 
+improper professional conduct pursuant to Rule 102(e)(1)(ii) of the Commission’s Rules of 
+Practice. 
+b. Based on the foregoing, the Commission finds that Sinopoli caused GSI’s 
+violations of Sections 15(c)(3) and 17(a) of the Exchange Act and Rules 15c3-1, 17a-3, 17a-5, and  
+17a-11 promulgated thereunder.  
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanctions agreed to in Respondent Sinopoli’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+8
+ 
+ 
+ 
+ 
+ 
+  
+ 
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+ 
+ 
+  
+ 
+      
+        
+ 
+      
+  
+      
+           
+ 
+ 
+ 
+ 
+ 
+      
+ 
+A. Sinopoli shall cease and desist from causing any violations and any future violations 
+of Sections 15(c)(3) and 17(a) of the Exchange Act, and Rules 15c3-1, 17a-3 , 17a-5, and  17a-11 
+promulgated thereunder; 
+B. Sinopoli is denied the privilege of appearing or practicing before the Commission 
+as an accountant. 
+C. After one year from the date of this order, Respondent may request that the 
+Commission consider his reinstatement by submitting an application (attention: Office of the 
+Chief Accountant) to resume appearing or practicing before the Commission as: 
+1. a preparer or reviewer, or a person responsible for the preparation or 
+review, of any public company’s financial statements that are filed with the Commission.  Such 
+an application must satisfy the Commission that Respondent’s work in his practice before the 
+Commission will be reviewed either by the independent audit committee of the public company 
+for which he works or in some other acceptable manner, as long as he practices before the 
+Commission in this capacity; and/or 
+2. an independent accountant.  Such an application must satisfy the 
+Commission that: 
+(a) Respondent, or the public accounting firm with which he is 
+associated, is registered with the Public Company Accounting Oversight Board (“Board”) in 
+accordance with the Sarbanes-Oxley Act of 2002, and such registration continues to be effective; 
+(b) Respondent, or the registered public accounting firm with which he 
+is associated, has been inspected by the Board and that inspection did not identify any criticisms 
+of or potential defects in the Respondent’s or the firm’s quality control system that would 
+indicate that the Respondent will not receive appropriate supervision;
+ (c) Respondent has resolved all disciplinary issues with the Board, and 
+has complied with all terms and conditions of any sanctions imposed by the Board (other than 
+reinstatement by the Commission); and 
+(d) Respondent acknowledges his responsibility, as long as 
+Respondent appears or practices before the Commission as an independent accountant, to 
+comply with all requirements of the Commission and the Board, including, but not limited to, all 
+requirements relating to registration, inspections, concurring partner reviews and quality control 
+standards. 
+D. The Commission will consider an application by Respondent to resume appearing 
+or practicing before the Commission provided that his state CPA license is current and he has 
+resolved all other disciplinary issues with the applicable state boards of accountancy.  However, 
+9
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+if state licensure is dependent on reinstatement by the Commission, the Commission will 
+consider an application on its other merits.  The Commission’s review may include consideration 
+of, in addition to the matters referenced above, any other matters relating to Respondent’s 
+character, integrity, professional conduct, or qualifications to appear or practice before the 
+Commission. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+10
+ 
\ No newline at end of file
diff --git a/raw/aaer/2009/AAER-2980.txt b/raw/aaer/2009/AAER-2980.txt
new file mode 100644
index 0000000000000000000000000000000000000000..1442818827093eff380bf40077bf6ba135253524
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+++ b/raw/aaer/2009/AAER-2980.txt
@@ -0,0 +1,1389 @@
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+                   U.S. Securities and Exchange Commission 
+
+ Litigation Release No. 21063 / May 29, 2009 
+
+ Accounting and Auditing Enforcement Release No. 2980 / May 29, 2009 
+
+  SECURITIES AND EXCHANGE COMMISSION v. THOMAS WURZEL,  Civil Action No. 09-Civ-01005 (RWR), United States District Court for the District of Columbia (Filed May 29, 2009) 
+
+ SEC SUES FORMER PRESIDENT OF UNITED INDUSTRIAL CORPORATION SUBSIDIARY FOR AUTHORIZING THE PAYMENT OF FOREIGN BRIBES 
+
+ On May 29, 2009, the Securities and Exchange Commission filed a settled enforcement action in the United States District Court for the District of Columbia against Thomas Wurzel, the former President of ACL Technologies, Inc. (ACL), formerly a subsidiary of United Industrial Corporation (UIC), which provided aerospace and defense systems.  The Commission's complaint alleges that Wurzel authorized illicit payments to an Egyptian-based agent while he knew or consciously disregarded the high probability that the agent would offer, provide, or promise at least a portion of such payments to Egyptian Air Force officials for the purpose of influencing these officials to award business to UIC related to a military aircraft depot in Cairo, Egypt.  The Commission charged Wurzel with violations of the anti-bribery, books and records and internal controls provisions of the Foreign Corrupt Practices Act (FCPA), and with aiding and abetting UIC's violations of the anti-bribery and books and records provisions of the FCPA. 
+
+ The Commission's complaint alleges that in late 2001 to 2002, Wurzel authorized three forms of illicit payments to the agent: (1) payments to the agent ostensibly for labor subcontracting work; (2) a $100,000 advance payment to the agent in June 2002 for "equipment and materials;" and (3) a $50,000 payment to the agent in November 2002 for "marketing services."  Furthermore, Wurzel later directed his subordinates to create false invoices to conceal the fact that the $100,000 "advance payment" in June 2002 was never repaid.  As a result, UIC, through ACL, was awarded a contract with gross revenues and net profits of approximately $5.3 million and $267,000, respectively.  
+
+ Without admitting or denying the allegations in the complaint, Wurzel has consented to the entry of a final judgment permanently enjoining him from future violations of Sections 30A and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rule 13b2-1 and from aiding and abetting violations of Exchange Act Sections 30A and 13(b)(2)(A) and ordering him to pay a $35,000 civil penalty.   
+
+ In a related action, the Commission also instituted, on May 29, 2009, a settled administrative proceeding against UIC.  The Commission's Cease-and-Desist Order finds that beginning in late 2001, and continuing through 2002, UIC violated Sections 30A, 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.  Without admitting or denying the Commission's findings, UIC agreed to a Commission order requiring it to cease and desist from committing or causing violations and any future violations of the foregoing provisions and ordered UIC to pay $337,679.42 in disgorgement and prejudgment interest.  See  Exchange Act Release No. 34-60005  (May 29, 2009); Accounting and Auditing Enforcement Release No. 2981.  
+
+   SEC Complaint in this matter  
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diff --git a/raw/aaer/2009/AAER-2981.txt b/raw/aaer/2009/AAER-2981.txt
new file mode 100644
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+ UNITED STATES OF AMERICA 
+ Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 60005 / May 29, 2009 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 2981 / May 29, 2009 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13495 
+In the Matter of 
+UNITED INDUSTRIAL 
+CORPORATION, 
+Respondent. 
+CORRECTED ORDER INSTITUTING 
+CEASE-AND-DESIST PROCEEDINGS 
+PURSUANT TO SECTION 21C OF THE 
+SECURITIES EXCHANGE ACT OF 1934, 
+MAKING FINDINGS, AND IMPOSING A 
+CEASE-AND-DESIST ORDER 
+I. 
+The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
+and-desist proceedings be, and he reby are, instituted pursuant to  Section 21C of the Securities 
+Exchange Act of 1934 (“Exchange Act”), agai nst United Industrial Corporation (“UIC” or 
+“Respondent”).  
+II. 
+In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) whic h the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdic tion over it and the subject matter of these 
+proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
+and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
+Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.   
+ 
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+III. 
+On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 
+Summary 
+1. Beginning in late 2001, and continui ng through 2002, UIC, th rough its indirect, 
+wholly owned subsidiary ACL Technologies, Inc. (“ACL”), made multiple payments to one of its 
+foreign agents in connection with a military aircraft depot ACL was building for the Egyptian Air 
+Force (“EAF”) in Cairo, Egypt. Thomas Wurzel, ACL’s former President and a U.S. citizen and 
+resident, authorized the payments to the agent while he knew or consciously disregarded the high 
+probability that the agent would of fer, provide or promise at least a portion of such payments to 
+active EAF officials for the purpose of influencing such officials to obtain or retain business for 
+U I C  t h r o u g h  A C L .   A s  a  r e s u l t ,  A C L ,  w h i c h  w as headquartered in California at the time, was 
+awarded a Contract Engineering Technical Services (“CETS”) contract with gross revenues and 
+net profit to ACL of approximately $5.3 million and $267,571, respectively.  During this time, UIC 
+lacked meaningful controls to prevent or de tect the ACL President’s authorization of illicit 
+payments to the agent.  The UI C legal department approved the retention of the agent despite a 
+lack of documented due diligence and the failure of the agency  agreement to comply with 
+corporate policy. Moreover, a UIC official approved at least one payment to the agent, and the 
+illicit payments to the agent were  mischaracterized on UIC’s books and reco rds as legitimate 
+business expenses.   
+Respondent 
+2. UIC , a Delaware corporation headquartered in Hunt Valley, Maryland, focuses on 
+the design and production of defense, training, transportation and energy systems for the U.S. 
+Department of Defense and domes tic and international customers.  At the time of the conduct 
+described below, UIC’s common stock was registered with the Commission pursuant to Section 
+12(b) of the Exchange Act, and was listed on the New York Stock Exchange.
+2 
+Other Relevant Persons/Entities 
+3. ACL Technologies, Inc. (“ACL”) was an indirect, wholly owned subsidiary of UIC, 
+and was formerly headquartered in Brea, California.  ACL’s parent corporation was AAI 
+Corporation, a direct, wholly owned subsidiary of UIC.  ACL developed, operated and maintained 
+1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any 
+other person or entity in this or any other proceeding. 
+2 On December 18, 2007, UIC was acquired by an affilia te of Textron Inc. ("Te xtron"). Textron's common 
+stock is registered with the Commission pursuant to Section 12(b) of the Exchange Act and is listed on the New 
+York Stock Exchange.  Following the acquisition, UIC filed a Form 15 Notice of Termination of Registration of its 
+common stock under Exchange Act Section 12(g).  UIC survives the acquisition as an indirect wholly owned 
+subsidiary of Textron.  All of the conduct described in Section III of this Order occurred prior to the acquisition of 
+UIC by Textron. 
+2
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+stationary and mobile test equipment in support of  hydraulics, pneumatics, electrical, mechanical 
+and fuel requirements of commercial and military aircraft.   
+4. Thomas E. Wurzel, is a United States citizen and resides in Bend, Oregon.  From 
+1992 to 2004, Wurzel served as the President of ACL and maintained an office in Brea, California. 
+From at least 1995 forward, UIC held Wurzel out as a member of its senior management team.     
+Facts 
+A. Background 
+5. In October 1999, the U.S. Air Force awarded ACL a project to build a F-16 combat 
+aircraft depot for EAF and to provide, operate and train Egyptian labor to use the associated testing 
+equipment for the depot (the “Egyptian F-16 Depot Project”).  ACL was awarded the Egyptian F-
+16 Depot Project as part of the U.S. Department of  Defense’s foreign military sale (“FMS”) 
+program.  FMS contracts generally are purchases by foreign governments from the U.S. 
+Government of weapons and other defense items, services and military training, which the U.S. 
+Government fulfills by entering into contract s with private-sector defense contractors. 
+Accordingly, as the purchaser and ultimate end-user for the F-16 depot facility that would be built, 
+the EAF directed when, to what extent and how money would be spent on the project.3  Moreover, 
+the EAF could select a particular contractor for a project it desired through its use of “sole source” 
+requests. A sole source request would avoid th e normal competitive bidding process and result in 
+the award of a “no bid” contract to the beneficiary of the request.   
+6. In connection with the Egyptian F-16 Depot Project, the EAF submitted a “sole 
+source” request for ACL’s services and in 1999 ACL was awarded the contract for the Project. 
+The original 1999 award included initial funding to ACL of $14 million under the primary contract 
+for development of the F-16 depot (called the “integration” contract), with an estimated total 
+contract value of $28 million.  In subsequent years, ACL wa s awarded “add-on” contracts and 
+contract modifications that supplemented its  revenues following ACL’ s initial award of the 
+integration contract. These additional revenues included supplemental funding for the integration 
+contract of approximately $29.6 million, a separate contract to build a surface treatment facility (or 
+“STF” contract) valued at approximately $2.7 million, and in April 2002, a new contract to help 
+train Egyptian military personnel to operate the F-16 depot, known as CETS, ultimately valued at 
+approximately $5.3 million.  In total, the Egyptian F-16 Depot Project, including the principal 
+integration contract, the STF and CETS contracts, and other modifi cations and add-on contracts, 
+generated approximately $64 million in revenue and $8.6 million in net profit for ACL from 1999 
+through 2004, representing over one-third of ACL’s total gross revenues over the same period.     
+Although the EAF was the customer for the Egyptian F-16 Depot Project, ACL did not enter into any 
+formal arrangement directly with the EAF; rather, AC L’s contractual obligations for the Egyptian F-16 Depot 
+Project were with the U.S. Air Force, which served as an intermediary on the Project and supervised logistical and 
+procurement matters. 
+3
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+B. ACL Retains a Former EAF General as Consultant 
+7. By at least December 1996, Wurzel (“ACL’s President”) had enlisted the assistance 
+of a foreign agent, a retired EAF General (the “EAF Agent”), to act as a consultant to ACL to help 
+influence the EAF in moving the Egyptian F-16 Depot Project forw ard.  By at least December 
+1997, ACL’s President also authorized monthly stipends of $4,000 to the EAF Agent, although 
+ACL did not maintain any due diligence files for the agent at that time and did not have a formal 
+consulting contract with the agent until March 13, 1998 (at wh ich time the agent’s monthly 
+stipends were raised to $20,000).  As ACL’s President stated in 1997 correspondence to the EAF 
+Agent, the purpose for hiring the agent was clear:  “[ACL’s] objective, as before, is to convince the 
+EAF to hire us as the integrating contractor” for the Project.  As a form er EAF General, the EAF 
+Agent’s potential to influence the contracting process was heightened as, according to ACL’s Vice 
+President and Program Manager for the Egyptian F-16 Depot Project, in Egypt, “it’s a very small 
+community of high-level military people.”  In addition, ACL’s President was aware that the EAF 
+Agent had a personal relationship with at least one active EAF official. 
+8. Shortly after the Project’s initial October 1999 award, ACL’s President authorized 
+the EAF Agent, through his comp any, to continue to act as ACL’s consultant for obtaining 
+business. The EAF Agent’s role  as the company’s Egyptian-based “consultant” was continued 
+through a new consulting agreement with the agent in November 1999.
+4  That agreement 
+essentially renewed the terms of the prior 1998 c onsulting contract, including paying the agent a 
+monthly stipend of $20,000 per month.  Although ACL had alr eady been awarded the initial 
+integrating contract for the Egyptian F-16 Depot Project, this new agreement was geared towards 
+helping solicit new or add-on business related to  the Project.  ACL’s President described this 
+understanding of the continuing consulting relationship in an e-mail to the agent in February 2001: 
+“We are certainly interested in paying for other new business if you can work it. . . .  [T]he training 
+effort needs some influence to make sure we are not excluded and the EAF needs to insist on our 
+follow on support after the Depot is in place.”
+5 
+9. In April 2000, several months afte r the initial October 1999 award, ACL’s 
+President also separately authorized the EAF Agent to act as a local labor subcontractor for ACL in 
+connection with its work on the Egyptian F-16 Depo t Project.  In this role, the EAF Agent was 
+brought under the umbrella of ACL’s principal contract with the U.S. Air Force, with the agent’s 
+company receiving reimbursement from ACL for coordinating the retention of local labor for the 
+Project. Beginning in the fall of 2000, ACL made periodic payments to the EAF Agent’s company 
+for his provision of local labor on the larger Egyptian F-16 Depot Proj ect.  The EAF Agent 
+submitted monthly invoices to ACL for these services and included in these invoices were the 
+agent’s own expenses as “program manager” on the project with compensation varying between 
+$4,300 and $11,100 per month.  This compensation was separate from the consulting fees ACL 
+4 Around this time, UIC’s legal department first approved the retention of the EAF Agent as ACL’s agent for 
+the Egyptian Depot Project, despite knowing that ACL had already been using the EAF Agent as its agent without 
+prior approval, and despite also knowing that the EAF Agent’s existing agency agreement did not conform to UIC’s 
+policies prohibiting contingent arrangements on government contracts. 
+5 “Follow on support” refers to a contract modificati on to permit ACL’s continuing to assist the EAF with 
+the new aircraft maintenance depot once the primary work constructing the depot was complete. 
+4
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+ 
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+paid to the agent, which by August of 2000 ha d totaled over $434,000.  However, because ACL 
+rolled the EAF Agent’s subcontract labor expenses into ACL’s submission to the U.S. Air Force 
+for reimbursement of its aggregate material costs on the Egyptian F-16 Depot Project, ACL 
+routinely was late in making payment to the EAF Agent’s company under the labor subcontract. 
+10. By mid-2001 ACL had satisfied its re maining obligations under the consulting 
+agreement executed with the EAF Agent in November 1999, and it was not renewed.  However, as 
+articulated in an e-mail from the EAF Agent in  June 2001, ACL’s President had promised “to 
+continue paying us the consultant fee either through the service contract or any other way.”  As a 
+result, from mid-2001 through 2002, the EAF Agent regularly contacted ACL’s President to 
+request a variety of payments, a portion of whic h related to reimbursement to the EAF Agent’s 
+company for the legitimate provisi on of local labor on the Projec t, and a portion of which were 
+requests for additional funds in circumstances that strongly indicated they would be used to make 
+illicit payments.  ACL’s President approved payments for additional funds, and he also knew that 
+the EAF Agent charged ACL for his subcontract labor at a rate that enabled the agent to maintain a 
+cushion between what he paid the project’s local employees and what he received from ACL; this 
+cushion was on top of the agent’s own salary as “project manager” of the subcontract labor.     
+C. Illicit Payments Tied to CETS Contract
+ (i) Improper payments through cushion in the EAF Agent’s invoices 
+11. During early 2001, ACL targeted a new contract, known as CETS, which was 
+related to the Egyptian F-16 Depot Project.  The CETS contract involved providing personnel for 
+technical assistance on-site at Helwan Air Force Base in Cairo, Egypt, where the depot was being 
+constructed, so that EAF personnel could get hand s-on training to do testing and make repairs to 
+their aircraft.  The EAF Agent assisted ACL with obtaining this contract add-on, and in August 
+2001, ACL learned that the EAF had submitted to the U.S. Air Force its recommendation that ACL 
+be awarded a “sole source” contract for the CETS project.  
+12. In December 2001, months before the CETS project would be officially awarded to 
+ACL, the EAF Agent e-mailed ACL’s President te lling him that ACL could expect the formal 
+award of CETS in the near future because the EAF Agent had “succeeded to make the [EAF] give 
+all the pressure on the USAF to finalize the sole source . . . .”  The EAF Agent then added, “[i]t is 
+very important to start giving motivation that we di scussed to give it before the year end.  It was 
+better to give it before the feast but we cant [sic] do this now.”  To help provide the “motivation,” 
+the EAF Agent requested an adva nce of funds separate and apar t from payments due on his 
+invoices under his local labor subcontract.  Although no separate payments were made by ACL at 
+the time, within a week, at the direction of ACL’s Presid ent, ACL wired the EAF Agent 
+approximately $114,000 against invoices received from the agent for labor subcontract services.   
+13. In January 2002, the EAF Agent again emailed ACL’s President requesting funds 
+to cover due invoices, plus additional funds to “secure our team loyalty . . . as you have started to 
+have some doubts about ou[r] commitment with them.”  When ACL had not forwarded any new 
+money to the EAF Agent by late February 2002, the EAF Agent sent another more pressing e-mail 
+to ACL’s President:  “Congratulations on the CETS contract.  Thank[] God that our key persons 
+5
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+are still on their position till now. We are now in a ve ry critical situation to really get the benefit 
+out [sic] this contract.  We s hould satisfy our people and really  we can not do that from our 
+resources as we used to do before.”  The EAF Agent then asked for an “urgent response” from 
+ACL’s President regarding a list of payment requests, including past due invoices for his labor 
+subcontract work, a separate advance payment of $300,000, a “CETS lump Sum Payment of 50% 
+from our 8% fee from the contract value as agreed before,” and “[c]ontinuing a consultation 
+monthly fee for the remaining 50%.”  In Marc h 2002, at the ACL’s Pres ident’s direction, ACL 
+wired the EAF Agent amounts due on his past-due labor subcontract invoices, although it did not 
+advance him monies for his separate funding requests outlined in his February e-mail. 
+14. On April 4, 2002, after having received  payments from ACL on his past due 
+invoices but not having received any additional monies, the EAF Agent e-mailed another payment 
+request to ACL’s President. This time, the EAF Agent told ACL’s President that he was planning 
+to use the additional money “to motivate people and secure our business specially (sic) the CETS.” 
+(Emphasis in original).  Making it clear that the agent was distinguishing between payments to him 
+to “secure our business” and payments to him for his provision of subcontract labor, the EAF 
+Agent added “[a]lso please bare [sic] in mind that the due invoices for domestic services reached 
+US $272,120” (referring to subcontract labor invoices submitted to ACL for February and March 
+2002).  Later that day, and without questioning th e EAF Agent’s stated purpose for the funds, 
+ACL’s President responded that ACL would “advance” monies to the agent, but would offset the 
+payment against pending labor subcontractor invoices for services provided by the EAF Agent; 
+ACL paid the EAF Agent four days later. 
+15. On April 30, 2002, ACL received the official award of the CETS subcontract from 
+the U.S. Air Force’s designated contractor Aeronautical Radio, Incorporated (“ARINC”), with an 
+initial funding to ACL in the amoun t of $500,000.  Internal documen ts reflect that, around this 
+time, ACL had estimated that th e total potential contract revenues for the CETS program, if 
+awarded, were approximately $8 million. 
+(ii) Improper $100,000 “advance” payment to the EAF Agent 
+16. On June 4, 2002, the EAF Agent again re quested monies separate and apart from 
+the regular payments ACL was making to him on his labor subcontract invoices.  Noting the recent 
+success regarding ACL’s receipt of sole source letters for the CETS project and a separate project 
+for a surface treatment facility (known as the “STF” project), the EAF Agent added “our people 
+should be awarded before the next PMR,
+6 [sic] it is very important to keep the pressure to get all 
+the allocated budget of the US$8M” (referring to the anticipated total value of the CETS contract). 
+Apparently frustrated that ACL had offset its prior payments to him against the agent’s invoices for 
+subcontract labor, the EAF Agent specifical ly requested that these new monies not  be deducted 
+from his labor invoices; rather, the EAF Agent requested that ACL send “at least US$200,000 
+PMRs were two weeks of substantive meetings held every six months, one each in the United States and in 
+Egypt every year, to discuss the progress, status and recommendations for pending or new projects related to the 
+Egyptian F-16 Depot Project.  PMRs typically were attended by representatives of the U.S. Air Force, the EAF, the 
+U.S. Embassy and the Project’s principal contractors, including ACL, and presented the EAF with the opportunity to 
+make its preferences for particular contracts, or particular  contractors, known in-person to the U.S. Air Force.  The 
+next PMR was scheduled to take place in Sacramento, California in July 2002. 
+6
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+before the next PMR to fulfil [sic] the present commitment . . . .  This will help keep[] the pressure 
+to get all the CETS budget as well as the [surface treatment facility project] which is [in] the final 
+phase.” ACL’s President responded in an e-mail by noting that ACL included $40,000 per month 
+for the EAF Agent’s services un der the CETS contract which “w ill permit you to meet all your 
+obligations.” Since the initiation of the CETS  contract had been delayed, however, ACL’s 
+President suggested that ACL could pay the EAF Agent an advance under the existing integration 
+contract. 
+17. Two days later on June 6, 2002, the EA F Agent again emailed ACL’s President, 
+this time requesting approximately $200,000 in pa st due labor subcontract invoices and an 
+additional $100,000 advance payment; the EAF Agent added that “[t]his could help us fulfil [sic] 
+the commitment . . . .”  ACL’s President responded by instructing the EAF Agent to send ACL a 
+$100,000 invoice, and to type on the invoice, among other things, that “THIS INVOICE IS FOR 
+ADVANCE PAYMENT OF RENTAL OF EQUIPMENT AND CONTRACTING OF 
+MATERIAL AND SERVICES UNDER THE F-16 EAF DEPOT INTEGRATION CONTRACT” 
+(capitalization in original). There is no indication in the correspondence between ACL’s President 
+and the EAF Agent, or elsewhere, that there was any actual need for “rental equipment” or 
+“advance” payments for other of the agent’s services given that he billed for his labor services in 
+the ordinary course of business.     
+18. On June 10, 2002, bypassing typical pr otocol that required the EAF Agent to 
+submit his labor subcontract invoices first to AC L’s on-site project manager for his review and 
+approval, the EAF Agent e-mailed an invoice directly to ACL’s President using the language 
+specified by ACL’s President.  That day, ACL’s President affixed his signature to the invoice and 
+authorized the $100,000 advance payment to the agent.  A UIC corporate official located at AAI’s 
+headquarters’ in Maryland subsequently approved this payment without inquiring into the purpose 
+or justification for the payment.  Relying on th e invoice drafted at the ACL President’s direction, 
+ACL then inaccurately recorded the $100,000 adva nce on its books as a bona fide “material” 
+expense of the Egyptian F-16 Depot Project; inst ead, the $100,000 advance was paid to the EAF 
+Agent based on a concocted invoice, and for reasons that were neither transparent nor based on the 
+provision of any identifiable legitimate services. 
+(iii) Improper $50,000 “marketing” payment to the EAF Agent 
+19. In the Fall of 2002, the EAF Agent continued to press ACL’s President for 
+additional payments that had no relation to his labor subcontract services, suggesting in an e-mail 
+that the new monies were needed to meet “comm itments” and to “keep the momentum.”  This 
+language was consistent with that in prior e-mails, which had suggested that the EAF Agent would 
+use such monies to influence officials who c ould recommend the award of business to ACL. 
+ACL’s President agreed to provide the agent with additional funds – this time through a purported 
+“marketing contract.”  By using this vehicle to provide the EAF Agent with funds, ACL’s 
+President caused ACL to pay the EAF Agent from ACL’s funds outside those associated with the 
+Egyptian F-16 Depot Project.  In December 2002, the EAF Agent sent an invoice for $50,000 to 
+ACL for “[m]arketing service for the period from July 02 – December 02,” and ACL’s President, 
+without further inquiry as to the nature of the services provided, authorized payment of the invoice. 
+7
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+ACL neither created nor executed any new marketing agreement with the EAF Agent that would 
+cover this $50,000 payment.       
+20. Between the fall of 2002 and 2004, ACL was awarded an additional five CETS 
+funding contracts (or “modifications”) worth a total of $4.7 million.  Combined with ACL’s initial 
+funding for the contract received in late Ap ril 2002, ACL received total gross revenue of 
+approximately $5.3 million, and net profits of $267,571, for its work on the CETS contract.   
+D. Fraudulent “Repayment” of $100,000 Advance 
+21. In January 2004, ACL’s President traveled to Egypt to visit the site of the Egyptian 
+F-16 Depot Project. During this trip, ACL’s President attended a meeting with the EAF Agent, 
+ACL’s Vice President and the company’s on-site project manager at the project manager’s 
+apartment in Cairo.  During this meeting, ACL’s President indicated that ACL would forgive the 
+$100,000 debt the EAF Agent owed the company as a result of the advance payment made to the 
+Agent in June 2002. Rather th an forgive the debt in a direct  and transparent manner, ACL’s 
+President approved a plan for the agent to submit false invoices to ACL to make it appear that the 
+agent had repaid the $100,000 advance.  The sc heme ACL’s President approved would have the 
+agent “repay” the $100,000 advance in ten equal installments  by putting a $10,000 credit on the 
+EAF Agent’s labor subcontract invoices for a ten month period.  To offset any real repayment of 
+the debt, ACL’s President also approved the EAF Agent’s expenses to be inflated on each of the 
+ten invoices at least by the amount of the $10,000 credit. 
+22. In March 2004, the scheme was put into effect.  At th at time, ACL first received 
+subcontract labor invoices from the EAF Agent covering the January 2004 service period, which 
+reflected a $10,000 credit for “Advance pay back.”  The same January 2004 invoice showed that 
+the agent’s aggregate cost for his subcontract labor had increased by slightly more than $10,000 as 
+compared to his aggregate labor cost for the sa me work for December 2003.  The EAF Agent’s 
+increase in labor costs, as shown by the invoices, was directly attributable to a categorical increase 
+in the monthly salary ra tes for each type of labor provided to  the Egyptian F-16 Depot Project 
+(aggregating to slightly more than $10,000).  For the next nine months, through the October 2004 
+service period, the EAF Agent’s invoices reflected the monthly $10,000 credit deducted from his 
+total costs, until the debt was “repaid.” For seven of those nine months, until September 2004, the 
+EAF Agent’s invoices also reflected the inflated labor rates.  In September 2004, in response to a 
+new initiative by the U.S. Air Force to contain ACL’s costs on the project, ACL required the EAF 
+Agent’s rates to be reduced to approximately their 2003 levels.      
+E. Internal Controls Violations 
+23. During the relevant period, UIC lacked in ternal controls sufficient to detect or 
+prevent improper payments such as those made by ACL to the EAF Agent.  In fact, throughout the 
+duration of the Egyptian F-16 Depot Project, ACL’s President was able  to authorize large 
+payments to the EAF Ag ent, including the improper $100,000 advance payment to  the agent in 
+June 2002 and the $50,000 “marketing services” payment later that year, without meaningful 
+substantiation or supporting documents.  In fact, from 1997 through 2002, ACL paid the EAF 
+8
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+ 
+Agent in total approximately $564,000 for “consulting” or “marketing” services without 
+meaningful records detailing the services being provided.   
+24. ACL’s President was able  to approve payments to the EAF Agent as early as 
+September 1997 in the absence of a written contract  with the agent, which ACL’s President first 
+executed with the agent in March 1998, and while  maintaining no written record of having 
+conducted any due diligence. Though UIC instituted policies in late 1999 requiring any employee 
+wishing to engage the services of a foreign agen t to submit due diligence forms for the agent to 
+corporate counsel prior to retaining such agent, ACL did not submit such forms until 2002; even 
+then, the due diligence forms were largely completed by the EAF Agent himsel f.  In addition, 
+though UIC’s regulatory compliance policy in place as early as 1997 required consulting contracts 
+to include certain representations, including, but not limited to, that (a) the consultant was aware of 
+the FCPA; (b) that UIC’s auditors and accountants  would be granted access to the consultant’s 
+books and records; and (c) that the consultant submit a signed statement of continuing FCPA 
+compliance prior to each commission or other compensation payment to the consultants, it was not 
+until 2003 that the EAF Agent operated under an agreement with ACL that contained any of these 
+representations and, even then, the provision requiring open access to the consultant’s books and 
+records still was not included. 
+25. UIC’s corporate legal department in 1999 approved ACL’s retention of the EAF 
+Agent.  Such approval was given even though the new agreement with the EAF Agent did not 
+contain FCPA provisions required by corporate policy.  Moreover, the legal department approved 
+the agent despite learning that ACL had already been using the EAF Agent without prior approval 
+and that the EAF Agent’s existing agency agreem ent did not conform to UIC’s existing policies 
+prohibiting contingent arrangements on government contracts.   
+Legal Analysis 
+26. As described above, between late 2001  and 2002, ACL’s President authorized 
+multiple illicit payments to the EAF Agent in connection with ACL’s efforts to receive new 
+business related to the CETS project of the Egyptian F-16 Depot Project.  In light of: (i) the EAF’s 
+Agent’s multiple e-mails to ACL’s President dur ing the relevant period, in which the agent 
+requested monies from ACL while strongly indicating that such monies would be used, in whole or 
+in part, to pay military officials who could influence the award of  business to ACL; (ii) the ACL 
+President’s authorization of payments to the EAF Agent in the face of such requests; (iii) the ACL 
+President’s authorization of the creation of fraudulent invoices to conceal that, at his direction, the 
+June 2002 $100,000 advance to the agent had b een forgiven; and (iv) the ACL President’s 
+knowledge that, during the releva nt period, ACL was seeking the award of the CETS business, 
+ACL’s President knew, or consciously disregarded the high probability, that the EAF Agent would 
+offer, provide or promise the payments he had authorized (or a portion thereof) to EAF officials for 
+the purpose of influencing such officials to obtain or retain business for UIC through ACL.  As a 
+result, ACL was awarded the CETS contract and received ill gotten net profits associated with the 
+CETS contract of $267,571.      
+27. During the relevant period, ACL was an indirect, wholly owned subsidiary of UIC 
+based in California.  ACL’s President authorized and directed multiple illicit payments to the EAF 
+9
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+Agent to obtain or retain busin ess for UIC.  ACL’s President was ACL’s highest ranking officer 
+and had a direct reporting line to the CEO of UI C (who also acted as th e CEO of UIC’s direct, 
+wholly owned subsidiary and ACL’s parent corporation, AAI Corporation).  UIC, in its Forms 10-
+K and annual reports, routinely listed ACL’s President as a member of UIC’s “senior 
+management.”  Additionally, as discussed above, UIC’s corporate legal department approved the 
+retention of the EAF Agent despite  a lack of documented due d iligence and despite an agency 
+agreement that violated corporate policy. Mo reover, a UIC corporate official approved the 
+$100,000 advance payment to the EAF Agent in June 2002. 
+28. As a result of the conduct describe d above, UIC violated Section 30A of the 
+Exchange Act, which prohibits any issuer with a class of securities registered pursuant to Section 
+12 of the Exchange Act, in order to obtain or retain business, from giving, or authorizing the giving 
+of, anything of value to any foreign official for purposes of influencing the official or inducing the 
+official to act in violation of his or her lawful duties, or to secure any improper advantage; or to 
+induce a foreign official to use his influence wi th a foreign government or foreign governmental 
+instrumentality to influence any act or decision of such government or instrumentality. 
+29. As a result of the conduct described above, UIC violated Section 13(b)(2)(A) of the 
+Exchange Act, which requires reporting companies to make and keep books, records, and accounts, 
+which, in reasonable detail, accurately and fairly reflect their transactions and disposition of their 
+assets. 
+30. As a result of the conduct described above, UIC violated Section 13(b)(2)(B) of the 
+Exchange Act, which requires all reporting companies to devise and maintain a system of internal 
+accounting controls sufficient to provide reasonable assurances that transactions are recorded in 
+accordance with management’s gene ral or specific authorization; transactions are recorded as 
+necessary to permit preparation of financial stat ements in conformity w ith generally accepted 
+accounting principles or any other criteria applicable to such statements, and to maintain 
+accountability for assets; access to assets is perm itted only in accordance with management’s 
+general or specific authorization; and the record ed accountability for assets is compared with the 
+existing assets at reasonable intervals and a ppropriate action is taken with respect to any 
+differences. 
+UIC’s Remedial Efforts 
+In determining to accept the Offer, the Commission considered remedial acts promptly 
+undertaken by Respondent and cooperation afforded the Commission staff. 
+IV. 
+In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in Respondent UIC’s offer. 
+Accordingly, it is hereby ORDERED that, pursuant to Section 21C of the Exchange Act: 
+10
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+A. Respondent UIC cease a nd desist from committing or causing any violations and 
+any future violations of Sections 30A, 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. 
+B. IT IS FURTHERED ORDERED that Respondent shall, within 10 days of the entry 
+of this Order, pay disgorgement of $267,571. 00 and prejudgment interest of $70,108.42 to the 
+United States Treasury. If timely payment is not made, additional interest shall accrue pursuant to 
+SEC Rule of Practice 600. Such payment shall be: (A) made by United States postal money order, 
+certified check, bank cashier's check or bank money order; (B) made payable to the Securities and 
+Exchange Commission; (C) hand-delivered or mailed to the Office of Financial Management, 
+Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3,  
+Alexandria, VA 22312; and (D) submitted under cover letter that  identifies United Industrial 
+Corporation as a Respondent in these proceedings, the file number of these proceedings, a copy of 
+which cover letter and money order or check shall be sent to Charles E. Cain, Division of 
+Enforcement, Securities and Exchange Comm ission, 100 F St., N.E., Wa shington, D.C. 20549-
+5553. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+11
+ 
\ No newline at end of file
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+                                                 
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+ 
+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No.  60017 / June 1, 2009 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 2983 / June 1, 2009 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13500 
+In the Matter of 
+SHARLENE ABRAMS, CPA 
+Respondent. 
+ORDER INSTITUTING ADMINISTRATIVE 
+PROCEEDINGS PURSUANT TO RULE 
+102(e) OF THE COMMISSION’S RULES OF 
+PRACTICE, MAKING FINDINGS, AND 
+IMPOSING REMEDIAL SANCTIONS 
+I. 
+The Securities and Exchange Commission (the “Commission”) deems it appropriate and in 
+the public interest that public administrative proceedings be, and hereby are, instituted against 
+Sharlene Abrams (the “Respondent” or “Abrams”) pursuant to Rule 102(e)(3) of the Commission’s 
+Rules of Practice.
+1 
+II. 
+In anticipation of the institution of these pr oceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) whic h the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+Rule 102(e)(3)(i) provides, in relevant part, that: 
+The Commission, with due regard to the public  interest and without preliminary hearing, 
+may, by order, . . . suspend from appearing or practicing before it any . . . accountant . . . who has 
+been by name . . . permanently enjoined by any c ourt of competent jurisdiction, by reason of his 
+or her misconduct in an action brought by the Co mmission, from violating or aiding and abetting 
+the violation of any provision of the Federal secu rities laws or of the rules and regulations 
+thereunder. 
+1 
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+herein, except as to the Commission’s jurisd iction over her and the subject matter of these 
+proceedings, and the findings contained in Sect ion III.3. below, which are admitted, Respondent 
+consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Rule 102(e) 
+of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions (the 
+“Order”), as set forth below. 
+III. 
+On the basis of this Order and Respondent’s Offer, the Commission finds that: 
+1. Sharlene Abrams, age 51, is a resident of the state of Nevada.  Abrams served as Chief 
+Financial Officer, Vice-President of Finance and Administration, and Secretary of Mercury 
+Interactive Corporation (“Mercury”) between November 1993 and November 2001.  Prior to her 
+tenure at Mercury, she was employed at Price Wa terhouse LLP, rising to the position of senior 
+manager.  Abrams was, beginning on or about July 1, 1981, a CPA licensed in the state of 
+Massachusetts, but that license lapsed no later than June 30, 2003 and she is no longer licensed as a 
+CPA in any state. 
+2. Mercury was acquired by the Hewlett-Pack ard Company (“HP”) by an agreement 
+consummated on November 8, 2006, and is now Mercury Interactive, LLC, a non-trading 
+subsidiary of HP.  Prior to the consummation of the merger, Mercury was a corporation 
+headquartered in Mountain View, California, and organized under the laws of Delaware.  Mercury 
+made software used to test and optimize information technology systems and software 
+applications.  At the time of the conduct described in this Order, the company’s common stock was 
+registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 
+(“Exchange Act”) and listed on the NASDAQ under the symbol MERQ. 
+3. On March 24, 2009, a final j udgment was entered by consent against Abrams in the 
+civil action entitled Securities and Exchange  Commission v. Mercury Interactive, et. al, Civil 
+Action Number C 07-2822 (JF), in the United States District Court for the Northern District of 
+California.  The final judgment permanently enjoined Abrams from future violations of Section 
+17(a) of the Securities Act of 1933, Sections 10 (b), 13(b)(5), 14(a), and 16(a) of the Securities 
+Exchange Act of 1934 (“Exchange Act”), and Exchange Act Rules 10b-5, 13a-14, 13b2-1, 13b2-2, 
+14a-9, and 16a-3, and from  aiding and abetting violations of Section 13(a), 13(b)(2)(A), and 
+13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 13a-13.  The final 
+judgment also prohibited Abrams from acting as an officer or director of any issuer that has a class 
+of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports 
+pursuant to Section 15(d) of the Exchange Ac t, and ordered her to pay disgorgement of 
+$2,287,914, prejudgment interest in the amount of $112,086, and a $425,000 civil penalty. 
+4. The Commission’s Complaint alleged, among other things, that no later than 1997, 
+Abrams engaged in a fraudulent scheme with Merc ury’s former Chief Executive Officer, former 
+General Counsel and others to grant undisclosed, in-the-money stock options to themselves and 
+others, by backdating stock option grants to coin cide with historically low closing prices for 
+Mercury’s stock. According to the Complaint, Abrams’ fraudulent misconduct caused Mercury, 
+-2-
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+between 1997 and 2005, (i) to f ile materially false and misleading financial statements that 
+materially understated its compensation expenses and materially overstated its quarterly and annual 
+net income and earnings per share,  and (ii) to make disclosures in its periodic filings and proxy 
+statements that falsely portrayed Mercury’s options as having been granted at exercise prices equal 
+to the fair market value of Me rcury’s common stock on the date of  the grant.  According to the 
+Complaint, Abrams also misled Mercury’s outside auditors in an attempt to hide the scheme.  The 
+Complaint alleged that Abrams, and others, filed Forms 3 and 4 with the Commission that 
+contained false or misleading statements with regard to the options’ grant dates and the exercise 
+prices. The Complaint also alle ged that from 1998 through 2001, Abrams and others fraudulently 
+backdated the dates of option exercises of certain  senior Mercury officers, including Abrams, to 
+low-points of the company’s stock price, in order to minimize the officers’ taxable gain on exercise 
+or receive more favorable long-term capital gains treatment on profits they earned upon the later 
+sale of the stock acquired through exercise.  The benefits reaped from the backdated exercises were 
+concealed through fraudulent proxy disclosures and in Forms 4 filed with the Commission. The 
+Complaint further alleged that during at least 1997 through 2001, Abrams participated in a scheme 
+to manipulate Mercury’s reported earnings per share (“EPS”) by holding shipping of its products 
+once revenue targets for a period had been achieved, pushing the recognition of the revenue into 
+subsequent periods, while concealing these pr actices from the public through fraudulent and 
+misleading disclosures and omissions.  The Complaint additionally alleged that between 1999 and 
+2005, Abrams and others particip ated in the fraudulent structur ing of overseas employee stock 
+option exercise transactions to conceal the variable accounting consequences of those transactions, 
+causing the company to fail to report the appr oximately $24 million in  compensation expense 
+required under variable accounting.  
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent Abrams’ Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+Abrams is suspended from appearing or practicing before the Commission as an 
+accountant. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+-3-
\ No newline at end of file
diff --git a/raw/aaer/2009/AAER-2991.txt b/raw/aaer/2009/AAER-2991.txt
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--- /dev/null
+++ b/raw/aaer/2009/AAER-2991.txt
@@ -0,0 +1,1394 @@
+
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21087 / June 17, 2009 
+
+ Accounting and Auditing Enforcement Release No. 2991 / June 17, 2009 
+
+  SEC v. Jerry D. Cash and David E. Grose , Civil Action No. 5:09-CV-639 (W.D. Oklahoma, June 17, 2009). 
+
+ SEC CHARGES FORMER QUEST EXECUTIVES WITH FRAUDULENTLY CONCEALING MILLIONS OF DOLLARS OF SELF-DEALING 
+
+ On June 17, 2009, the Securities and Exchange Commission charged two Oklahoma City residents with securities fraud and other violations for a scheme in which they misappropriated to themselves millions of dollars from Quest Resource Corporation, Quest Energy Partners, L.P. and their affiliates while they were executives at the company. 
+
+ The SEC alleges that Quest's then-chief executive officer and board chairman Jerry D. Cash and then-chief financial officer David E. Grose caused Quest to make a series of transfers to a separate company that Cash controlled. Cash tried to conceal the transfers by, among other things, ostensibly transferring the funds back to Quest at the end of each quarter. The SEC alleges, however, that Cash took progressively greater amounts from Quest over time that he used to support his lavish lifestyle, including spending more than $5 million on his Oklahoma City mansion. Grose was complicit in Cash's wrongdoing by, among other things, initiating wire transfers to Cash's company and creating a false cover story to explain the transfers to Quest's employees and auditors. 
+
+ The SEC's enforcement action was filed in U.S. District Court in Oklahoma City concurrently with criminal charges against Grose filed by the U.S. Attorney's Office for the Western District of Oklahoma. 
+
+ The SEC alleges that the scheme, which began in June 2004, collapsed in August 2008 after other Quest executives discovered and began questioning the legitimacy of the transfers. By that time, Cash had misappropriated a total of $10 million from Quest. Cash subsequently resigned from Quest and Grose was terminated. 
+
+ According to the SEC's complaint, Grose also took advantage of Quest's lax internal controls to siphon more than $1.8 million from the company for his own benefit. From December 2005 through August 2008, one of Quest's equipment vendors kicked back approximately $850,000 to Grose from equipment purchases that Quest had made. The SEC also contends that Grose used $1 million of Quest's money to fund his personal investment in a small Oklahoma start-up company. 
+
+ The SEC's complaint states that none of these transactions were disclosed in the multiple quarterly and annual filings Quest made with the SEC during the periods in question, even though Cash and Grose each certified in these filings that they had disclosed any fraud involving management. Cash and Grose also signed numerous Quest filings in which such related party transactions were required to be disclosed, but were not. Lastly, the SEC claims that Cash and Grose signed multiple representation letters to Quest's auditor attesting that all related party transactions had been disclosed and that there had been no fraud involving management. 
+
+ The SEC's complaint charges, among other things, that Cash and Grose violated the anti-fraud provisions of the Securities Act of 1933 and the anti-fraud, internal controls, proxy statement, record-keeping and reporting provisions of the Securities Exchange Act of 1934. The SEC seeks injunctive relief, financial penalties, disgorgement of ill-gotten proceeds with prejudgment interest, and permanent bars from serving as officers or directors of public companies. 
+
+ The SEC appreciates the assistance of the U.S. Attorney's Office for the Western District of Oklahoma, the Federal Bureau of Investigation and the Oklahoma Department of Securities. The SEC's investigation continues. 
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diff --git a/raw/aaer/2009/AAER-2995.txt b/raw/aaer/2009/AAER-2995.txt
new file mode 100644
index 0000000000000000000000000000000000000000..bb6d4f10d734f75a30c33b5fab83dafaddcf4f3f
--- /dev/null
+++ b/raw/aaer/2009/AAER-2995.txt
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+        Ulticom, Inc. and Lisa M. Roberts
+       
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21091 / June 18, 2009 
+
+ Accounting and Auditing Enforcement Release No. 2995 / June 18, 2009 
+
+  Securities and Exchange Commission v. Ulticom, Inc. , United States District Court for the Eastern District of New York, Civil Action No. 09-CV-02589-JS-ARL (E.D.N.Y. June 18, 2009) 
+
+  Securities and Exchange Commission v. Lisa M. Roberts , United States District Court for the Eastern District of New York, Civil Action No. 09-CV-02590-LDW-AKT (E.D.N.Y. June 18, 2009) 
+
+ SEC SUES ULTICOM AND FORMER ULTICOM EXECUTIVE FOR FRAUDULENT OPTIONS BACKDATING AND EARNINGS MANAGEMENT SCHEMES 
+
+ The Securities and Exchange Commission today filed settled civil charges against Ulticom, Inc. and a former executive, Lisa M. Roberts, for two separate fraudulent schemes, involving improper options backdating practices and certain improper accounting practices. The Commission's Complaint against Ulticom alleges the misconduct began in 1996, when Ulticom was a wholly-owned subsidiary of Comverse Technology, Inc. ("Comverse"), and continued after Ulticom became a publicly-traded company, while still majority-owned by Comverse, in 2000. 
+
+ According to the Commission's Complaint, between April 2000 and April 2004, Ulticom improperly recorded the grant dates of eight company-wide grants of employee stock options. The Complaint alleges: 
+
+   Ulticom backdated four of these option grants to coincide with near-term lows in the company's stock price. The options in these four grants were "in-the-money," meaning the exercise prices of the backdated Ulticom options were less than the company's stock price on the date the grants were formally approved by Ulticom's Stock Option Committee.  
+
+    The backdating allowed Ulticom to award employees disguised in-the-money options, without recording a corresponding non-cash compensation expense for the in-the-money portion of the option grant in conformity with U.S. Generally Accepted Accounting Principles (GAAP).  
+  The Commission's Complaint alleges that Ulticom's second scheme involved certain long-standing and improper accounting practices that were not in conformity with GAAP. Specifically, the Complaint alleges: 
+
+   From 1996 until its initial public offering in April 2000, Ulticom made improper adjustments to its reserve accounts in order to stockpile reserves. In its first fiscal year following its IPO, Ulticom released some of these improper excess reserves into income.  
+
+    Without these improper releases, the company would not have met Wall Street analysts' earnings estimates.  
+
+    In addition, from 1998 to April 2001 Ulticom improperly deferred to subsequent periods the recognition of revenues from certain shipments and service contracts between itself and another subsidiary of Comverse.  
+  According to the Complaint, as a result of these two schemes, Ulticom filed materially false and misleading financial statements with the Commission that misstated the company's revenues, expenses, liabilities, net income, and earnings per share and made other materially false and misleading disclosures on reports filed with the Commission through April 15, 2005, when it filed its 2004 annual report. In a related Complaint, the Commission also brought suit against Roberts for her alleged participation in these two schemes while serving in various senior accounting and management positions at Ulticom, including Chief Financial Officer ("CFO"), and for misleading the company's auditors in furtherance of the accounting fraud. 
+
+ Without admitting or denying the allegations of the Commission's Complaint, both Ulticom and Roberts have consented to the entry of final judgments permanently enjoining them from violating the antifraud, reporting, record-keeping, and internal controls, and other provisions of the federal securities laws. Specifically, the proposed final judgment against Ulticom would permanently enjoin it from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Exchange Act Rules 13a-1, 13a-11, 13a-13, and 14a-9. In accepting the settlement offer, the Commission considered, among other things, Ulticom's extensive cooperation in the Commission's investigation. 
+
+ The proposed final judgment against Roberts would permanently enjoin her from violating Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act, Exchange Act Rules 10b-5, 13b2-1, and 13b2-2, and for aiding and abetting Ulticom's violations of Exchange Act Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) and Exchange Act Rules 13a-1, 13a-11, 13a-13, and 14a-9. In addition, Roberts has agreed to pay a $25,000 civil monetary penalty and has consented to an order that would prohibit her from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act. As part of her settlement with the Commission, and following the entry of the proposed final judgment, Roberts has consented to the entry of an administrative order, pursuant to Rule 102(e)(3) of the Commission's Rules of Practice, suspending her from appearing or practicing before the Commission as an accountant, with the right to reapply after five years. 
+
+ The settlements are subject to the approval of the United States District Court for the Eastern District of New York. 
+
+ The Commission today also announced the filing of settled civil charges against Comverse for fraudulent options backdating and improper accounting practices, including earnings management. For further information, see Litigation Release Nos.  19796  (August 9, 2006),  19878  (October 24, 2006),  19964  (January 10, 2007), and 21091 (June 18, 2009). 
+
+ The Commission previously charged former Comverse Chairman and CEO Jacob "Kobi" Alexander, former Comverse Chief Financial Officer David Kreinberg, and former Comverse General Counsel William F. Sorin. Kreinberg and Sorin later reached independent settlements with the Commission. 
+
+ 
+
+ 
+   SEC Complaint v. Ulticom    SEC Complaint v. Roberts  
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+              L. Dennis Kozlowski, Mark H. Swartz, and Mark A. Belnick
+           
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+        L. Dennis Kozlowski, Mark H. Swartz, and Mark A. Belnick
+       
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21129 / July 14, 2009 
+
+ Accounting and Auditing Enforcement Release No. 3010 / July 14, 2009 
+
+  Securities and Exchange Commission v. L. Dennis Kozlowski, Mark H. Swartz, and Mark A. Belnick , 02-CV-7312 (RWS) (S.D.N.Y. filed Sept. 12, 2002) 
+
+ FORMER TYCO EXECUTIVES L. DENNIS KOZLOWSKI AND MARK H. SWARTZ SETTLE SEC FRAUD ACTION 
+
+ On July 14, 2009, the Securities and Exchange Commission (the Commission) filed settled Final Judgments against L. Dennis Kozlowski, the former Chairman and Chief Executive Officer of Tyco International Ltd. (Tyco), and Mark H. Swartz, the former Chief Financial Officer of Tyco, in the Commission's action arising from their violations of the federal securities laws while officers of that company. The Final Judgments permanently enjoin Kozlowski and Swartz from violating, or aiding and abetting violations of, the antifraud, proxy statement, periodic reporting, books and records, and lying to auditors provisions of the federal securities laws and permanently bar each of them from serving as an officer or director of a public company. 
+
+ The Commission's complaint alleges that, from 1996 until June 2002, Kozlowski and Swartz failed to disclose hundreds of millions of dollars in executive indebtedness, executive compensation, and related party transactions that they received while at Tyco. As alleged in the complaint, Kozlowski and Swartz granted themselves undisclosed low interest and interest-free loans from the company that they regularly used for personal expenses and other unauthorized purposes. They repeatedly arranged to have many of these loans forgiven by Tyco. They also engaged in undisclosed related party transactions. In violation of the federal securities laws, Kozlowski and Swartz failed to disclose their indebtedness, loan forgiveness, and related party transactions and caused Tyco to fail to disclose those items in its proxy statements and annual reports. 
+
+ Without admitting or denying the allegations in the Commission's complaint, Kozlowski and Swartz consented to the entry of Final Judgments that will permanently enjoin each of them from violating Section 17(a) of the Securities Act of 1933 (Securities Act), Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rules 10b-5, 13b2-1, and 13b2-2, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 14(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 14a-9. The proposed Final Judgments also bar Kozlowski and Swartz, pursuant to Section 20(e) of the Securities Act and Section 21(d)(2) of the Exchange Act, from serving as officers or directors of a public company. The proposed Final Judgments are subject to the approval of the United States District Court for the Southern District of New York. 
+
+ In 2005, a New York State court sentenced Kozlowski and Swartz to prison terms of 8 1/3 to 25 years for their roles in the Tyco fraud. Pursuant to their criminal convictions, Kozlowski and Swartz also paid approximately $134 million in restitution to Tyco and criminal fines of $70 million and $35 million, respectively. On October 16, 2008, the New York Court of Appeals affirmed Kozlowski's and Swartz's convictions. On June 8, 2009, the United States Supreme Court denied a petition by Kozlowski and Swartz for a writ of certiorari. 
+
+ For further information about the Commission's action in  Securities and Exchange Commission v. L. Dennis Kozlowski, Mark H. Swartz, and Mark A. Belnick ,  see  Litigation Release No.  17722  (Sept. 12, 2002) and Litigation Release No.  19678  (May 1, 2006);  see also  Litigation Release No.  19657  (Apr. 17, 2006). 
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diff --git a/raw/aaer/2009/AAER-3011.txt b/raw/aaer/2009/AAER-3011.txt
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@@ -0,0 +1,1371 @@
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21136 / July 16, 2009 
+
+ Accounting and Auditing Enforcement Release No. 3011 / July 16, 2009 
+
+  Securities and Exchange Commission v. Mark T. Turkcan , 4:09-cv-00204 (CEJ) (E.D. Mo., filed Feb. 4, 2009) 
+
+ COMMISSION OBTAINS PERMANENT INJUNCTION AGAINST FORMER FIRST BANKS OFFICER MARK T. TURKCAN 
+
+ The Securities and Exchange Commission ("Commission") announced today that it obtained an order of permanent injunction ("Order") against Mark T. Turkcan, a former officer of First Banks, Inc., in the Commission's action against Turkcan in the United States District Court for the Eastern District of Missouri. Turkcan consented to the entry of the Order, which permanently enjoins him from, among other things, violating, or aiding and abetting violations of, the antifraud, periodic reporting, books and records, internal controls, and lying to auditors provisions of the federal securities laws and permanently bars him from serving as an officer or director of a public company. 
+
+ The Commission's complaint alleges that from at least 1990 through April 2008, Turkcan, a resident of Kirkwood, Missouri, carried out his scheme by secretly obtaining money from third-party brokerage firms through the surreptitious use of repurchase transactions, which are essentially collateralized loans, and improperly disguising the money obtained from those transactions as gains from trading mortgage-backed securities. According to the complaint, Turkcan circumvented First Banks' internal controls and concealed his scheme by lying to his staff and his superiors, falsifying and fabricating documents, and providing false and misleading information to First Banks and its outside auditor. 
+
+ Without admitting or denying the allegations in the complaint, Turkcan consented to entry of the Order that permanently enjoins him from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5, 13b2-1, and 13b2-2 promulgated thereunder, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 promulgated thereunder. The Order also bars Turkcan, pursuant to Section 20(e) of the Securities Act and Section 21(d)(2) of the Exchange Act, from serving as an officer or director of a public company. 
+
+ Previously, the honorable Judge Donald J. Stohr in  United States v. Mark Turkcan , 4:08CR428 (DJS) (E.D. Mo.), in connection with the scheme alleged in the Commission's action, sentenced Turkcan to a prison term of one year and one day and ordered him to pay restitution of nearly $25 million in connection with his pleading guilty to one felony count of misapplication of bank funds. The criminal case was prosecuted by the United States Attorney's Office for the Eastern District of Missouri. 
+
+ For further information about the Commission's action in  Securities and Exchange Commission v. Mark T. Turkcan ,  see  Litigation Release No.  20882  (Feb. 4, 2009). 
+
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+              Joel M. Arnold, Grant P. Graham, John M. Walker, and Richard L. Weston
+           
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+             
+        Joel M. Arnold, Grant P. Graham, John M. Walker, and Richard L. Weston
+       
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21148 / July 23, 2009 
+
+ Accounting and Auditing Enforcement Release No. 3018 / July 23, 2009 
+
+  SEC v. Joel M. Arnold, Grant P. Graham, John M. Walker, and Richard L. Weston , Civil Action No. 03-cv-0328 (D. Colo.) 
+
+ SEC ANNOUNCES FINAL DISPOSITIONS IN CASE INVOLVING ALLEGED IMPROPER ACCOUNTING PRACTICES AT QWEST COMMUNICATIONS INT'L 
+
+ The Securities and Exchange Commission ("Commission") announced today that on July 8, 2009, the United States District Court for the District of Colorado entered final judgments against Joel M. Arnold, Grant P. Graham, and Richard L. Weston. The entry of final judgments settles the Commission's claims against these individuals. Also, on the same date, the District Court granted the Commission's motion to dismiss all claims against John M. Walker. 
+
+ In its complaint in this matter, the Commission alleged improper accounting practices by the defendants at Qwest Communications International, Inc., a Denver telecommunications company, relating to two transactions which inflated the company's revenues and overstated its performance during the third quarter 2000 and the second quarter 2001. 
+
+ Without admitting or denying the allegations in the Commission's complaint, Arnold consented to the entry of a judgment enjoining him from violating Sections 13(b)(5) of the Exchange Act of 1934 ("Exchange Act") and Rule 13b2-1 thereunder, and from aiding and abetting violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. The judgment also requires Arnold to pay a civil penalty of $55,000. 
+
+ Also without admitting or denying the allegations in the Commission's complaint, Graham consented to the entry of a judgment enjoining him from violating Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder, from violating Section 17(a) of the Securities Act of 1933, and from aiding and abetting violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. The judgment also bars Graham from acting as an officer or director of a public company for a period of five years, and requires him to pay a civil penalty of $50,000. 
+
+ Also without admitting or denying the allegations in the Commission's complaint, Weston consented to the entry of a judgment enjoining him from violating Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder, and from aiding and abetting violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. The judgment also requires Weston to pay a civil penalty of $20,000. 
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diff --git a/raw/aaer/2009/AAER-3020.txt b/raw/aaer/2009/AAER-3020.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f4c846d1a2d818864031a1ecccc641ec218853e2
--- /dev/null
+++ b/raw/aaer/2009/AAER-3020.txt
@@ -0,0 +1,1391 @@
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+              Avery Dennison Corporation
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+       
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+                   U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21156 / July 28, 2009 
+
+ Accounting and Auditing Enforcement Release No. 3020 / July 28, 2009 
+
+  Securities and Exchange Commission v. Avery Dennison Corporation , United States District Court for the Central District of California, Civil Action No. CV09-5493 DSF (CWx) 
+
+ SEC FILES SETTLED CHARGES AGAINST AVERY DENNISON CORPORATION FOR VIOLATING THE BOOKS AND RECORDS AND INTERNAL CONTROLS PROVISIONS OF THE FOREIGN CORRUPT PRACTICES ACT 
+
+ The Securities and Exchange Commission today filed two settled enforcement proceedings against Avery Dennison Corporation ("Avery"), a Pasadena, California-based multinational corporation, alleging violations of the Foreign Corrupt Practices Act ("FCPA") in connection with improper payments and promises of improper payments to foreign officials by Avery's Chinese subsidiary and several entities Avery acquired. 
+
+ The SEC filed a civil action in the United States District Court for the Central District of California charging Avery with violations of the books and records and internal controls provisions of the FCPA and seeking a civil penalty.  The SEC also issued an administrative order finding that Avery violated the same provisions of the FCPA.  In the administrative proceeding, the SEC ordered Avery to cease and desist from such violations, and to disgorge $273,213, together with $45,257 in prejudgment interest.  In the federal civil action, Avery agreed to the entry of a final judgment requiring it to pay a civil penalty in the amount of $200,000.  
+
+ The SEC's complaint and administrative order charge that, from 2002 through 2005, the Reflectives Division of Avery (China) Co. Ltd. ("Avery China") paid or authorized the payments of kickbacks, sightseeing trips, and gifts to Chinese government officials.  The amount of illegal payments actually paid amounted to approximately $30,000.  In one transaction, Avery China secured a sale to a state-owned end user by agreeing to pay a Chinese official a kickback of nearly $25,000 through a distributor.  Avery China realized $273,213 in profit from this transaction, which it inaccurately booked as a sale to the distributor rather than to the end user.  In addition, after Avery acquired a company in June 2007, employees of the acquired company continued their pre-acquisition practice of making illegal petty cash payments to customs or other officials in several foreign countries, resulting in illegal payments of approximately $51,000.  Avery failed to accurately record these payments and gifts in the company's books and records, and failed to implement or maintain a system of internal accounting controls sufficient to detect and prevent such illegal payments or promises of illegal payments. 
+
+ As a result of the conduct described above, the SEC charged that Avery violated Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934.  Avery consented to the ordered relief without admitting or denying either the findings contained in the SEC's administrative order, or the allegations of the SEC's complaint.   
+
+ The SEC acknowledges the assistance of the United States Department of Justice. 
+
+   SEC Complaint in this matter  
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diff --git a/raw/aaer/2009/AAER-3032.txt b/raw/aaer/2009/AAER-3032.txt
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+++ b/raw/aaer/2009/AAER-3032.txt
@@ -0,0 +1,1400 @@
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+              Maurice R. Greenberg and Howard I. Smith
+           
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+        Maurice R. Greenberg and Howard I. Smith
+       
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21170 / August 6, 2009 
+
+ Accounting and Auditing Enforcement Release No. 3032 / August 6, 2009 
+
+  Securities and Exchange Commission v. Maurice R. Greenberg and Howard I. Smith , Civil Action No. 09 Civ 6939 (S.D.N.Y.) 
+
+ SEC Charges Hank Greenberg and Howard Smith for Roles in Alleged AIG Accounting Violations 
+
+ The Securities and Exchange Commission today charged former American International Group Chairman and CEO Maurice "Hank" Greenberg and former Vice Chairman and CFO Howard Smith for their involvement in numerous improper accounting transactions that inflated AIG's reported financial results between 2000 and 2005. The complaint alleges that Greenberg and Smith are liable as control persons for AIG's violations of the antifraud and other provisions of the securities laws. Smith is also charged with direct violations of the antifraud and other provisions of the securities laws. 
+
+ The complaint alleges that Greenberg and Smith were responsible for material misstatements that enabled AIG to create the false impression that the company consistently met or exceeded key earnings and growth targets. According to the complaint, Greenberg publicly described AIG as the leader in the insurance and financial services industry with a history of delivering consistent double-digit growth. However, AIG faced numerous financial challenges under Greenberg's leadership that were disguised through improper accounting. 
+
+ The complaint, filed in U.S. District Court for the Southern District of New York, charges the defendants with responsibility for the following improper accounting transactions: 
+
+   Sham reinsurance transactions to make it appear that AIG had legitimately increased its general loss reserves.  
+
+    A purported deal with an offshore shell entity to conceal multi-million dollar underwriting losses from AIG's auto-warranty insurance business.  
+
+    Economically senseless round-trip transactions to report improper gains in investment income.  
+
+    The purported sale of tax exempt municipal bonds owned by AIG's subsidiaries to trusts that AIG controlled in order to improperly recognize realized capital gains.  
+  The complaint alleges that Greenberg knew about the effects that certain improper transactions would have on AIG's reported financial results, and along with Smith was responsible for false and misleading public statements and material omissions in quarterly reports that AIG filed in the second and third quarters of 2002, and in related press releases and investor conference calls. In 2005, AIG restated its prior accounting for many transactions, including those that are the subject of the charges in the SEC's complaint. 
+
+ Without admitting or denying the allegations in the complaint, Greenberg has consented to a judgment enjoining him from violating Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 and from controlling any person who violates Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13, and directing him to pay a penalty of $7.5 million and disgorgement of $7.5 million. 
+
+ Without admitting or denying the allegations in the complaint, Smith has consented to a judgment enjoining him from violating Section 17(a) of the Securities Act of 1933, and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13a-14, 13b2-1, and 13b2-2, and from controlling any person who violates Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13, directing him to pay a penalty of $750,000 and disgorgement of $750,000, and prohibiting him from acting as an officer or director of any public company for three years. Smith also consented to the entry of a Commission order that will suspend him from appearing or practicing before the Commission as an accountant, with the right to reapply after five years. 
+
+ The SEC previously charged AIG in 2006 with securities fraud and improper accounting, and the company settled the charges by paying disgorgement of $700 million and a penalty of $100 million, among other remedies. 
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diff --git a/raw/aaer/2009/AAER-3033.txt b/raw/aaer/2009/AAER-3033.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1dd34b36d6431fd4f7b57a60b5b53af70ba287d
--- /dev/null
+++ b/raw/aaer/2009/AAER-3033.txt
@@ -0,0 +1,1397 @@
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+              General Motors Corporation
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+       
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 20861 / January 22, 2009 
+
+ Accounting and Auditing Release No. 3033 / January 22, 2009 
+
+  Securities and Exchange Commission v. General Motors Corporation , Civil Action No. 1:09-CV-00119 (filed on January 22, 2009) 
+
+ SEC Charges General Motors With Disclosure and Other Violations Related to Its Pension Plans and Its Accounting for Derivatives and Other Contracts 
+
+ The Securities and Exchange Commission today filed settled charges against General Motors Corporation (GM) relating to its disclosures concerning two pension accounting estimates, and its projected cash contributions to its pension plans, as well as errors in its accounting for derivatives and various other transactions. According to the SEC's complaint, filed in federal court in the District of Columbia, GM violated the issuer reporting, books-and-records, and internal controls provisions of the federal securities laws. 
+
+ With regard to GM's pension plans, the complaint alleges that GM made material misstatements or omissions in its 2002 Form 10-K concerning the disclosure of two critical pension accounting estimates - its pension discount rate for 2002 and its expected return on pension assets for 2003. 
+
+ According to the complaint, GM had stated publicly in an August 2002 pension conference call with analysts that it used a duration matched approach to select its discount rate, but failed to disclose in its 2002 Form 10-K that its use of a 6.75% discount rate was developed from a non-duration matched approach, which was materially higher than the rate developed from a duration matched model. In addition, the complaint alleges that with respect to the discount rate, GM maintained inadequate internal controls to provide reasonable assurance that transactions would be recorded as necessary to permit preparation of financial statements in compliance with generally accepted accounting principles, including a process for reviewing and adopting discount rate recommendations to provide reasonable assurance that the recommendation was developed in a reasoned and unbiased manner. 
+
+ The complaint further alleges that since at least the mid-1980s, GM's expected return assumption had never been higher than its most recent 10 year average return. In its 2001 Form 10-K and during the August 2002 pension call, GM referred to its rolling 10 year historical average return of 10% or better as support for the reasonableness of its 10% expected return assumption. In its 2002 Form 10-K, GM did not state that its most recent 10 year average return was below its new assumption set at year-end. According to the complaint, if GM had used an expected return consistent with its 10 year historical average, it would have reduced its 2003 pre-tax earnings by $680 million. 
+
+ The complaint also alleges that in that same 2002 Form 10-K and in three 10-Q filings, GM failed to disclose material information about the timing and amount of its projected cash contributions to its pension plans to avoid variable rate premiums to the Pension Benefit Guaranty Corporation (PBGC) and the impact such contributions might have on its liquidity and capital resources. 
+
+ With regard to GM's other transactions, the SEC's complaint alleges that GM made material misstatements that included improperly accounting for a $97 million transaction involving the sale and repurchase of precious metals inventory in its 2000 Form 10-K; prematurely recognizing in its 2001 Form 10-K and Q3 2001 Form 10-Q a $100 million signing bonus it received for entering into a railroad shipping contract; and improperly accounting for two types of derivatives contracts - a Canadian dollar mirror hedge strategy and "normal purchase normal sale" arrangements of commodities - in its 2004 Form10-K. The complaint also alleges that GM maintained inadequate internal controls in these areas and maintained inaccurate books and records in connection with these transactions. 
+
+ GM simultaneously settled the charges, without admitting or denying the allegations, by consenting to the entry of a final judgment permanently enjoining it from violating Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 12b-20, 13a-1, and 13a-13 thereunder. The settlement is subject to court approval. 
+
+ The Commission notes the assistance of the PBGC. 
+
+ The investigation is continuing as to others. 
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diff --git a/raw/aaer/2009/AAER-3034.pdf b/raw/aaer/2009/AAER-3034.pdf
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diff --git a/raw/aaer/2009/AAER-3037.pdf b/raw/aaer/2009/AAER-3037.pdf
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diff --git a/raw/aaer/2009/AAER-3038.txt b/raw/aaer/2009/AAER-3038.txt
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+  
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+       
+      
+ 
+  
+ 
+      
+    
+      
+    
+       
+       
+  
+   
+ 
+ 
+ 
+ 
+   
+                                                 
+ 
+ UNITED STATES OF AMERICA 
+ before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 60575 / August 26, 2009 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3038 / August 26, 2009 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13600 
+: 
+: 
+: 
+In the Matter of : ORDER INSTITUTING ADMINISTRATIVE 
+: PROCEEDINGS PURSUANT TO RULE 
+L. Daniel Ferrer, Esq., : 102(e) OF THE COMMISSION’S RULES OF 
+: PRACTICE, MAKING FINDINGS, AND 
+Respondent. : IMPOSING REMEDIAL SANCTIONS 
+: 
+: 
+____________________________________ : 
+I. 
+The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
+public interest that public administrative proceedings be, and hereby are, instituted against L. 
+Daniel Ferrer (“Respondent” or “Ferrer”) pursuant to Rule 102(e)(3)(i) of the Commission’s Rules 
+of Practice.
+1 
+1 Rule 102(e)(3)(i) provides, in relevant part, that: 
+The Commission, with due regard to the public interest and without preliminary hearing, 
+may, by order, . . . suspend from appearing or practicing before it any attorney . . . who has been 
+by name . . . permanently enjoined by any court of competent jurisdiction, by reason of his or her 
+misconduct in an action brought by the Commission, from violating or aiding and abetting the 
+violation of any provision of the Federal securities laws or of the rules and regulations 
+thereunder. 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+II. 
+In anticipation of the institution of these proceedings, Ferrer has submitted an Offer of 
+Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the purpose 
+of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
+which the Commission is a party, and without admitting or denying the findings herein, except as 
+to the Commission’s jurisdiction over him and the subject matter of these proceedings, and the 
+findings contained in Section III.3 below, which are admitted, Ferrer consents to the entry of this 
+Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission’s Rules 
+of Practice, Making Findings, and Imposing Remedial Sanctions (“Order”), as set forth below.   
+III. 
+On the basis of this Order and Ferrer’s Offer, the Commission finds that:  
+1. L. Daniel Ferrer (“Respondent” or “Ferrer”) is an attorney licensed to practice law 
+in the State of Florida.  Ferrer was outside counsel for Weida Communications, Inc. during all 
+times relevant to this Complaint.  He lives in Fort Lauderdale, Florida where his practice has 
+included, among other things, representing clients in securities-related matters before the SEC and 
+the NASD. 
+2. Weida Communications, Inc.  (“Weida” or “company”) was a New Jersey 
+corporation which was headquartered in Fort Lauderdale, Florida at all times relevant to this 
+Complaint.  Weida marketed itself as providing ground-based transmitters and receivers that 
+purportedly allowed corporate and government customers to use satellite communications in 
+China.  During the relevant period, Weida’s common stock was registered with the Commission 
+under Section 12(g) of the Exchange Act and traded on the Over-the-Counter Bulletin Board (OTC 
+Bulletin Board) under the symbol WDAC.  On December 30, 2005, Weida announced that it had 
+no effective interest in the China operations it had previously claimed to control.  On March 29, 
+2006, Weida filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy 
+Code in the United States Bankruptcy Court for the Northern District of Ohio. 
+3. On August 3, 2009, a final judgment was entered against Ferrer, permanently 
+enjoining him from future violations of Sections 10(b) of the Exchange Act and Rule 10b-5 
+thereunder in the civil action entitled Securities and Exchange Commission v. L. Daniel Ferrer, 
+Civil Action Number 09-CV-61154, in the United States District Court for the Southern District of 
+Florida. Ferrer was also barred from participating in an offering of penny stock.   
+4. As alleged in the complaint, from at least June 2004 through April 2005, two stock 
+promoters who controlled Weida, and closely affiliated stock brokers acting at their direction, 
+engaged in a scheme to defraud which included manipulating and supporting the market price for 
+Weida common stock at artificially high levels.  During this period, the stock price, as a 
+consequence of the manipulation, allegedly did not accurately reflect the legitimate forces of 
+supply and demand in a free and open market for the stock.  As further alleged in the complaint, 
+two of the goals of the promoters of the manipulative scheme were facilitating the sale of Weida 
+2
+ 
+ 
+ 
+  
+ 
+  
+ 
+ 
+ 
+ 
+ 
+  
+ 
+ 
+ 
+ 
+ 
+   
+ 
+stock in private transactions at prices higher than the stock was actually worth, and attempting to 
+satisfy the NASDAQ National Market's (now known as NASDAQ Global Market) listing 
+requirements, which mandated that the stock must trade at $5 per share over a given time period to 
+be eligible for listing. Approximately 165 investors — ma ny elderly and unsophisticated — 
+allegedly paid approximately $9.2 million to Weida for near-worthless unregistered securities 
+during the manipulation period as part of private offerings orchestrated by the promoters.   
+5. As further alleged in the complaint, in furtherance of this scheme, Ferrer and one of 
+the promoters used two brokerage accounts which Ferrer established in his own name and that of 
+his law firm to execute transactions in Weida common stock on the open market.  These 
+transactions in Weida stock executed in Ferrer’s accounts were alleged to have fraudulently 
+supported the price of Weida stock at artificially inflated levels and given the false appearance of 
+liquidity in the market for Weida stock.     
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent Ferrer’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that Ferrer is suspended from 
+appearing or practicing before the Commission as an attorney.   
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+3
+ 
\ No newline at end of file
diff --git a/raw/aaer/2009/AAER-3042.txt b/raw/aaer/2009/AAER-3042.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2095870cad4f6e6b21235c335701a1302dc4cd3f
--- /dev/null
+++ b/raw/aaer/2009/AAER-3042.txt
@@ -0,0 +1,177 @@
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+       
+      
+ 
+ 
+ 
+                
+  
+          
+  
+       
+       
+ 
+   
+ 
+ 
+ 
+ 
+   
+ 
+ 
+ 
+                                                
+ 
+ 
+  
+ 
+ UNITED STATES OF AMERICA 
+ BEFORE THE 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 60600 / September 1, 2009 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3042 / September 1, 2009 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13606 
+: 
+: 
+: 
+In the Matter of : ORDER INSTITUTING ADMINISTRATIVE 
+: PROCEEDINGS PURSUANT TO RULE 
+Kenneth Selterman, Esq., : 102(e) OF THE COMMISSION’S RULES            
+: OF PRACTICE, MAKING FINDINGS, 
+Respondent.  : AND IMPOSING REMEDIAL SANCTIONS 
+: 
+: 
+____________________________________ : 
+I. 
+The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
+public interest that public administrative proceedings be, and hereby are, instituted against Kenneth 
+Selterman, Esq. (“Selterman” or “Respondent”) pursuant to Rule 102(e)(3)(i) of the Commission’s 
+Rules of Practice.
+1 
+1 Rule 102(e)(3)(i) provides, in relevant part, that: 
+The Commission, with due regard to the public interest and without preliminary hearing, may, by 
+order, . . . suspend from appearing or practicing before it any . . . attorney . . . who has been by name . . . 
+permanently enjoined by any court of competent jurisdiction, by reason of his or her misconduct in an 
+action brought by the Commission, from violating or aiding and abetting the violation of any provision of 
+the Federal securities laws or of the rules and regulations thereunder. 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+  
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+    
+II. 
+In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdiction over him and the subject matter of these 
+proceedings, and the findings contained in Section III.3 below, which are admitted, Respondent 
+consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Rule 102(e) 
+of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions 
+(“Order”), as set forth below.   
+III. 
+On the basis of this Order and Respondent’s Offer, the Commission finds that: 
+1. Selterman, age 59, is and has been an attorney licensed to practice in the 
+State of New York.  Selterman joined Take-Two Interactive Software, Inc. (“Take-Two” or “the 
+Company”) as General Counsel in 1999 where he worked until his resignation on February 28, 
+2007. 
+2. Take-Two was, at all relevant times, a Delaware corporation with its 
+principal place of business in New York, New York.  Take-Two develops, markets, publishes and 
+distributes interactive entertainment software games for video game consoles and personal 
+computers.  Take-Two also publishes through its wholly-owned labels Rockstar Games, 2K Games, 
+2K Sports and 2K Play.  Prior to July 31, 2006, Take-Two registered its common stock with the 
+Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 (“Exchange Act”) 
+and traded on the NASDAQ NMS under the symbol “TTWO.”  Since July 31, 2006, Take-Two has 
+registered its common stock with the Commission pursuant to Section 12(b) of the Exchange Act 
+and has traded on the NASDAQ Global Market under the same symbol.  The Company operates on 
+an October 31 fiscal year. 
+3. On August 6, 2009, a final judgment was entered against Selterman, 
+permanently enjoining him from future violations of Sections 10(b), 13(b)(5), and 16(a) of the 
+Exchange Act and Exchange Act Rules 10b-5, 13b2-1, 13b2-2, and 16a-3, and aiding and abetting 
+violations of Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Exchange Act and 
+Exchange Act Rules 12b-20, 13a-1, 13a-11, 13a-13, and 14a-9, in the civil action entitled 
+Securities and Exchange Commission v. Kenneth Selterman, et al., Civil Action Number 09-CV-
+6813 (DLC), in the United States District Court for the Southern District of New York.  Selterman 
+was also barred from serving as an officer or director of any public company and ordered to pay 
+$363,185 in disgorgement of ill-gotten “in-the-money” gains from his exercise of backdated stock 
+options, $111,115 in prejudgment interest, and a $125,000 civil money penalty. 
+4. The Commission’s Complaint alleged, among other things, that Selterman 
+enriched himself and others by knowingly or recklessly allowing Take-Two’s former 
+2
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+CEO/Chairman Ryan Brant (“Brant”) to backdate the Company’s stock option grants.  The 
+Complaint alleged that Selterman knew, or was reckless in not knowing, that exercise prices for 
+stock options had been picked with hindsight, and that he created Company records that falsely 
+indicated that grants had occurred on earlier dates when the Company’s stock price had been at a 
+low. Specifically, the Complaint alleged that Selterman was, in part, responsible for ensuring 
+that the options granting process complied with Take-Two’s own stock option plans, including 
+the 2002 Plan that he helped create and draft.  The Complaint alleged that beginning in 2002 and 
+continuing through the end of 2003, Selterman also was responsible for ensuring that the actions 
+taken by the Company’s Board or Compensation Committee to grant and approve stock options 
+were properly documented in the Company’s books and records, and he prepared or supervised 
+the preparation of Board or Compensation Committee minutes for stock option grants.  The 
+Complaint alleged further that from at least as early as 2000, Selterman knew, or was reckless in 
+not knowing, that stock options were being backdated, and from at least as early as January 
+2002, Selterman knew the accounting consequences of granting stock options at below fair 
+market value. The Complaint alleged that in the instances before and beginning in 2002, when 
+Selterman prepared Compensation Committee minutes for stock option grants, he knew, or was 
+reckless in not knowing, that Brant was using hindsight to pick grant dates, yet, without inquiry, 
+he simply recorded in the minutes what Brant told him about the granting and approval of option 
+grants. Accordingly, the Complaint alleged that Selterman knew, or was reckless in not 
+knowing, that Take-Two filed materially false and misleading reports, proxy statements, and 
+financial statements with the Commission and that Take-Two’s filings falsely represented that 
+Take-Two was properly accounting for stock option grants.  In addition, the Complaint alleged 
+that Selterman received backdated “in-the-money” options. 
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanctions agreed to in Respondent Selterman’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+Selterman is suspended from appearing or practicing before the Commission as an attorney. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+3
+ 
\ No newline at end of file
diff --git a/raw/aaer/2009/AAER-3043.pdf b/raw/aaer/2009/AAER-3043.pdf
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--- /dev/null
+++ b/raw/aaer/2009/AAER-3044.txt
@@ -0,0 +1,1389 @@
+
+
+ 
+ 
+   
+     
+ 
+ 
+ 
+ 
+ 
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+              VeriFone Holdings, Inc. and Paul Periolat
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+                   U.S. Securities and Exchange Commission 
+
+ Litigation Release No. 21194 / September 1, 2009 
+
+ Accounting and Auditing Enforcement Release No. 3044 / September 1, 2009 
+
+  Securities and Exchange Commission v. VeriFone Holdings, Inc. and Paul Periolat.,  Case No. CV 09- 4046 RS (N.D. Cal. Filed September 1, 2009) 
+
+ SEC CHARGES VERIFONE FOR ARTIFICIALLY INFLATING ITS INCOME 
+
+ The Securities and Exchange Commission today charged Silicon Valley technology company VeriFone Holdings, Inc. and a former finance department employee for falsifying the company's accounting records which boosted gross margins and income reported to shareholders.  The SEC alleges that in three consecutive quarters in 2007, the company made unsupportable alterations to its records to compensate for an unexpected decline in gross margins, overstating VeriFone's operating income by a total of 129 percent.  When the misrepresentations came to light in December 2007, the company's stock price fell 46 percent, resulting in a one-day drop in market capitalization of   $1.8 billion.   
+
+ The SEC's complaint, filed in federal court in San Jose, alleges that at the end of each of the first three quarters of 2007, internal company reports showed that gross margins would be markedly lower than previously released guidance to analysts.  According to the SEC, senior management was convinced that the previous forecasts were correct and directed finance employees to figure out and fix the problem so the company could report results in line with forecasts and thereby avoid, in the words of a senior officer, an "unmitigated disaster."   
+
+ The SEC alleges that VeriFone's former supply chain controller, Paul Periolat, then made large manual adjustments to inventory balances on VeriFone's books each quarter, dramatically increasing both gross margins and operating income.  In each of the first three quarters of 2007, the accounting adjustments allowed the company to meet its internal forecasts and guidance to investors.  However, the complaint alleges that the adjustments were based on incorrect assumptions which Periolat did not take adequate steps to verify.  In fact, the company's unreported results had been correct, and Periolat's adjustments led to VeriFone's improper inflating of its income by over $37 million. 
+
+ Without admitting or denying the Commission's allegations, VeriFone consented to a permanent injunction against violations of the reporting, internal controls, and other provisions of the federal securities laws.  Further, without admitting or denying the Commission's allegations, Periolat consented to a permanent injunction against further violations of certain antifraud, reporting, internal controls, and other provisions of the federal securities laws, and to pay a $25,000 civil penalty.   
+
+   SEC Complaint in this matter  
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diff --git a/raw/aaer/2009/AAER-3046.txt b/raw/aaer/2009/AAER-3046.txt
new file mode 100644
index 0000000000000000000000000000000000000000..7e21a0abbd30841e9b88131a7a646d4c2dd3e1df
--- /dev/null
+++ b/raw/aaer/2009/AAER-3046.txt
@@ -0,0 +1,1385 @@
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21202 / September 9, 2009 
+
+ Accounting and Auditing Enforcement Release No. 3046 / September 9, 2009 
+
+  Securities and Exchange Commission v. Timothy J. Huff , Case No. 09-61419 (S.D. Fla., filed September 8, 2009) 
+
+ SEC Charges Former CEO Of Florida Telecommunications Company For Accounting Fraud 
+
+ On September 8, 2009, the Securities and Exchange Commission ("SEC") filed a civil action against Timothy J. Huff ("Huff"), the former chief executive officer ("CEO") of GlobeTel Communications Corp. ("GlobeTel" or the "company"), a publicly-traded company headquartered in Fort Lauderdale, Florida, now known as Sanswire Corp. 
+
+ According to the complaint, which was filed in the United States District Court for the Southern District of Florida, Huff participated in a scheme to fraudulently inflate GlobeTel's revenue from approximately May 2002 through October 2004. The complaint alleges that Huff's scheme involved the creation of millions of dollars in fake invoices and call detail records that appeared to reflect transactions between GlobeTel and telecommunications companies in Mexico, Brazil and the Philippines. The complaint further alleges that, as a result of Huff's scheme, GlobeTel issued materially false and misleading periodic reports, registration statements and press releases. Huff allegedly received compensation from the company of about $4.9 million and exercised stock options with a value of more than $1.5 million. The SEC charges Huff with violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a), 13(b)(2)(A) and (B) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 13a-14 and 13b2-2 thereunder and seeks as relief permanent injunctions, civil penalties, disgorgement with prejudgment interest and an officer and director bar. 
+
+ The SEC previously charged GlobeTel and a number of other former officers in connection with these and other securities law violations. The SEC also charged Huff for violations of Section 5(a) and 5(c) of the Securities Act of 1933. Without admitting or denying the allegations, Huff settled those charges by consenting to an injunction and $30,000 civil penalty. For additional information, see  LR-20371  (Nov. 26, 2007) and  LR-20550  (May 1, 2008). 
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diff --git a/raw/aaer/2009/AAER-3048.txt b/raw/aaer/2009/AAER-3048.txt
new file mode 100644
index 0000000000000000000000000000000000000000..91caeca325ee35c8e3d30d04a64485713977b2bd
--- /dev/null
+++ b/raw/aaer/2009/AAER-3048.txt
@@ -0,0 +1,460 @@
+ 
+ 
+ 
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+ 
+ 
+ 
+ 
+  
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+ 
+ 
+ 
+ UNITED STATES OF AMERICA 
+ Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No.  60657 / September 11, 2009 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3048 / September 11, 2009 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13614 
+In the Matter of 
+DANA HOLDING CORPORATION 
+(as successor registrant to DANA 
+CORPORATION), 
+Respondent. 
+ORDER INSTITUTING CEASE-AND-
+DESIST PROCEEDINGS PURSUANT TO 
+SECTION 21C OF THE SECURITIES 
+EXCHANGE ACT OF 1934, MAKING 
+FINDINGS, AND IMPOSING A CEASE-
+AND-DESIST ORDER 
+I. 
+The Securities and Exchange Commission (“Commission”) deems it appropriate that cease­
+and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
+Exchange Act of 1934 (“Exchange Act”), against Dana Holding Corporation (as successor 
+registrant to Dana Corporation) (“Dana Holding” or “Respondent”).  
+II. 
+In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
+proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease­
+and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
+Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.   
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+III. 
+On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 
+RESPONDENT 
+1. Prior to filing a voluntary petition for reorganization relief under Chapter 11 of the 
+U.S. Bankruptcy Code on March 3, 2006, Dana Corporation was a Virginia corporation 
+headquartered in Toledo, Ohio, that manufactured and supplied automotive parts and systems to 
+vehicle manufacturers worldwide.  Before bankruptcy, Dana Corporation’s shares were registered 
+under Section 12(b) of the Exchange Act and traded on the New York Stock Exchange. Trading of 
+Dana Corporation’s shares was suspended on March 3, 2006.  The Commission granted the New 
+York Stock Exchange’s application to de-list Dana Corporation from the Exchange in April 2006. 
+After being delisted, Dana Corporation’s shares were deemed registered under Section 12(g) of the 
+Exchange Act and traded on the Over-the Counter Bulletin Board.  On or about February 1, 2008, 
+upon its emergence from Chapter 11, a new holding company, Dana Holding Corporation assumed 
+substantially all of the business and assets of Dana Corporation and the common stock of Dana 
+Holding, which was registered under Section 12(b) of the Exchange Act, began trading on the New 
+York Stock Exchange. 
+SUMMARY 
+2. From 2004 through mid-2005, contrary to Generally Accepted Accounting 
+Principles (“GAAP”), Dana Corporation improperly recognized revenue or income on several 
+transactions and delayed recording expenses in the appropriate period.  Dana Corporation thus filed 
+materially false and misleading periodic reports with the Commission for the fiscal year 2004 and 
+the first two quarters of 2005. In total, Dana Corporation materially overstated its earnings before 
+interest and taxes (“EBIT”) by $88 million, or 73.9% of restated EBIT.  This equates to an 
+overstatement of $43 million or 39.8% of restated net income, as previously reported in Dana 
+Corporation’s Form 10-K/A and Forms 10-Q/A filed in December 2005. 
+3. During this period, former Dana Corporation employees of Commercial Vehicle 
+Systems (“CVS”), a subdivision of one of Dana Corporation’s two main business units, the Heavy 
+Vehicle Technologies and Systems Group (“HVTSG”), engaged in a fraudulent scheme with 
+former Dana Corporation employees of HVTSG to inflate CVS’s financial results.  As a result, 
+Dana Corporation’s financial statements were misstated, in part because the company: (1) 
+recognized income on transactions where assets were never transferred or risk of ownership never 
+passed, (2) recognized revenue for price increases on parts sales without agreement from the 
+customers for the price increases, (3) improperly deferred the recognition of steel surcharge 
+expenses, and (4) recorded other improper accounting entries, including decreasing debts owed to 
+suppliers without any contractual support or agreement from the suppliers and recording entries 
+1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding 
+on any other person or entity in this or any other proceeding. 
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+that increased income without any basis or supporting documentation.  Dana Corporation 
+overstated its EBIT by $31.6 million due to the fraud. 
+4. In addition to the fraud, Dana Corporation’s financial statements from 2004 through 
+the first two quarters of 2005 contained accounting errors amounting to $56.4 million.  Dana 
+Corporation failed to maintain accurate books and records.  Dana Corporation also had materially 
+deficient internal accounting controls that significantly contributed to the accounting irregularities 
+and errors. As a result, Dana Corporation filed materially false and misleading periodic filings 
+with the Commission for fiscal year 2004 and the first two quarters of 2005.  In December 2005, 
+Dana Corporation issued a Form 10-K/A and Forms 10-Q/A amending those filings. 
+FACTS 
+The Fraudulent Scheme to Overstate Earnings at CVS 
+5. The fraudulent misstatements in the financial results for CVS were ultimately 
+incorporated into the financial statements for HVTSG and Dana Corporation.  HVTSG’s financial 
+results and Dana Corporation’s consolidated financial information were disclosed to the investing 
+public in Dana Corporation’s Form 10-K, Forms 10-Q, Forms 8-K and S-4 filings for 2004 
+through the second quarter of 2005.  During this period, Dana Corporation overstated its EBIT by 
+approximately $31.6 million or 26.5% because of the fraud at CVS, described below.   
+Improper Revenue Recognition of Price Increases 
+6. In the first and second quarter of 2005, Dana Corporation improperly recognized 
+price increases for parts without any written agreement from two significant customers.  When 
+Dana Corporation accrued revenue for these price increases, employees were still negotiating the 
+price increases with these customers.  No written agreement was ever finalized, and no invoices for 
+the amounts accrued were sent to the customers.  Before revenue can be recognized, GAAP 
+requires that persuasive evidence of an arrangement exists and that collectability be reasonably 
+assured. See Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition in Financial 
+Statements, Topic 13.A.1., citing Statement of Financial Accounting Concepts (“SFAC”) 5, 
+Recognition and Measurement in Financial Statements of Business Enterprises, ¶¶ 83 and 84. 
+Thus, contrary to GAAP, Dana Corporation’s EBIT was overstated by a total of $2 million and 
+$8.6 million in the first and second quarter of 2005, respectively, when Dana Corporation recorded 
+these price accruals without customer agreement. 
+Failure to Expense Steel Surcharge Costs 
+7. In 2004 and 2005, steel suppliers typically passed on the higher cost of steel to 
+Dana Corporation in the form of steel surcharges, which were separately invoiced.  During that 
+time, former employees of CVS and HVTSG improperly delayed expensing the cost of steel 
+surcharges by: (1) instructing HVTSG’s purchasing department to request that suppliers delay 
+sending steel surcharge invoices; (2) rejecting valid steel surcharge invoices and failing to record 
+those expenses; and (3) expensing the base cost of steel at the time of the receipt of steel, but 
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+delaying the recognition of the steel surcharge costs for three to four months. Expenses were not 
+booked in conformity with GAAP because they were not recorded as they were incurred.  See 
+SFAC 6, Elements of Financial Statements, ¶80; SFAC 5, ¶85. Thus, because Dana Corporation’s 
+expenses were understated, its EBIT was overstated by $350,000 in 2004, and by $2.8 million and 
+$4 million, in the first and second quarters of 2005, respectively. 
+Improper Recording of Income from Sales Transactions 
+8. In 2004, employees of CVS and HVTSG negotiated several transactions with a 
+Kentucky supplier of automotive parts (“Kentucky Supplier”) that resulted in improper recording 
+of income.  The first transaction took place at the end of the first quarter of 2004, at which time 
+an agreement was signed which provided for the Kentucky Supplier’s purchase of spare parts 
+from Dana Corporation.  Some of the spare parts purportedly sold to the Kentucky Supplier were 
+to be used with equipment that the Kentucky Supplier did not yet own, but supposedly was to be 
+acquired from Dana Corporation in the future.  The signed agreement specifically provided, 
+among other things, that: (1) the spare parts would remain at Dana Corporation’s facilities 
+pending the actual sale of equipment to the Kentucky Supplier; and (2) Dana Corporation would 
+insure and assume the risk of loss on the spare parts while the parts were at Dana Corporation’s 
+facilities.  Inclusion of these provisions in the agreement precluded the recording of income 
+under GAAP. According to GAAP, income cannot be  recorded if the goods are not delivered 
+and risk of loss does not pass from the seller to the buyer.  See SAB No. 104, Topic 13.A.1., 
+citing SFAC 5, ¶¶ 83 and 84. Because income could not be recorded under GAAP, Dana 
+Corporation overstated its EBIT in the first quarter of 2004 by $573,000. 
+9. In the second quarter of 2004, Dana Corporation agreed to sell its plant located in 
+Toluca, Mexico to the Kentucky Supplier. Dana Corporation agreed to partially leaseback the 
+Toluca plant.  Dana Corporation recorded a $5 million gain on the sale and leaseback of Toluca.  
+According to Statement of Financial Accounting Standards (“SFAS”) No. 28, “any profits up to 
+the amount of the present value of the leaseback rentals must be deferred and amortized” in a 
+sale involving a leaseback provision over the life of the agreement.  SFAS No. 28, Accounting 
+for Sales with Leasebacks, ¶¶3 and 15. Contrary to GAAP , Dana Corporation improperly 
+recorded the entire $5 million from the Kentucky Supplier as income, overstating its EBIT in the 
+second quarter of 2004 by $2.8 million (the amount relating to the leaseback).  
+10. Finally, in the last half of 2004, CVS improperly recognized income based on 
+upfront payments for an agreement to purchase equipment which was never delivered to the 
+Kentucky Supplier. The written agreement stated that if Dana Corporation did not sell or deliver 
+the equipment, Dana Corporation was liable to repay the upfront payment. GAAP requires that 
+gains shall be realized or realizable and earned before it may be recognized.  Those conditions are 
+usually met by the time the product is delivered.  See SAB No. 104, Topic 13.A.1., citing SFAC 5, 
+¶¶ 83 and 84.  The gain from a non-refundable, upfront payment should be deferred if the goods, 
+assets, or services contracted for have not been delivered.  See id. The Kentucky Supplier paid a 
+total of $3.3 million in September and December 2004 for the equipment, and Dana Corporation 
+booked all of that as income instead of delaying recognition until the equipment was transferred as 
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+required by GAAP. Thus, these improper accounting entries had the effect of overstating Dana 
+Corporation’s EBIT by $3.3 million. 
+Other Improper Accounting Entries 
+11. From late 2004 through the first quarter of 2005, CVS issued debit memoranda 
+(“debit memos”) to suppliers without their agreement or any contractual basis thus causing Dana 
+Corporation to improperly increase its profits.  Debit memos were invoices that were issued to its 
+suppliers to reduce an outstanding payable amount and corresponding expense.  If the supplier 
+agreed to the issuance of the debit memo, Dana Corporation could properly reduce the payable 
+amount and its inventory cost.  However, in many instances during this timeframe, the suppliers 
+who received the debit memos from CVS disputed them.  Without supplier agreement or a 
+contractual basis, Dana Corporation either improperly reduced its obligation to pay these liabilities 
+or improperly recorded an increase in its receivables.  As a result, Dana Corporation overstated its 
+EBIT by $3.9 million from the last quarter of 2004 through 2005.   
+12. In addition, Dana Corporation’s publicly reported financial results were inflated by 
+a number of entries, some of which were made at the end of the month or quarter, which had no 
+documentation or contractual basis.  For example, in at least two instances in the first quarter of 
+2005, income was inappropriately recognized based solely on letters of intent to sell parts.  Based 
+on all of these improper entries, Dana Corporation’s EBIT was overstated by $500,000 in 2004 and 
+$3.1 million and $1.6 million the first and second quarter of 2005, respectively. 
+Other Accounting Errors at Dana Corporation 
+13. Dana Corporation also overstated its EBIT by approximately $56.4 million based 
+on accounting errors from 2004 through the first two quarters of 2005.   
+14. Errors at Dana Corporation’s CVS Division amounted to EBIT of $13.9 million.  
+Those errors included approximately $4.1 million relating to the accounting for one of Dana 
+Corporation’s joint ventures; and approximately $9.8 million of errors in various reserve and 
+expense accounts at CVS.   
+15. The largest error throughout all of Dana Corporation’s divisions involved a $19 
+million EBIT overstatement relating to Dana Corporation’s LIFO inventory reserve.  Dana 
+Corporation was required to increase its LIFO inventory reserve to correct its LIFO calculation.  
+Erroneous information had been provided to Dana Corporation’s corporate accounting department 
+from many plants at various divisions regarding the costs for steel surcharges.  During 2004, the 
+plants were instructed to use a separate account to record surcharges in order to better track those 
+costs and its recovery from customers.  However, most plants submitted reports of their inventory 
+costs to corporate accounting without including steel surcharge costs.  Corporate accounting, in 
+relying upon the erroneous information received from the plants, miscalculated Dana 
+Corporation’s LIFO inventory reserve.   
+5
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+16. The remaining errors in EBIT in the amount of $23.5 million were spread 
+throughout Dana Corporation’s divisions, including:  (1) approximately $6.8 million in errors 
+involving accounts at Dana Corporation’s foreign facilities; (2) approximately $3.7 million in 
+errors relating the accounting for assets and/or plants sold; and (3) approximately $13 million in 
+errors in several of Dana Corporation’s reserve and expense accounts. 
+Dana Corporation’s Internal Controls Weaknesses 
+17. Dana Corporation’s deficient system of internal controls contributed to the 
+restatement of its financial statements for the first two quarters of fiscal year 2005, fiscal year 2004 
+and prior years.  As identified by Dana Corporation in its Form 10-K/A filed on December 30, 
+2005, Dana Corporation had five material weaknesses in the design and operation of its internal 
+controls: (1) Dana Corporation did not maintain an effective control environment at CVS; (2) the 
+financial and accounting organization was not adequate to support the Dana Corporation’s 
+financial accounting and reporting needs; (3) Dana Corporation did not maintain effective controls 
+over the completeness and accuracy of certain revenue and expense accruals; (4) Dana Corporation 
+did not maintain effective controls over reconciliations of certain financial statement accounts; and 
+(5) Dana Corporation did not maintain effective control over the valuation of certain inventory and 
+the related cost of goods sold accounts.   
+18. Dana Corporation failed to maintain adequate internal controls at CVS sufficient to 
+prevent and detect the improper accounting entries recorded, and thereby allowed the wrongdoing 
+set forth above to occur, undetected.  In particular, Dana Corporation failed to segregate duties 
+concerning journal entries made at CVS.  The inadequate controls at Dana Corporation left the 
+CVS controller with the sole responsibility of directing the recording of journal entries, reviewing 
+the entries, and ensuring that they were made in accordance with GAAP.  Dana Corporation did 
+not ensure that the HVTSG controller adequately reviewed the entries made by the CVS controller 
+in order to verify the accuracy and propriety of the financial information.  In addition, Dana 
+Corporation relied upon the controllers for CVS and HVTSG to self-report any issues to corporate 
+accounting. 
+19. Dana Corporation failed to maintain a proper system of internal controls and 
+reporting structure sufficient to detect and prevent errors and accounting irregularities.  Accounting 
+personnel at Dana Corporation reported directly to the operations managers, not to accounting 
+supervisors responsible for determining that the accounting was properly recorded in accordance 
+with GAAP. This reporting stru cture allowed, for example, the CVS manager to threaten to fire 
+the CVS controller if profit goals were not met.  In addition, the lack of qualifications of 
+accounting personnel at Dana Corporation contributed to the deficiencies in its internal controls.   
+20. Dana Corporation also had insufficient internal controls to prevent and detect 
+improper revenue and expense accruals.  For example, employees at CVS and HVTSG failed to 
+follow controls which required the existence of a written agreement for price increases before 
+significant accruals were entered.  Invoices were similarly not expensed at the time incurred 
+because employees circumvented controls requiring the same.  Dana Corporation had insufficient 
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+internal controls procedures to ensure adequate review of these significant revenue and expense 
+accruals. 
+21.  Lastly, Dana Corporation lacked effective controls over its inventory and cost of 
+goods sold accounts.  Dana Corporation’s miscalculation of its LIFO inventory reserve resulted, in 
+part, from corporate accounting’s failure to properly instruct the plants to include the surcharge 
+amounts in reporting the steel costs for the LIFO calculation, and to independently verify whether 
+the steel surcharges in the separate accounts were included. 
+Dana Corporation’s Restatement 
+22. As a result of the fraudulent entries and accounting errors discussed above, Dana 
+Corporation’s financial statements in its annual report on Form 10-K for 2004 and its quarterly 
+reports on Forms 10-Q for the first two quarters of 2005 were materially inaccurate.  On December 
+30, 2005, Dana Corporation filed a Form 10-K/A that restated its consolidated financial statements 
+for fiscal year 2004 and Forms 10-Q/A for the first two quarters of 2005.  The table below shows 
+that in Dana Corporation’s original financial statements, Dana Corporation’s EBIT was $77 
+million for fiscal year 2004 and $130 million for the first two quarters of 2005.  In its restated 
+financial statements, Dana Corporation’s EBIT was reduced by $44 million for fiscal year 2004 
+and $44 million for the first two quarters of 2005, resulting in a total reduction of $88 million in 
+EBIT.  This equates to an overstatement of $43 million or 39.8% of restated net income, as 
+previously reported in Dana Corporation’s Forms 10-K/A and 10-Q/A filed in December 2005. 
+(All dollar amounts in millions) 
+Yr. 
+Ended 
+2004 
+Qtr. 
+Ended 
+3/31/05 
+Qtr. 
+Ended 
+6/30/05 Total 
+Dana Reported EBIT  77.0  38.0   92.0  207.0 
+Dana Restated EBIT  33.0  24.0   62.0  119.0 
+Total EBIT Overstatement  44.0  14.0   30.0  88.0 
+Overstatement as % of Restated EBIT 133.3% 58.3% 48.4% 73.9% 
+VIOLATIONS 
+23. As a result of the conduct described above, Dana Corporation violated Section 
+13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder, which require 
+every issuer of a security registered pursuant to Section 12 of the Exchange Act file with the 
+Commission information, documents, and annual, quarterly and current reports as the 
+Commission may require, and mandate that periodic reports contain such further material 
+information as may be necessary to make the required statements not misleading. Dana 
+Corporation filed inaccurate periodic reports with the Commission that misstated material facts 
+concerning its financial performance due to Dana Corporation’s improper accounting for its 
+revenue, expenses and income. 
+24. As a result of the conduct described above, Dana Corporation violated Section 
+13(b)(2)(A) of the Exchange Act, which requires reporting companies to make and keep books, 
+records, and accounts which, in reasonable detail, accurately and fairly reflect their transactions 
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+and dispositions of their assets.  Because Dana Corporation improperly recognized revenue or 
+income and deferred expenses, its books, records and accounts did not, in reasonable detail, 
+accurately reflect its transactions and dispositions of assets.  
+25. Lastly, as a result of the conduct described above, Dana Corporation violated 
+Section 13(b)(2)(B) of the Exchange Act, which requires all reporting companies to devise and 
+maintain a system of internal accounting controls sufficient to provide reasonable assurances that 
+transactions are recorded as necessary to permit preparation of financial statements in accordance 
+with GAAP. Dana Corporation’s internal controls were not sufficient to prevent the recording of 
+numerous and widespread improper accounting entries described above.  Thus, its internal 
+accounting controls were not sufficient to reasonably assure that its transactions were recorded as 
+necessary and its financial statements prepared in accordance with GAAP. 
+RESPONDENT’S REMEDIAL EFFORTS 
+In determining to accept the Offer, the Commission considered remedial acts promptly 
+undertaken by Respondent and cooperation afforded the Commission staff. 
+IV. 
+In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in Respondent’s Offer. 
+Accordingly, it is hereby ORDERED that: 
+Pursuant to Section 21C of the Exchange Act, Respondent Dana Holding cease and desist 
+from committing or causing any violations and any future violations of Sections 13(a), 13(b)(2)(A), 
+and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+8
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+ UNITED STATES OF AMERICA 
+ Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 60806 / October 9, 2009 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3057 / October 9, 2009 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13645 
+In the Matter of 
+PETER Y. ATKINSON, ESQ.,   
+Respondent. 
+ORDER INSTITUTING PUBLIC 
+ADMINISTRATIVE AND CEASE-
+ AND-DESIST PROC EEDINGS PURSUANT 
+TO SECTION 21C OF THE SECURITIES 
+EXCHANGE ACT OF 1934 AND RULE 
+102(e) OF THE COMMISSION’S RULES OF 
+PRACTICE, MAKING FINDINGS, AND 
+IMPOSING REMEDIAL SANCTIONS AND 
+A CEASE-AND-DESIST ORDER 
+I. 
+The Securities and Exchange Commission (“Commission”) deems it appropriate that public 
+administrative and cease-and-desist proceedings be, and hereby are, instituted against Peter Y. 
+Atkinson (“Respondent” or “Atkinson”) pursuant to Section 21C of the Securities Exchange Act of 
+1934 (“Exchange Act”) and Rule 102(e)(1)(iii) of the Commission’s Rules of Practice.
+1 
+II. 
+In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
+1 Rule 102(e)(1)(iii) provides, in pertinent part, that: 
+The Commission may . . . deny, temporarily or permanently, the privilege of appearing or practicing before 
+it . . . to any person who is found…to have willfully viol ated, or willfully aided and abetted the violation of any 
+provision of the Federal securities laws or the rules and regulations thereunder. 
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+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdiction over him and the subject matter of these 
+proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Public 
+Administrative and Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities 
+Exchange Act of 1934 and Rule 102(e) of the Commission’s Rules of Practice, Making Findings, 
+and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.   
+III. 
+On the basis of this Order and Respondent’s Offer, the Commission finds2 that: 
+Summary
+ 1. These proceedings arise out of a fraudul ent scheme pursuant to which former 
+officers of Hollinger International, Inc., now known as Sun-Times Media Group, Inc. (“Hollinger 
+International”) diverted corporate funds to themselves through a series of related party transactions 
+involving purported non-competitio n payments. As part of the sc heme, these former officers 
+misrepresented or omitted to state material  facts regarding the purported non-competition 
+payments to the Audit Committe e of Hollinger International’s Board of Directors (“Audit 
+Committee”) and Hollinger International’s Board of Directors and caused Hollinger International 
+to make material misstatements regarding the related party transactions in its periodic reports and 
+proxy statements filed with the Commission. 
+Respondent 
+2. Atkinson, currently incarcerated at Allenwood Federal Correction Center in White 
+Deer, PA, is 62 years old and a citizen and resident of Canada.  Atkinson is a licensed attorney in 
+Canada. From approximately 2000 until April 27, 2004, he served as an Executive Vice President 
+of Hollinger International. From approximately May 2002 until January 2004, he served as a 
+Director of Hollinger International.  From early 1996 until January 2004, Atkinson was also Vice 
+President and a Director of Hollinger Inc.  In May 2000, he was appointed General Counsel of 
+Hollinger Inc. In 2002, he became an Executive Vice President of Hollinger Inc., a position from 
+which he resigned on April 27, 2004.  From approximately 1996 until 2004, he also served as the 
+Executive Vice President of The Ravelston Corporation Limited and Ravelston Management, Inc. 
+(jointly “Ravelston”), of which he indirectly owned approximately .97%.  On November 17, 2005, 
+the U.S. Attorney for the Northern District of Illinois indicted Atkinson on six counts of mail and 
+wire fraud in connection with his receipt of and failure to disclose certain of the purported non-
+competition payments discussed herein.  In July 2007, Atkinson was found guilty of three counts 
+of mail fraud. On December 10, 2007, Atkinson was sentenced to 24 months imprisonment, 
+ordered to pay a fine of $3,000, and held jointly and severally liable for forfeiture of $6.1 million.  
+2 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any other 
+person or entity in this or any other proceeding. 
+2
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+Other Relevant Individuals and Entities 
+3. At all times relevant, Hollinger International was a Delaware corporation with its 
+principal place of business in Chicago, Illinois. During the relevant period, Hollinger International 
+owned and operated newspaper publishing businesses in the United States and abroad, including 
+the Chicago Sun-Times, The Daily Telegraph in London, England, The Jerusalem Post in Israel 
+and a number of other publications.  During the relevant period, Hollinger International’s stock 
+was comprised of Class A and Class B stock.  Hollinger International’s Class A Common Stock 
+was registered with the Commission under Section 12(b) of the Exchange Act, and its shares were 
+traded on the New York Stock Exchange.  Hollinger International’s Class B Common Shares were 
+directly and indirectly owned by Hollinger Inc.  
+4. At all times relevant, Hollinger Inc. was a publicly held Canadian company with its 
+principal place of business located in Toronto, Canada.  Hollinger Inc.’s shares were traded on the 
+Toronto Stock Exchange. Hollinger Inc. was also a foreign private issuer whose shares were 
+registered with the Commission pursuant to Section 12(g) of the Exchange Act.  Hollinger Inc.’s 
+primary holding was its shares of Hollinger International stock.  During 1998 through 2003, 
+Hollinger Inc. was the controlling shareholder of Hollinger International through its direct and 
+indirect ownership of all of the approximately 14,990,000 shares of Hollinger International’s Class 
+B Common Stock, which had a 10-to-1 voting preference over shares of Hollinger International’s 
+Class A Common Stock.  Hollinger Inc. also held several million shares of Hollinger 
+International’s Class A Common Stock.  The remaining Class A shares were held primarily by 
+public shareholders.  Hollinger Inc. was controlled by Ravelston.  
+5. Conrad Black (“Black”), currently incarcerated, was the Chairman of Hollinger 
+International from approximately October 1995 until January 17, 2004, and Chief Executive 
+Officer (“CEO”) from October 1995 until November 19, 2003.  At all times relevant, Black was 
+the Chairman and CEO of  Ravelston, and, through Conrad Black Capital Corp., was Ravelston’s 
+65.1% majority stockholder.  At all times relevant, Black, through Ravelston, was the controlling 
+shareholder of Hollinger Inc., which, in turn, held voting control over Hollinger International.  In 
+late 2005, the U.S. Attorney for the Northern District of Illinois charged Black with several counts 
+of mail and wire fraud, money laundering, racketeering, and obstruction of justice in connection 
+with his receipt of and failure to disclose certain purported non-competition payments.  In July 
+2007, after a four month trial, Black was found guilty of three counts of mail fraud in connection 
+with certain of these payments and one count of obstruction of justice.  On December 10, 2007, 
+Black was sentenced to 78 months imprisonment, fined $125,000, and pursuant to the U.S. 
+Attorney’s forfeiture motion, found jointly and severally liable for the $6.1 million in ill-gotten 
+“non-competition” payments received by him and the other criminal defendants.   
+6. F. David Radler (“Radler”) was Deputy Chairman, Director, President and Chief 
+Operating Officer (“COO”) of Hollinger International and former Publisher of the Chicago Sun-
+Times, a subsidiary of Hollinger International, until he resigned on November 17, 2003.  At all 
+times relevant, Radler was also the Deputy Chairman and COO of Hollinger Inc. and was also the 
+President of Ravelston, and owned approximately 14.2% of stock in Ravelston through F.D. 
+Radler Limited.  On August 18, 2005, Radler was indicted on seven counts of mail and wire fraud 
+3
+ 
+ 
+ 
+ 
+   
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+in connection with his receipt of and failure to disclose certain of the non-competition payments.  
+On September 20, 2005, Radler pled guilty to one count of mail fraud in connection with his 
+receipt of and failure to disclose certain of the non-competition payments.  On December 17, 2007, 
+Radler was sentenced to 29 months imprisonment, and ordered to pay a fine of $250,000. 
+7. John A. Boultbee (“Boultbee”), currently incarcerated, is a chartered accountant in 
+Canada. From 1990 until 1995, Boultbee served as a Director of Hollinger International, and from 
+1995 until 1999, he served as the Chief Financial Officer (“CFO”) of Hollinger International, after 
+which time he became an Executive Vice President of Hollinger International.  However, in 2000 
+and 2001, he acted as CFO of Hollinger International. He remained an Executive Vice President 
+of Hollinger International until November 17, 2003.  From approximately 1987 to 2004, Boultbee 
+served on the Board of Directors of Hollinger Inc. and was the CFO and Executive Vice President 
+of Hollinger Inc. Boultbee was also an Executive Vice President of Ravelston, of which he 
+indirectly owned approximately .97%.  On November 17 and December 15, 2005, the U.S. 
+Attorney for the Northern District of Illinois indicted Boultbee on nine counts of mail and wire 
+fraud in connection with his receipt of and failure to disclose certain purported non-competition 
+payments. In July 2007, Boultbee was found guilty of three counts of mail fraud.  On December 
+10, 2007, Boultbee was sentenced to 27 months imprisonment, ordered to pay restitution of 
+$152,000, and held jointly and severally liable for forfeiture of $6.1 million. 
+8. Mark S. Kipnis (“Kipnis”) was, from January 1998 until November 2003, the 
+Secretary and Vice President, Law of Hollinger International.  He served as the General Counsel 
+for Hollinger International’s Chicago newspapers.  On August 18 and November 17, 2005, the 
+U.S. Attorney for the Northern District of Illinois indicted Kipnis on nine counts of mail and wire 
+fraud in connection with the non-competition payments discussed herein.  Kipnis was found guilty 
+of two counts of mail fraud and on December 10, 2007, was sentenced to five years probation and 
+was held jointly and severally liable for forfeiture of $5.5 million. 
+Facts 
+9. In 2001, Atkinson received a total of $152,500 in purported non-competition 
+payments in connection with Hollinger International’s sales of certain of its U.S. community 
+newspapers to Forum Communications Company (“Forum”) and PMG Acquisition Corporation 
+(“Paxton”) and from American Publishing Company, a Hollinger International subsidiary.   
+10. On September 30, 2000, Forum and Hollinger International entered into an asset 
+purchase agreement for approximately $14 million, of which $400,000 was allocated to a non-
+competition agreement. On October 2, 2000, Paxton and Hollinger International entered into an 
+asset purchase agreement for approximately $59 million, of which $2 million was allocated to a 
+non-competition agreement.  Neither the asset purchase agreements nor the non-competition 
+agreements provided for non-competition agreements with or non-competition payments to any 
+individual executive officers of Hollinger International.   
+11. In April 2001, approximately six months after the transactions had closed, Black 
+and Radler paid themselves $285,000 each and Atkinson and Boultbee $15,000 each from the 
+reserves of the Forum and Paxton transactions as purported “supplemental non-competition 
+4
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+payments.” Black, Radler, Atkinson and Boultbee were not parties to and did not execute non-
+competition agreements in connection with these transactions.  Atkinson knew that he had not 
+executed non-competition agreements and was not entitled to non-competition payments in 
+connection with these transactions. 
+12. In February 2001, Black, Radler, Atkinson, Boultbee and Kipnis orchestrated the 
+payment of $5.5 million in purported non-competition payments, $2,612,500 each to Black and 
+Radler and $137,500 each to Atkinson and Boultbee, from American Publishing Company, a 
+Hollinger International subsidiary. There was no sale of newspapers associated with these 
+payments, and no reason for the individuals to execute agreements not to compete with a Hollinger 
+International subsidiary.  Moreover, at the time, American Publishing Company owned only one 
+small community newspaper which it sold shortly thereafter for $1.   
+13. Kipnis prepared non-competition agreements between American Publishing 
+Company and Black, Radler, Atkinson and Boultbee  and backdated the non-competition 
+agreements to December 31, 2000.  On February 8, 2001, Kipnis sent the non-competition 
+agreements to Atkinson, which Atkinson returned in executed form on or about March 1, 2001.  
+The non-competition payments to the individuals were made in February 2001, but Kipnis caused 
+the checks to be backdated to December 31, 2000.   
+14. It was the policy and practice of Hollinger International that related party 
+transactions were to be reviewed and approved by the Audit Committee.  Atkinson did not present 
+the American Publishing Company and Paxton and Forum non-competition payments to Hollinger 
+International’s Audit Committee or Board for review or approval.  In addition, Atkinson failed to 
+disclose his receipt of these purported non-competition payments in his responses to the 
+questionnaires used by Hollinger International to prepare its proxy statements and Forms 10-K.    
+15. Hollinger International’s filings with the Commission contained misstatements and 
+omissions of material fact regarding the non-competition payments made in connection with the 
+American Publishing Company and Forum and Paxton transactions.  The non-competition 
+payments to the executives were not disclosed in Hollinger International’s 2000 Form 10-K or 
+2001 proxy statement and were not disclosed in any way to Hollinger International’s shareholders 
+until Hollinger International’s 2001 Form 10-K filed on April 1, 2002.   
+16. The disclosure in the 2001 Form 10-K stated: 
+In connection with the sales of United States newspaper properties in 2000, to 
+satisfy a closing condition, the Company, Lord Black and three senior executives 
+entered into non-competition agreements with the purchasers . . .  for aggregate 
+consideration paid in 2001 of $0.6 million.  These amounts were in addition to the 
+aggregate consideration paid in respect of these non-competition agreements in 
+2000 of $15 million. Such amounts were paid to Lord Black and the three senior 
+executives. The Company’s independent directors have approved the terms of these 
+payments. 
+5
+ 
+ 
+ 
+ 
+  
+ 
+ 
+ 
+ 
+ 
+ 
+17. Hollinger International’s 2002 Form 10-K filed on March 31, 2003 contained a 
+nearly identical disclosure. Hollinger International’s 2002 proxy statement filed on April 2, 2002 
+contained a similar disclosure, but also reported that $7,197,500 was paid to Black and Radler each 
+and $602,500 was paid to Atkinson and Boultbee each.  
+18. Atkinson participated in preparing Hollinger International’s proxy statements and 
+Forms 10-K and reviewed and approved the relevant disclosures contained in these filings. 
+Atkinson also signed Hollinger International’s 2002 Form 10-K.    
+19. Hollinger International’s disclosures in its 2001 and 2002 Forms 10-K and in its 
+2002 proxy statement regarding the non-competition payments to the executives were materially 
+false and misleading because: (1) the American Publishing Company and Forum and Paxton non-
+competition agreements and payments were not made “to satisfy a closing condition” or required 
+by a purchaser and were not made in connection with the sales of newspaper properties; (2) the 
+individuals did not execute non-competition agreements in connection with the Forum or Paxton 
+payments; (3) only $9.5 million in non-competition payments were paid in 2000 and another $6 
+million, specifically the American Publishing Company and Forum and Paxton payments, was paid 
+in 2001; and (4) the payments were not approved by Hollinger International’s independent 
+directors. 
+20. Hollinger Inc.’s 2002 proxy statement filed on its Form 6-K on April 23, 2002 also 
+contained materially false and misleading statements regarding the non-competition payments to 
+the individuals in connection with the U.S. newspaper transactions.  The 2002 Form 6-K reported: 
+In connection with the sales of United States newspaper properties in 2000, to 
+satisfy a closing condition, Hollinger [Inc.], Hollinger International, Lord Black and 
+Messrs. Radler, Atkinson and Boultbee entered into non-competition agreements 
+with the purchasers . . . for aggregate consideration paid in 2001 and 2000 of 
+U.S.$15,600,000, consisting of U.S.$7,197,500 paid to Lord Black, U.S.$7,197,500 
+paid to Mr. Radler, U.S.$602,500 paid to Mr. Atkinson and U.S.$602,500 paid to 
+Mr. Boultbee. 
+21. Hollinger Inc.’s 2001 annual report filed on its Form 40-F on May 22, 2002 
+contained a similar disclosure, stating:
+ [i]n connection with the sales of United States newspaper properties in 2000, to 
+satisfy a closing condition, Hollinger International, Lord Black and three senior 
+executives entered into non-competition agreements with purchasers …for 
+aggregate consideration paid in 2001 of U.S. $600,000 ($917,000).  These amounts 
+were in addition to the aggregate consideration paid in respect to these non-
+competition agreements in 2000 of U.S. $15 million ($22.5 million).  All such 
+amounts were paid to Lord Black and the three senior executives.  The independent 
+directors of Hollinger International have approved the terms of the payments.   
+Hollinger Inc.’s 2002 Form 20-F filed on June 27, 2003 and its amended 2002 Form 20-F/A filed 
+on September 17, 2003 contained a nearly identical disclosure.   
+6
+ 
+ 
+ 
+ 
+ 
+   
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+22. Atkinson participated in drafting and reviewed and approved the Hollinger 
+International disclosures described above, which he knew served as the basis for Hollinger Inc.’s 
+disclosures. He also participated in the drafting of and reviewed and approved Hollinger Inc.’s 
+disclosures.  Atkinson reviewed and approved the 2001 and 2002 financial statements and the 2002 
+Proxy during Hollinger Inc. Board meetings, and failed to ensure that those filings disclosed the 
+true facts concerning the related party payments.  
+23. For the reasons discussed above in paragraph 19, the disclosures contained in 
+Hollinger Inc.’s filings regarding the non-competition payments were also materially false and 
+misleading.  
+24. Atkinson knew or was reckless in not knowing that the Hollinger International and 
+Hollinger Inc. filings discussed above contained materially false and misleading information 
+concerning the American Publishing Company, Forum and Paxton non-competition agreements and 
+payments. Atkinson knew or was reckless in not knowing that the purchasers in Forum and Paxton 
+did not request him to sign non-competition agreements or receive funds and that there was no non-
+competition agreement with Paxton or Forum and any of the executives.  Atkinson also knew that 
+the American Publishing Company “non-competition” payments were not in connection with any 
+sale of newspapers.  He also knew that only $9.5 million in non-competition payments were paid in 
+2000 and another $6 million was paid in 2001.  Finally, Atkinson knew or was reckless in not 
+knowing that the payments had not been approved by Hollinger International’s independent 
+directors. Atkinson also knew that the executives had received purported non-competition 
+payments that were not disclosed in the 2000 Form 10-K and 2001 proxy statement. 
+25. Atkinson has paid to Hollinger International, with interest, all of the non-
+competition monies he received.  In total, Atkinson has paid more than $2,798,424 to Hollinger 
+International.  Atkinson has also paid certain criminal monetary penalties and forfeiture amounts 
+assessed against him.   
+Violations 
+26. Based on the foregoing, the Commission finds that Atkinson willfully violated 
+Sections 10(b), 13(b)(5), and 14(a) of the Exchange Act and Rules 10b-5, 13b2-1,14a-3 and 14a-9 
+thereunder; willfully aided and abetted and caused Hollinger International’s violations of Sections 
+13(a), 13(b)(2)(A) and 14(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-13, 14a-3 and 14a-
+9 thereunder; and willfully aided and abetted and caused Hollinger Inc.’s violations of Section 
+13(a) of the Exchange Act and Rules 13a-1 and 13a-16 thereunder. 
+IV. 
+In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in Respondent Atkinson’s Offer. 
+7
+ 
+ 
+ 
+ 
+ 
+  
+   
+  
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+A. Atkinson shall cease and desist from committing or causing any violations and any 
+future violations of Sections 10(b), 13(b)(5), and 14(a) of the Exchange Act and Rules 10b-5, 
+13b2-1, 14a-3 and 14a-9 thereunder; and from causing any violations and any future violations of 
+Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1, 13a-13, and 13a-16 
+thereunder. 
+B. Pursuant to Section 21C(f) of the Exchange Act, Atkinson be, and hereby is, 
+prohibited from acting as an officer or director of any issuer that has a class of securities registered 
+pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 
+15(d) of the Exchange Act. 
+C. Atkinson is denied the privilege of appearing or practicing before the Commission 
+as an attorney.   
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+8
+ 
\ No newline at end of file
diff --git a/raw/aaer/2009/AAER-3059.txt b/raw/aaer/2009/AAER-3059.txt
new file mode 100644
index 0000000000000000000000000000000000000000..48f70cd429402f797aee629a6e106e2d55189904
--- /dev/null
+++ b/raw/aaer/2009/AAER-3059.txt
@@ -0,0 +1,100 @@
+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 60846 / October 20, 2009 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3059 / October 20, 2009 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No.  3-13659 
+ 
+ 
+In the Matter of 
+ 
+ECO
+2 Plastics, Inc., 
+ 
+Respondent. 
+ 
+ 
+ORDER INSTITUTING CEASE-AND-
+DESIST PROCEEDINGS PURSUANT TO 
+SECTION 21C OF THE SECURITIES 
+EXCHANGE ACT OF 1934, MAKING 
+FINDINGS, AND IMPOSING A CEASE-
+AND-DESIST ORDER 
+ 
+I. 
+ 
+ The Securities and Exchange Commi ssion (“Commission”) deems it appropriate 
+that cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C 
+of the Securities Exchange Act of 1934 (“Exchange Act”), against ECO
+2 Plastics, Inc. 
+(“ECO2” or “Respondent”).   
+ 
+II. 
+ 
+ In anticipation of the institution of these proceedings, Respondent has submitted 
+an Offer of Settlement (the “Offer”) which the Commission has determined to accept.  
+Solely for the purpose of these proceedings and any other proceedings brought by or on 
+behalf of the Commission, or to which the Commission is a party, and without admitting 
+or denying the findings herein, except as to the Commission’s jurisdiction over it and the 
+subject matter of these proceedings, which are admitted, Respondent consents to the entry 
+of this Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the 
+Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist 
+Order (“Order”), as set forth below.   
+ 
+ 
+ 
+ 
+ 
+ 
+III. 
+ 
+ On the basis of this Order and Respondent’s Offer, the Commission finds that: 
+ 
+1. ECO
+2 is a Delaware corporation located in San Francisco, California.  The 
+company’s common stock (symbol “EOPI”) is quoted on the OTC Bulletin Board and the 
+Pink Sheets operated by Pink OTC Markets Inc.  According to EDGAR, it appears that 
+ECO
+2 has never registered a class of securities under the Exchange Act but has registered 
+offerings of securities under the Securities Act of 1933.  Therefore, at all relevant times, 
+ECO2 has been subject to the reporting requirements of Section 15(d) of the Exchange 
+Act. 
+ 
+2. ECO
+2 failed to comply with Items 307 and 308T of Regulation S-B in its 
+Form 10-KSB report filed on April 15, 2008 for the fiscal year ended December 31, 
+2007, as a result of which the Respondent violated Exchange Act Section 15(d) and Rules 
+15d-1 and 15d-15 thereunder. 
+ 
+3. ECO
+2 failed to comply with Item 307 of Regulation S-K in its Form 10-K 
+report filed on April 14, 2009 for the fiscal year ended December 31, 2008, as a result of 
+which the Respondent violated Exchange Act Section 15(d) and Rules 15d-1 and 15d-15 
+thereunder. 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate to impose the 
+sanctions agreed to in Respondent ECO2’s Offer. 
+ 
+ Accordingly, it is hereby ORDERED that: 
+ 
+ Pursuant to Section 21C of th e Exchange Act, Respondent ECO
+2 cease and desist 
+from committing or causing any violations and any future violations of Section 15(d) of the 
+Exchange Act and Rules 15d-1 and 15d-15 thereunder.   
+ 
+ 
+ 
+ 
+ By the Commission. 
+        
+       Elizabeth M. Murphy 
+       S e c r e t a r y  
+ 
+ 
\ No newline at end of file
diff --git a/raw/aaer/2009/AAER-3071.txt b/raw/aaer/2009/AAER-3071.txt
new file mode 100644
index 0000000000000000000000000000000000000000..bb0288ab4876a1d2fcc70bf885fa7090c0c9a2d5
--- /dev/null
+++ b/raw/aaer/2009/AAER-3071.txt
@@ -0,0 +1,1402 @@
+
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+     SEC.gov | Home Solutions of America, Inc., Frank J. Fradella, Brian M. Marshall, Jeffrey M. Mattich, Rick J. O'Brien, Stephen C. Gingrich, Thomas L. Davis and Jeffrey T. Craft 
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+              Home Solutions of America, Inc., Frank J. Fradella, Brian M. Marshall, Jeffrey M. Mattich, Rick J. O'Brien, Stephen C. Gingrich, Thomas L. Davis and Jeffrey T. Craft
+           
+     
+ 
+
+   
+
+     
+
+      
+      
+             
+        Home Solutions of America, Inc., Frank J. Fradella, Brian M. Marshall, Jeffrey M. Mattich, Rick J. O'Brien, Stephen C. Gingrich, Thomas L. Davis and Jeffrey T. Craft
+       
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+                        
+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21314 / November 30, 2009 
+
+ Accounting and Auditing Enforcement Release No. 3071 / November 30, 2009 
+
+  SEC v. Home Solutions of America, Inc., Frank J. Fradella, Brian M. Marshall, Jeffrey M. Mattich, Rick J. O'Brien, Stephen C. Gingrich, Thomas L. Davis and Jeffrey T. Craft , Civil Action No. 3:09-cv-02269 (DCG) (N.D. Tx. Nov. 30, 2009) 
+
+ SEC Charges Hurricane Restoration Company and Executives In Post-Katrina Accounting Fraud; Four Individuals Settle 
+
+ On November 30, 2009, the Securities and Exchange Commission filed a civil injunctive action in the U.S. District Court for the Northern District of Texas charging a Dallas and New Orleans-based hurricane restoration company and several executives for lying about non-existent business deals in the wake of Hurricane Katrina, and fraudulently inflating the company's stock price before the company's CEO sold millions of dollars in company shares. 
+
+ The SEC alleges that Home Solutions of America, Inc. recorded millions of dollars in bogus revenue and issued a series of materially false press releases boasting robust financial results following Katrina and other weather-related disasters, thus inflating the company's stock price. The stock price later plummeted after large insider stock sales, the filing of private securities lawsuits alleging fraud, and the company's public announcement that it would restate its financial statements. Home Solutions then-CEO Frank Fradella, who is among seven individuals charged by the SEC in the scheme, dumped approximately $6.8 million worth of stock into the inflated market. 
+
+ According to the SEC's complaint, several different illicit maneuvers were used by Home Solutions at various times between 2004 to 2007 at the direction of Fradella and other executives in order to mislead the public about the company's true financial condition. The SEC alleges that Fradella initiated an expense-deferral scheme to inflate earnings by expensing year-end bonuses when paid rather than when earned. Fradella, Home Solutions CFO Jeff Mattich, and Brian Marshall (who became a Home Solutions director and president of its largest subsidiary, Fireline Restoration Inc., after its acquisition by Home Solutions) together engaged in a series of revenue-inflation schemes, booking millions of dollars of bogus revenue by invoicing and recording receivables on work that never occurred. They also improperly caused millions of dollars of revenue from another public company to be booked as Home Solutions revenue. 
+
+ The SEC further alleges that Marshall engaged in a separate revenue-inflation scheme at Fireline, booking more than $9 million of fake construction revenue from undisclosed, related-party contracts with entities that Marshall controlled. In fact, at the time Fireline caused Home Solutions to record the revenue, very little work had been performed on the projects and most remained bare-dirt lots. 
+
+ The SEC's complaint charges Home Solutions, Fradella, Marshall and Mattich with violating Section 17(a) of the Securities Act of 1933 (the "Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 thereunder. The complaint also charges Home Solutions with violating, and Fradella, Marshall and Mattich with aiding and abetting Home Solutions' violations of, Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13. The complaint further charges Fradella and Mattich with violating Section 13(b)(5) of the Exchange Act, Rules 13a-14, 13b2-1, and 13b2-2 thereunder and Section 304 of the Sarbanes-Oxley Act of 2002; and Marshall with violating Section 13(b)(5) of the Exchange Act and, Rules 13b2-1, and 13b2-2 thereunder, and aiding and abetting Home Solutions' violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 
+
+ The complaint seeks permanent injunctive relief and financial penalties against Home Solutions, Fradella, Marshall and Mattich, as to all the individuals, full disgorgement with interest and officer and director bars, and as to Fradella and Mattich, reimbursement of bonuses and stock sale profits under Section 304 of the Sarbanes-Oxley Act. Based on the failure of Home Solutions to file periodic reports since August 2007, the Commission also instituted separate administrative proceedings against the company, seeking revocation or suspension of each class of its securities. 
+
+ Four others charged today by the SEC simultaneously agreed to settle on the following terms, without admitting or denying the allegations in the complaint. 
+
+  Former Home Solutions CFO and COO Rick O'Brien agreed to pay a $130,000 penalty. 
+   Former Fireline controller Stephen Gingrich agreed to pay a $25,000 penalty and to an administrative order barring him from practicing before the Commission as an accountant for at least three years. 
+   Former Fireline COO Thomas Davis agreed to pay a $25,000 penalty and to pay disgorgement and interest of $32,850. 
+   In addition, O'Brien, Gingrich and Davis each consented to final judgments permanently enjoining them from violating Sections 17(a)(2) and (3) of the Securities Act and from aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. 
+   Finally, Jeff Craft, a business partner of Marshall, consented to a final judgment permanently enjoining him from violating Rule 13b2-2 under the Exchange Act. 
+  The SEC's investigation is continuing. 
+
+ # # # 
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diff --git a/raw/aaer/2009/AAER-3074.pdf b/raw/aaer/2009/AAER-3074.pdf
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+   
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+   
+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61137 / December 10, 2009 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3074 / December 10, 2009 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13707 
+In the Matter of 
+Applied Wellness Corporation, 
+Respondent. 
+ORDER INSTITUTING 
+ADMINISTRATIVE PROCEEDINGS 
+AND NOTICE OF HEARING 
+PURSUANT TO SECTION 12(j) OF THE 
+SECURITIES EXCHANGE ACT OF 1934 
+I. 
+The Securities and Exchange Commission (“Commission”) deems it necessary 
+and appropriate for the protection of investors that proceedings be, and hereby are, 
+instituted pursuant to Section 12(j) of the Securities Exchange Act of 1934 (“Exchange 
+Act”), against Applied Wellness Corporation (“Applied Wellness” or “Respondent”). 
+II. 
+After an investigation, the Division of Enforcement alleges that: 
+1. Applied Wellness Corporation (CIK No. 0001134011) is a Nevada 
+corporation located in San Diego, California.  Pursuant to its Form 10-KSB filed on April 
+15, 2008, it purported to distribute “devices for non-invasive therapeutic applications 
+based on the latest advances in the field of ionic therapies” through its subsidiary, Energy 
+Balance Resources, Inc. The common stock of Applied Wellness has been registered 
+with the Commission under Exchange Act Section 12(g) since April 8, 2001.  Applied 
+Wellness common stock is quoted on the Pink Sheets operated by Pink OTC Markets Inc. 
+(symbol: AAWL) and is eligible for the “piggyback” exception of Rule 15c2-11 of the 
+Exchange Act. 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+2. While its common stock was registered with the Commission, Applied 
+Wellness failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-15 
+thereunder in that it failed to make disclosures in its Form 10-KSB for the fiscal year 
+ended December 31, 2007, filed with the Commission on April 15, 2008, concerning its 
+internal control over financial reporting and disclosure controls and procedures, as 
+required by Items 307 and 308T of Regulation S-B. 
+3. While its common stock was registered with the Commission, Applied 
+Wellness failed to comply with Exchange Act Section 13(a) and Rule 13a-13 thereunder 
+in that it has not filed any periodic or quarterly reports on Form 10-Q for any fiscal 
+period subsequent to its fiscal quarter ended March 31, 2008.   
+4. While its common stock was registered with the Commission, Applied 
+Wellness failed to comply with Exchange Act Section 13(a) and Rule 13a-1 thereunder in 
+that it failed to file an annual report on Form 10-K for the fiscal year ended December 31, 
+2008. 
+III. 
+In view of the allegations made by the Division of Enforcement, the Commission deems 
+it necessary and appropriate for the protection of investors that public administrative proceedings 
+be instituted to determine:  
+A. Whether the allegations contained in Section II are true and, in connection 
+therewith, to afford the Respondent an opportunity to establish any defenses to such allegations; 
+and 
+B. Whether it is necessary or appropriate for the protection of investors, to suspend 
+for a period not exceeding twelve months, or revoke the registration of each class of securities of 
+the Respondent registered pursuant to Section 12 of the Exchange Act.  
+IV. 
+IT IS HEREBY ORDERED that a public hearing for the purpose of taking evidence on 
+the questions set forth in Section III hereof shall be convened at a time and place to be fixed, and 
+before an Administrative Law Judge to be designated by further order as provided by Rule 110 
+of the Commission’s Rules of Practice [17 C.F.R. § 201.110].  
+IT IS HEREBY FURTHER ORDERED that Respondent shall file an Answer to the 
+allegations contained in this Order within twenty (20) days after service of this Order, as 
+provided by Rule 220(b) of the Commission’s Rules of Practice [17 C.F.R. § 201.220(b)].  
+If Respondent fails to file the directed Answer, or fails to appear at a hearing after being 
+duly notified, the Respondent may be deemed in default and the proceedings may be determined 
+2 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+          
+ 
+  
+against it upon consideration of this Order, the allegations of which may be deemed to be true as 
+provided by Rules 155(a), 220(f), 221(f), and 310 of the Commission’s Rules of Practice [17 
+C.F.R. §§ 201.155(a), 201.220(f), 201.221(f), and 201.310]. 
+This Order shall be served forthwith upon Respondent personally or by certified, 
+registered, or Express Mail, or by other means of verifiable delivery.  
+IT IS FURTHER ORDERED that the Administrative Law Judge shall issue an initial 
+decision no later than 120 days from the date of service of this Order, pursuant to Rule 360(a)(2) 
+of the Commission’s Rules of Practice [17 C.F.R. § 201.360(a)(2)].  
+In the absence of an appropriate waiver, no officer or employee of the Commission 
+engaged in the performance of investigative or prosecuting functions in this or any factually 
+related proceeding will be permitted to participate or advise in the decision of this matter, except 
+as witness or counsel in proceedings held pursuant to notice.  Since this proceeding is not “rule 
+making” within the meaning of Section 551 of the Administrative Procedure Act, it is not 
+deemed subject to the provisions of Section 553 delaying the effective date of any final 
+Commission action.  
+By the Commission.  
+         Elizabeth M. Murphy 
+         S e c r e t a r y 
+3 
diff --git a/raw/aaer/2009/AAER-3075.txt b/raw/aaer/2009/AAER-3075.txt
new file mode 100644
index 0000000000000000000000000000000000000000..0b2369212d684049bde3801e8a7b42aaee1ae428
--- /dev/null
+++ b/raw/aaer/2009/AAER-3075.txt
@@ -0,0 +1,214 @@
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+                     
+ 
+ 
+     
+   
+  
+    
+ 
+  
+ 
+ 
+ 
+ 
+   
+ 
+ 
+ 
+                                                
+ 
+ 
+ 
+UNITED STATES OF AMERICA 
+ Before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61146 / December 10, 2009 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3075 / December 10, 2009 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13708 
+:
+ : 
+In the Matter of : ORDER INSTITUTING PUBLIC 
+: A D M I N I S T R A T I V E P R O C E E D I N G S 
+Kenneth Mueller, CPA : PURSUANT TO RULE 102(e) OF THE 
+: C O M M I S S I O N ’ S R U L E S O F
+ Respondent. : PRACTICE, MAKING FINDINGS, AND 
+: IMPOSING REMEDIAL SANCTIONS 
+: 
+____________________________________ : 
+I. 
+The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
+public interest that public administrative proceedings be, and hereby are, instituted against Kenneth 
+Mueller, CPA, (“Respondent” or “Mueller”) pursuant to Rule 102(e)(3)(i) of the Commission’s 
+Rules of Practice.1 
+II. 
+1 Rule 102(e)(3)(i) provides, in relevant part, that: 
+The Commission, with due regard to the public interest and without preliminary hearing, 
+may, by order, . . . suspend from appearing or practicing before it any . . . accountant . . . who has 
+been by name . . . permanently enjoined by any court of competent jurisdiction, by reason of his 
+or her misconduct in an action brought by the Commission, from violating or aiding and abetting 
+the violation of any provision of the Federal securities laws or of the rules and regulations 
+thereunder. 
+  
+  
+ 
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+ 
+ 
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+  
+  
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+   
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+ 
+In anticipation of the institution of these proceedings, Respondent has submitted an Offer of 
+Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the purpose of 
+these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
+which the Commission is a party, and without admitting or denying the findings herein, except as to 
+the Commission’s jurisdiction over him and the subject matter of these proceedings, and the 
+findings contained in paragraph three of Section III below, which are admitted, Respondent 
+consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Rule 
+102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions 
+(“Order”), as set forth below.   
+III. 
+On the basis of this Order and Respondent’s Offer, the Commission finds that:  
+1. Kenneth Mueller, age 56, was the Chief Financial Officer (“CFO”) of 
+SafeNet, Inc., from June 2004 until he resigned on April 6, 2006.  Since July 30, 1984, Mueller 
+has been a Certified Public Accountant in the state of Illinois. 
+2. SafeNet, Inc. (“SafeNet” or the “Company”) is a Delaware corporation, with 
+its headquarters in Belcamp, Maryland.  SafeNet produces information security software products.  
+During the relevant period, the Company’s common stock was registered with the Commission 
+pursuant to Section 12(g) of the Securities Exchange Act of 1934 (“Exchange Act”) and listed on 
+the NASDAQ Global Market under the symbol “SFNT.”  In April 2007, SafeNet was taken private 
+by Vector Capital Corporation.
+ 3. On November 12, 2009, the Commission filed a complaint against Mueller 
+in SEC v. SafeNet, Inc., et. al., Civil Case No. 09-2117 (D.D.C). On December 2, 2009, the court 
+entered a final judgment permanently enjoining Mueller, by consent, from future violations of 
+Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(b)(5), 14(a), and 16(a) of the 
+Exchange Act, and Rules 10b-5, 13a-14, 13b2-1, 13b2-2, 14a-9, 16a-3, and Regulation G 
+thereunder; and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) 
+of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.  Mueller was also 
+prohibited, for a period of five years, from acting as an officer or director of any issuer that has a 
+class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file 
+reports pursuant to Section 15(d) of the Exchange Act, and was ordered to pay disgorgement of 
+$37,000, plus prejudgment interest of $13,561, and a civil penalty of $75,000.    
+4. The Commission’s complaint alleged that, during the period from the 
+fourth quarter of 2000 through May 2006, SafeNet, through the actions of its former senior 
+officers, engaged in a scheme to backdate option grants to senior executives and other employees 
+in order to take advantage of low points in the Company’s stock price, without recording the 
+requisite compensation expense for these option grants.  The complaint alleged that, in late 2004, 
+Mueller learned of SafeNet’s backdating practice.  According to the complaint, after learning of 
+the practice, Mueller continued the backdating scheme by, among other actions, approving a 
+highly favorable historical date, coinciding with a low closing stock price, to use as the grant date 
+for option grants to himself and other SafeNet employees.  In addition, the complaint alleged that, 
+2 
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+      
+           
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+ 
+ 
+from the third quarter of 2004 through the second quarter of 2005, SafeNet, through the actions of 
+Mueller, another former officer, and three former accountants, engaged in a scheme to assist 
+SafeNet in meeting or exceeding quarterly earnings per share targets through the use of improper 
+accounting adjustments.  According to the complaint, as a result of each of these schemes, 
+SafeNet’s periodic reports, registration statements, and press releases contained materially 
+misstated financial results and materially false and misleading information concerning SafeNet’s 
+financial condition. The complaint alleged th at, during Mueller’s involvement in the two 
+schemes, as SafeNet’s CFO, he prepared, reviewed and/or signed SafeNet’s materially false and 
+misleading securities filings and press releases.   
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent Mueller’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+A. Mueller is suspended from appearing or practicing before the Commission as an 
+accountant.   
+B. After five years from the date of this order, Respondent may request that the 
+Commission consider his reinstatement by submitting an application (attention: Office of the 
+Chief Accountant) to resume appearing or practicing before the Commission as: 
+1. a preparer or reviewer, or a person responsible for the preparation or 
+review, of any public company’s financial statements that are filed with the Commission.  Such 
+an application must satisfy the Commission that Respondent’s work in his practice before the 
+Commission will be reviewed either by the independent audit committee of the public company 
+for which he works or in some other acceptable manner, as long as he practices before the 
+Commission in this capacity; and/or
+ 2. an independent accountant. Such an application must further satisfy the 
+Commission that: 
+(a) Respondent, or the public accounting firm with which he is 
+associated, is registered with the Public Company Accounting Oversight Board (“Board”) in 
+accordance with the Sarbanes-Oxley Act of 2002, and such registration continues to be effective; 
+(b) Respondent, or the registered public accounting firm with which he 
+is associated, has been inspected by the Board and that inspection did not identify any criticisms 
+of or potential defects in the respondent’s or the firm’s quality control system that would indicate 
+that the respondent will not receive appropriate supervision;
+ (c) Respondent has resolved all disciplinary issues with the Board, and 
+has complied with all terms and conditions of any sanctions imposed by the Board (other than 
+reinstatement by the Commission); and 
+3 
+
+  
+ 
+ 
+  
+  
+ 
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+ 
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+ 
+ 
+   
+ 
+ 
+ 
+ 
+ (d) Respondent acknowledges his responsibility, as long as Respondent 
+appears or practices before the Commission as an independent accountant, to comply with all 
+requirements of the Commission and the Board, including, but not limited to, all requirements 
+relating to registration, inspections, concurring partner reviews, and quality control standards. 
+C. The Commission will consider an application by Respondent to resume 
+appearing or practicing before the Commission provided that his state Registration License 
+is current and he has resolved all other disciplinary issues with the applicable state boards of 
+accountancy. However, if stat e licensure is dependent on reinstatement by the Commission, 
+the Commission will consider an application on its other merits.  The Commission’s review 
+may include consideration of, in addition to the matters referenced above, any other matters 
+relating to Respondent’s character, integrity, professional conduct, or qualifications to 
+appear or practice before the Commission. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+4 
diff --git a/raw/aaer/2009/AAER-3076.txt b/raw/aaer/2009/AAER-3076.txt
new file mode 100644
index 0000000000000000000000000000000000000000..acb1e49a300d7775c73d7cb790fdbd8673d93805
--- /dev/null
+++ b/raw/aaer/2009/AAER-3076.txt
@@ -0,0 +1,203 @@
+ 
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+                     
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+                                                
+ 
+ 
+ 
+UNITED STATES OF AMERICA 
+ Before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61147 / December 10, 2009 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3076 / December 10, 2009 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13709 
+:
+ : 
+In the Matter of : ORDER INSTITUTING PUBLIC 
+: A D M I N I S T R A T I V E P R O C E E D I N G S 
+Clinton Ronald Greenman, CPA : PURSUANT TO RULE 102(e) OF THE 
+: C O M M I S S I O N ’ S R U L E S O F
+ Respondent. : PRACTICE, MAKING FINDINGS, AND 
+: IMPOSING REMEDIAL SANCTIONS 
+: 
+____________________________________ : 
+I. 
+The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
+public interest that public administrative proceedings be, and hereby are, instituted against Clinton 
+Ronald Greenman, CPA, (“Respondent” or “Greenman”) pursuant to Rule 102(e)(3)(i) of the 
+Commission’s Rules of Practice.1 
+II. 
+1 Rule 102(e)(3)(i) provides, in relevant part, that: 
+The Commission, with due regard to the public interest and without preliminary hearing, 
+may, by order, . . . suspend from appearing or practicing before it any . . . accountant . . . who has 
+been by name . . . permanently enjoined by any court of competent jurisdiction, by reason of his 
+or her misconduct in an action brought by the Commission, from violating or aiding and abetting 
+the violation of any provision of the Federal securities laws or of the rules and regulations 
+thereunder. 
+  
+  
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+   
+ 
+ 
+ 
+ 
+ 
+ 
+In anticipation of the institution of these proceedings, Respondent has submitted an Offer of 
+Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the purpose of 
+these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
+which the Commission is a party, and without admitting or denying the findings herein, except as to 
+the Commission’s jurisdiction over him and the subject matter of these proceedings, and the 
+findings contained in paragraph three of Section III below, which are admitted, Respondent 
+consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Rule 
+102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions 
+(“Order”), as set forth below.   
+III. 
+On the basis of this Order and Respondent’s Offer, the Commission finds that:  
+1. Clinton Ronald Greenman, age 41, was SafeNet’s Corporate Controller 
+from December 2002 through December 2004.  From December 2004 through May 26, 2005, 
+Greenman was the Director for the Americas Regional Operating Center at SafeNet.  Since May 
+1996, Greenman has been licensed as a Certified Public Accountant in the State of New York.   
+2. SafeNet, Inc. (“SafeNet” or the “Company”) is a Delaware corporation, 
+with its headquarters in Belcamp, Maryland.  SafeNet produces information security software 
+products. During the relevant period, the Comp any’s common stock was registered with the 
+Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 (“Exchange Act”), 
+and listed on the NASDAQ Global Market under the symbol “SFNT.”  In April 2007, SafeNet 
+was taken private by Vector Capital Corporation.   
+3. On November 12, 2009, the Commission filed a complaint against 
+Greenman in SEC v. SafeNet, Inc., et. al, Civil Case No. 09-2117 (D.D.C).  On December 2, 2009, 
+the court entered a final judgment permanently enjoining Greenman, by consent, from future 
+violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, and Rules 13b2-1 and 
+13b2-2 under the Exchange Act, and from aiding and abetting violations of Sections 13(a), 
+13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, 13a-11, and 13a-13 
+thereunder.  The final judgment also found Greenman liable to pay disgorgement of $45,000, plus 
+prejudgment interest of $13,960, but waived these payments, except for $15,000, and did not 
+impose a civil penalty based on Greenman’s sworn financial statement and supporting materials 
+provided to the Commission.   
+4. The Commission’s complaint alleged that, from the third quarter of 2004 
+through the second quarter of 2005, SafeNet, through the conduct of its former employees, 
+engaged in a scheme to assist SafeNet in meeting or exceeding quarterly earnings per share 
+targets through the use of improper accounting adjustments.  The complaint alleged that 
+Greenman and others made, or caused others to make, certain improper accounting adjustments in 
+SafeNet’s books and records. The complaint also alleged that, as a result of these inappropriate 
+adjustments, SafeNet’s periodic reports, registration statements, and press releases contained 
+2 
+
+  
+ 
+ 
+ 
+ 
+  
+ 
+ 
+  
+ 
+      
+        
+ 
+      
+ 
+      
+           
+ 
+ 
+ 
+ 
+ 
+ 
+materially misstated financial results and materially false and misleading information concerning 
+SafeNet’s financial condition. 
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent Greenman’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+A. Greenman is suspended from appearing or practicing before the Commission as an 
+accountant.   
+B. After two years from the date of this order, Respondent may request that the 
+Commission consider his reinstatement by submitting an application (attention: Office of the 
+Chief Accountant) to resume appearing or practicing before the Commission as: 
+1. a preparer or reviewer, or a person responsible for the preparation or 
+review, of any public company’s financial statements that are filed with the Commission.  Such 
+an application must satisfy the Commission that Respondent’s work in his practice before the 
+Commission will be reviewed either by the independent audit committee of the public company 
+for which he works or in some other acceptable manner, as long as he practices before the 
+Commission in this capacity; and/or
+ 2. an independent accountant. Such an application must further satisfy the 
+Commission that: 
+(a) Respondent, or the public accounting firm with which he is 
+associated, is registered with the Public Company Accounting Oversight Board (“Board”) in 
+accordance with the Sarbanes-Oxley Act of 2002, and such registration continues to be effective; 
+(b) Respondent, or the registered public accounting firm with which he 
+is associated, has been inspected by the Board and that inspection did not identify any criticisms 
+of or potential defects in the respondent’s or the firm’s quality control system that would indicate 
+that the respondent will not receive appropriate supervision;
+ (c) Respondent has resolved all disciplinary issues with the Board, and 
+has complied with all terms and conditions of any sanctions imposed by the Board (other than 
+reinstatement by the Commission); and 
+(d) Respondent acknowledges his responsibility, as long as Respondent 
+appears or practices before the Commission as an independent accountant, to comply with all 
+requirements of the Commission and the Board, including, but not limited to, all requirements 
+relating to registration, inspections, concurring partner reviews, and quality control standards.   
+3 
+
+  
+  
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+ 
+ 
+ 
+ 
+C. The Commission will consider an application by Respondent to resume 
+appearing or practicing before the Commission provided that his state CPA license is 
+current and he has resolved all other disciplinary issues with the applicable state boards of 
+accountancy. However, if stat e licensure is dependent on reinstatement by the Commission, 
+the Commission will consider an application on its other merits.  The Commission’s review 
+may include consideration of, in addition to the matters referenced above, any other matters 
+relating to Respondent’s character, integrity, professional conduct, or qualifications to 
+appear or practice before the Commission. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+4 
diff --git a/raw/aaer/2009/AAER-3079.txt b/raw/aaer/2009/AAER-3079.txt
new file mode 100644
index 0000000000000000000000000000000000000000..eb2e06426c51fe01cd60f8089c80fe7e3c520bb6
--- /dev/null
+++ b/raw/aaer/2009/AAER-3079.txt
@@ -0,0 +1,1400 @@
+
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+              Brad A. Morrice, et al.
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+                   U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21327 / December 7, 2009 
+
+ Accounting and Auditing Enforcement Release No. 3079 / December 7, 2009 
+
+  SECURITIES AND EXCHANGE COMMISSION v. BRAD A. MORRICE et al. , 
+Civil Action No.  SACV09-01426 JVS (C.D. Cal.) 
+
+ SEC CHARGES FORMER OFFICERS OF SUBPRIME LENDER NEW CENTURY WITH FRAUD 
+
+ The Securities and Exchange Commission today charged three former top officers of New Century Financial Corporation with securities fraud for misleading investors as New Century's subprime mortgage business was collapsing in 2006.  At the time of the fraud, New Century was one of the largest subprime lenders in the nation.   
+
+ The SEC's complaint names as defendants: 
+
+  Former CEO and co-founder Brad A.   Morrice of Laguna Beach, Calif.    
+
+ Former CFO Patti M. Dodge of Irvine, Calif.   
+
+ Former Controller David N. Kenneally of Rossmoor, Calif. 
+
+  In its complaint, the SEC alleges that New Century disclosures generally sought to assure investors that its business was not at risk and was performing better than its peers.  Defendants, however, failed to disclose important negative information, including dramatic increases in early loan defaults, loan repurchases, and pending loan repurchase requests.  Defendants knew this negative information from numerous internal reports they regularly received, including weekly reports that Morrice ominously entitled "Storm Watch."   
+
+ The complaint also alleges that Dodge and Kenneally fraudulently accounted for expenses related to bad loans that it had to repurchase.  In the face of dramatically increasing loan repurchases and a huge, undisclosed backlog of repurchase demands, Kenneally, with Dodge's knowledge, made changes to New Century's accounting for loan repurchases in both the second and third quarters of 2006.  These undisclosed accounting changes violated generally accepted accounting principles and resulted in New Century's improperly avoiding substantial repurchase expenses and materially overstating its financial results. 
+
+ The complaint further alleges that the defendants' fraud caused investors substantial losses.  From early 2006 to early 2007, New Century's stock price ranged from $30.00 to $50.00; and in the second half of 2006, the company raised $142.5 million by selling stock to new investors.  After New Century announced in February 2007 that it would have restate its 2006 financial statements, New Century's stock price fell 36% to around $19.00.  New Century's stock price continued to fall, and traded at less than $1 when the company filed for bankruptcy in April 2007.   
+
+ The complaint, filed in federal court in the Central District of California, charges the defendants with violations of the antifraud provisions in Section 17(a) of the Securities Act (Morrice and Dodge only) and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; the record-keeping provisions of Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder (Dodge and Kenneally only); the internal control provisions of Section 13(b)(5) of the Exchange Act; the false statements to auditors provisions of Exchange Act Rule 13b2-2; the officer certification provisions of Rule 13a-14 of the Exchange Act (Morrice and Dodge only); the failure to reimburse provisions of Section 304 of the Sarbanes-Oxley Act of 2002 (Morrice and Dodge only); and aiding and abetting New Century's violations of the reporting provisions in Sections 13(a) of the Exchange Act and Rules 12b-20, 13a-11, and 13a-13 thereunder.  The Commission seeks permanent injunctions against future violations, disgorgement with prejudgment interest, officer and director bars, and civil penalties. 
+
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diff --git a/raw/aaer/2009/AAER-3081.pdf b/raw/aaer/2009/AAER-3081.pdf
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diff --git a/raw/aaer/2009/AAER-3088.txt b/raw/aaer/2009/AAER-3088.txt
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+              John W. Dwyer and Theodore P. Noncek
+           
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+        John W. Dwyer and Theodore P. Noncek
+       
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+                   U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No.  21342 / December 17, 2009 
+
+ Accounting and Auditing Enforcement Release No.  3088 / December 17, 2009 
+
+  Securities and Exchange Commission v. John W. Dwyer, 09-CV-2386 (CKK)(D.D.C.); Securities and Exchange Commission v. Theodore P. Noncek, 09-CV-2387 (CKK)(D.D.C.)  
+
+ SEC CHARGES FORMER CFO AND CONTROLLER FOR ROLES IN ACCOUNTING VIOLATIONS AT BALLY TOTAL FITNESS 
+
+ The Commission today charged former chief financial officer John W. Dwyer and former controller Theodore P. Noncek for their roles in an accounting fraud at Bally Total Fitness Holding Corporation, which settled accounting fraud charges in 2008.  Bally is a Chicago-based operator of fitness centers.  Without admitting or denying the allegations, Dwyer and Noncek agreed to settle the SEC's charges.  The settlements are subject to Court approval. 
+
+ The Commission's complaint against Dwyer alleges, among other things, that during the relevant time period, Dwyer violated the anti-fraud provisions, and aided and abetted Bally's violations of the reporting, record-keeping, and internal controls provisions, of the federal securities laws.  The Commission's complaint against Noncek alleges that Noncek violated various provisions of the federal securities laws.  The complaints also allege that Dwyer and Noncek were responsible   for Bally's materially false and misleading statements about its financial condition in filings with the Commission and in other public statements. These materially false and misleading statements portrayed Bally's financial condition (its net worth) and its performance (its income) as being materially better than they actually were during the relevant period.  
+
+ Dwyer settled the Commission case against him by consenting to permanent injunctions based on his violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5 and his aiding and abetting Bally's violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13, payment of $250,000, a permanent officer-and-director bar, and a permanent bar from practice before the SEC in a related Rule 102(e) proceeding.  Noncek settled the Commission case against him by consenting to permanent injunctions based on his violations of Section 17(a)(2) and (3) of the Securities Act, and his aiding and abetting Bally's violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13, and a two-year bar from practice before the SEC in a related Rule 102(e) proceeding.   
+
+ In separate administrative proceedings, the Commission charged Ernst & Young LLP (E&Y) and six of its current and former partners.  In the settled order as to E&Y, the SEC finds that E&Y knew or should have known about Bally's fraudulent financial accounting and disclosures.  The SEC further finds that E&Y issued unqualified audit opinions stating that Bally's 2001 â€" 2003 financial statements were presented in conformity with Generally Accepted Accounting Principles (GAAP) and that E&Y's audits were conducted in accordance with Generally Accepted Auditing Standards (GAAS).  These opinions were false and misleading. 
+
+ The SEC charged current E&Y National Office partners Randy G. Fletchall (the partner in charge of E&Y's National Office), Mark V. Sever (E&Y's National Director of Area Professional Practice), and Kenneth W. Peterson (the Professional Practice Director for the Lake Michigan Area/Chicago office), and retired E&Y partners Thomas D. Vogelsinger  ( the former Lake Michigan Area Managing Partner), and William J. Carpenter and John M. Kiss ,  two former E&Y Engagement Partners.   
+
+ E&Y and each of the E&Y partners also has settled with the SEC without admitting or denying the charges. 
+
+ See  Lit. Rel. LR-20470  
+
+ Complaints in this matter 
+
+   John W. Dwyer  
+  Theodore P. Noncek  
+    
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diff --git a/raw/aaer/2009/AAER-3090.pdf b/raw/aaer/2009/AAER-3090.pdf
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diff --git a/raw/aaer/2009/AAER-3091.txt b/raw/aaer/2009/AAER-3091.txt
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@@ -0,0 +1,1374 @@
+
+
+ 
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+     SEC.gov | Walter A. Forbes et al. 
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21356 / December 30, 2009 
+
+ Accounting and Auditing Enforcement Release No. 3091 / December 30, 2009 
+
+  Securities and Exchange Commission v. Walter A. Forbes et al.,  , 01 civ 987 (JAP) (D.N.J. filed Feb. 28, 2001) 
+
+ Former Cendant Corporation Chairman Walter A. Forbes Settles SEC Fraud Action 
+
+
+ 
+
+ The Securities and Exchange Commission (the Commission) announced that on December 29, 2009, a settled final judgment was entered by the U.S. District Court for the District of New Jersey against Walter A. Forbes, the former Chairman of Cendant Corporation (Cendant), in the Commission's action against Forbes arising out of his conduct in the Cendant fraud, Securities and Exchange Commission v. Walter A. Forbes et al., 01 civ 987 (JAP) (D.N.J. filed Feb. 28, 2001).  The Commission's complaint in that action alleged that Forbes orchestrated an earnings management scheme at CUC International Inc. (CUC), a corporate predecessor of Cendant, and, subsequently, at Cendant itself.  The complaint further alleged that over a twelve-year period Forbes directed a scheme that improperly inflated the company's quarterly and annual financial results, and that for the period 1995 to 1997, CUC's operating income was improperly inflated by an aggregate amount exceeding $500 million.  When the fraud was disclosed in 1998, Cendant's common stock dropped dramatically, resulting in defrauded investors losing billions of dollars. 
+
+ The final judgment against Forbes, to which he consented without admitting or denying the Commission's allegations, enjoins him from violating Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rules 10b 5, 13b2 1, and 13b2 2, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Exchange Act and Exchange Act Rules 12b 20, 13a 1, 13a 13, and 14a 9.  The final judgment also bars Forbes, pursuant to Section 21(d)(2) of the Exchange Act, from serving as an officer or director of a public company. 
+
+ Forbes was convicted in a related federal criminal prosecution of conspiracy to commit securities fraud and making false filings with the Commission.  In 2007, Forbes was sentenced to 151 months in prison and ordered to pay criminal restitution of $3.275 billion.  Later that year, the U.S. Court of Appeals for the Second Circuit affirmed his judgment of conviction.  In 2008, the U.S. Supreme Court denied Forbes' petition for a writ of certiorari seeking review of his conviction.
+
+  For further information about the Commission's action in  Securities and Exchange Commission v. Forbes et al. , see Litigation Release No.  16910  (Feb. 28, 2001);  see also  Litigation Release No.  16587  (June 14, 2000); Litigation Release No.  18711  (May 14, 2004); Litigation Release No.  20089  (Apr. 25, 2007). 
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diff --git a/raw/aaer/2009/AAER-3093.txt b/raw/aaer/2009/AAER-3093.txt
new file mode 100644
index 0000000000000000000000000000000000000000..4c9af8e3f5ec2887cb852506f5f7110eac81d299
--- /dev/null
+++ b/raw/aaer/2009/AAER-3093.txt
@@ -0,0 +1,1391 @@
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+              UTStarcom, Inc.
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+                  U.S. SECURITIES AND EXCHANGE COMMISSION 
+
+ Litigation Release No. 21357 / December 31, 2009 
+
+ Accounting and Auditing Enforcement Release No. 3093 / December 31, 2009 
+ 
+  Securities and Exchange Commission v. UTStarcom, Inc. , Case No. CV-09-6094 (JSW) (N.D. Cal. filed Dec. 31, 2009) 
+
+ SEC CHARGES CALIFORNIA TELECOM COMPANY WITH BRIBERY AND OTHER FCPA VIOLATIONS 
+
+ The Securities and Exchange Commission today charged Alameda, Calif.-based telecommunications company UTStarcom, Inc. with violations of the Foreign Corrupt Practices Act (FCPA) for authorizing unlawful payments to foreign government officials in Asia. 
+
+ UTStarcom agreed to settle the SEC's charges and pay a $1.5 million penalty among other remedies. In a related criminal case, the U.S. Department of Justice announced today that UTStarcom agreed to pay an additional $1.5 million fine. 
+
+ The SEC's complaint, filed in the U.S. District Court for the Northern District of California, alleges that UTStarcom's wholly-owned subsidiary in China paid nearly $7 million between 2002 and 2007 for hundreds of overseas trips by employees of Chinese government-controlled telecommunications companies that were customers of UTStarcom, purportedly to provide customer training. In reality, the trips were entirely or primarily for sightseeing. 
+
+ The SEC further alleges that UTStarcom provided lavish gifts and all-expenses paid executive training programs in the U.S. for existing and potential foreign government customers in China and Thailand. UTStarcom also purported to hire individuals affiliated with foreign government customers to work in the U.S. and provided them with work visas, when in reality the individuals did no work for UTStarcom. According to the SEC, UTStarcom also made improper payments to sham consultants in China and Mongolia while knowing that they would pay bribes to foreign government officials. 
+
+ The SEC's complaint charges UTStarcom with violations of the anti-bribery, books and records, and internal controls provisions of the FCPA (Sections 30A, 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, respectively). UTStarcom agreed, without admitting or denying the charges, to the entry of a permanent injunction against FCPA violations and to provide the SEC with annual FCPA compliance reports and certifications for four years, in addition to paying the $1.5 million penalty. 
+
+ The SEC acknowledges the assistance of the Department of Justice during the investigation. 
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