UNITED STATES OF AMERICA
In the Matter of
PROCEEDINGS, MAKING FINDINGS AND
ORDER PURSUANT TO RULE 102(e)
OF THE COMMISSION'S
RULES OF PRACTICE
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest to institute an administrative proceeding against Respondent Samuel L. White pursuant to paragraphs (2) and (3) of Rule 102(e) of the Commission's Rules of Practice [17 C.F.R. §201.102(e)].1
In anticipation of the institution of this proceeding, White 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 without admitting or denying the Commission's findings contained herein, except that he admits the jurisdiction of the Commission over him and over the matters set forth in this Order and admits the Commission's finding that a Final Judgment of Permanent Injunction and Other Equitable Relief has been entered against him as set forth in Section III, White consents to the entry of findings and the imposition of the remedial sanctions set forth below.
The Commission finds the following:
A. At all relevant times, White, a certified public accountant, was a tax partner at Deloitte & Touche LLP and the personal accountant for Christopher K. Bagdasarian.
B. Normandy America Inc. was a Delaware corporation formed in 1994 to operate, through a subsidiary, as a reinsurance company. In May 1995, Normandy America filed a registration statement with the Commission for a $200 million initial public offering of securities. According to the registration statement, Normandy America's success as a reinsurer would depend on the ability of Christopher K. Bagdasarian, the company's Chief Executive Officer and Chairman of the Board, to successfully invest its reinsurance premium income in a portfolio of equity securities. Normandy America's registration statement became effective on August 11, 1995, and its stock, registered with the Commission pursuant to Exchange Act Section 12(g), commenced trading on the NASDAQ National Market System on August 15, 1995. On August 16, 1995, Normandy withdrew its offering from the market and rescinded all trades.
C. On September 26, 1996, the Commission filed a complaint against White and Bagdasarian in the United States District Court for the Southern District of New York. [SEC v. Christopher K. Bagdasarian and Sam Lance White, No. 96-CV-7306 (S.D.N.Y.).] The Commission's complaint alleged, among other things, that: (1) White engaged in a fraudulent scheme with Bagdasarian to fabricate an investment track record for Bagdasarian that was included in the registration statement for Normandy America's initial public offering; (2) White perpetrated the fraudulent scheme by repeatedly providing false and misleading information to the underwriters and underwriters' counsel; (3) White issued, on behalf of Deloitte, four "agreed-upon procedures" letters to the underwriters that falsely stated that the investment results described in the registration statement were complete and accurate, when in fact no Deloitte personnel performed any work to verify Bagdasarian's investment performance results as described in the registration statement; (4) White falsely represented that all of the assets Bagdasarian managed had been disclosed in Normandy's registration statement, and that Bagdasarian had sole authority to make investment decision for those assets, when in fact Bagdasarian managed approximately $45 million in additional assets that were not disclosed; and (5) between 1991 and 1995, White verified false statements in quarterly letters sent by Bagdasarian to a New York bank to enable Bagdasarian to obtain over twelve million dollars in unsecured lines of credit.
D. Also on September 26, 1996, White was indicted by a grand jury in the United States District Court for the Southern District of New York. As superceded prior to White's trial, the indictment charged White with felony charges of securities fraud, bank fraud, conspiracy, and false statements arising from White's involvement with Normandy America and Bagdasarian. In November 1997, following a trial, a jury found White guilty on all charges. On June 30, 1999, the court imposed a final judgment sentencing White to imprisonment for 57 months and ordering him to pay $6,475,898 in restitition. [United States v. Samuel Lance White, No. 96 Cr. 869 (S.D.N.Y.).]
E. On April 18, 2000, a final judgment was entered by the United States District Court for the Southern District of New York enjoining White from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), Exchange Act Rule 10b-5. White consented to entry of the judgment without admitting or denying the allegations of the Commission's complaint.
Based on the foregoing, the Commission finds that: (a) on June 30, 1999, the United States District Court for the Southern District of New York imposed a final judgment convicting White of felony crimes involving moral turpitude; and (b) on April 18, 2000, in an action brought by the Commission, the United States District Court for the Southern District of New York entered a final judgment permanently enjoining White from violating Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5 by reason of his misconduct.
ORDER IMPOSING SANCTIONS
Based on the foregoing, the Commission deems it appropriate and in the public interest to accept White's Offer of Settlement and accordingly,
IT IS HEREBY ORDERED, effective immediately, that White is denied the privilege of appearing or practicing before the Commission as an accountant.
By the Commission.
Jonathan G. Katz
1Rule 102(e) provides, in pertinent part:
(2) [A]ny 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. . . .
(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 misconduct in an action brought by the Commission, from violation or aiding and abetting the violation of any provision of the Federal securities laws or of the rules and regulations thereunder . . . .
(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.
|Home | Previous Page||