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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 43531 / November 8, 2000

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1341 / November 8, 2000

ADMINISTRATIVE PROCEEDING
File No. 3-10357

In the Matter of

LUIS R. HIDALGO, JR., CPA,

Respondent.

ORDER INSTITUTING A PUBLIC ADMINISTRATIVE PROCEEDING PURSUANT TO RULE 102(e) OF THE COMMISSION'S RULES OF PRACTICE, MAKING FINDINGS, AND IMPOSING SANCTIONS

I.

The Securities and Exchange Commission ("Commission") deems it appropriate that a public administrative proceeding be and hereby is instituted pursuant to Rule 102(e)(3)(i)(A)1 of the Commission's Rules of Practice against Respondent Luis R. Hidalgo, Jr., CPA ("Hidalgo").

II.

In anticipation of the institution of this proceeding, Hidalgo 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 Hidalgo admits the jurisdiction of the Commission over him and over the subject matter of this proceeding, and that a Judgment of Permanent Injunction and Other Relief Against Defendant Luis R. Hidalgo, Jr. as set forth in paragraph III.C. has been entered against him, Hidalgo consents to the entry of this Order Instituting a Public Proceeding and Opinion and Order Pursuant to Rule 102(e) of the Commission's Rules of Practice ("Order") as set forth below.

Accordingly, IT IS HEREBY ORDERED that a proceeding pursuant to Rule 102(e)(3)(i)(A) be, and hereby is, instituted.

III.

On the basis of this Order and the Offer of Settlement submitted by Hidalgo, the Commission finds that:2

A. RESPONDENT

Luis R. Hidalgo, Jr., CPA, age 64, is and has been a certified public accountant licensed to practice in California since 1981. Since 1993, Hidalgo has been the auditor for Countryland Wellness Resorts, Inc. ("Countryland"). Pertinent to this Order, Hidalgo audited Countryland's financial statements for the fiscal years ended October 31, 1996, October 31, 1997, December 31, 1997 and December 31, 1998.

B. RELATED PARTY

Countryland (formerly Continental Wellness Casinos, Inc.), most recently incorporated in Delaware in 1999, maintains its offices in Las Vegas, Nevada. Countryland claims to be engaged in the mining and electrical contracting industries, and plans to operate a longevity center at a wellness resort and casino in Las Vegas, Nevada. Countryland's stock is registered with the Commission pursuant to Section 12(b) of the Securities Exchange Act of 1934 ("Exchange Act") and is quoted on the OTC Bulletin Board but is not actively trading.

C. FACTS

1. On September 26, 2000, the Commission filed a complaint against Hidalgo and others in SEC v. Countryland Wellness Resorts, Inc., Fred Cruz (a.k.a. Federico Cruz Gonzalez), Luis R. Hidalgo, Jr., and Donald E. Studer, CV-S-00-1160-PMP-RJJ (D. Nev.) (the "Complaint"). On October 23, 2000, the United States District Court for the District of Nevada entered a Judgment of Permanent Injunction and Other Relief Against Defendant Luis R. Hidalgo, Jr. ("Judgment"), which, among other things: (1) permanently enjoins Hidalgo from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and (2) does not assess a civil penalty based on Hidalgo's demonstrated inability to pay. Hidalgo consented to the entry of the judgment without admitting or denying any of the allegations in the Complaint.

2. The Commission's Complaint, among other things, alleges that: (1) beginning in 1996 or earlier and continuing into 1999, Countryland reported non-existent assets, including "gold in storage," "proven gold and silver mining reserves," and Indonesian bank guarantees, which ranged in value from $19 million (gold in storage) to over $2 billion (proven mining reserves); (2) Hidalgo made materially false and misleading statements when he rendered audit reports containing unqualified opinions for 1996 and 1997, and a qualified opinion for 1998, that represented Countryland's financial statements to be in conformity with Generally Accepted Accounting Principles and that his audits were conducted in accordance with Generally Accepted Auditing Standards ("GAAS"); (3) Hidalgo knew or was reckless in not knowing that Countryland's financial statements were materially false and misleading; and (4) Hidalgo's audits were not conducted in accordance with GAAS.

IV.

Hidalgo 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) suspends Hidalgo from appearing or practicing before the Commission, except that after five years from the date of this Order, Hidalgo may request permission to resume appearing or practicing before the Commission. As set forth in Hidalgo's Offer of Settlement, Hidalgo undertakes to cooperate with the Commission staff in preparing for and presenting any civil litigation or administrative proceeding concerning any transaction that is the subject of this Order.

V.

In view of the foregoing, the Commission deems it appropriate to accept the Offer of Settlement submitted by Hidalgo.

IT IS HEREBY ORDERED, effective immediately, that:

A. Respondent 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 satisfy the Commission that: (a) Respondent, 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) Respondent, 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 Respondent 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 Respondent to resume appearing or practicing before the Commission 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.

Jonathan G. Katz
Secretary


Footnotes

1 Rule 102(e)(3)(i)(A) provides, in pertinent 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 The findings herein are made pursuant to the Offer of Settlement of Luis R. Hidalgo, Jr., CPA and are not binding on any other person or entity in this or any other proceeding.

http://www.sec.gov/litigation/admin/34-43531.htm


Modified:11/13/2000