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U.S. Securities and Exchange Commission

Before The

Release No. 44511 / July 3, 2001

Release No. 1421 / July 3, 2001

File No. 3-10313

In the Matter of






On September 27, 2000 the Securities and Exchange Commission (the "Commission") instituted administrative proceedings against respondent William L. Butcher, C.P.A. ("Butcher") pursuant to Rule 102(e) of the Commission's Rules of Practice.1

In response to the institution of these proceedings, Butcher 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, Butcher consents to the issuance of this Order Making Findings And Imposing Sanctions Pursuant To Rule 102(e) Of The Commission's Rules Of Practice ("Order").


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.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. The case also involves improper professional conduct by the Company's independent auditor, William L. Butcher.

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. In the two weeks following the issuance of this press release, Consolidated's stock price climbed from under $1 to a high of $32 per share.

3. In August 1999, Consolidated filed with the Commission a registration statement on Form 10-SB incorporating financial statements audited by Butcher. These financial statements reported a substantially inflated asset value for the software. The software represented nearly 99% of the Company's assets.

4. Consolidated had no legitimate basis for the valuation given to the software in the March press release and the August registration statement. Moreover, Butcher engaged in improper professional conduct in his audit of the Company's financial statements.

B. Respondent

5. William L. Butcher, C.P.A., 51, is a resident of Everett, Washington. He became a licensed Certified Public Accountant in 1991, and was licensed in the State of Washington during the relevant period.

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. Contractors Directory 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. 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, 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. Consolidated Issued a 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 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. Consolidated followed this press release with additional releases - nearly a dozen in April alone - each describing a different technical aspect of the YourBankOnline software. Consolidated's stock price went as high as $32 in intraday trading on April 12, and then steadily declined to $3 by August 1999.

16. 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. The stock that Consolidated exchanged for the software had a market value far below $10,000,000 at the time of the purchase (particularly since the stock issued to the owner was restricted and could not be freely traded).

17. Just one week before signing the contract, Consolidated had hired an outside consulting firm to help draft a registration statement and business plan for the Company. Under the contract between Consolidated 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 $0.20 per share. This stock, unlike the stock issued to the owner, was unrestricted.

18. Despite the press release's claim that Consolidated 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 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.

E. Consolidated Filed A Registration Statement Which Incorporated Financial Statements Reflecting The Inflated Software Valuation.

19. 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. The financial statements had been audited by respondent Butcher. Consolidated reported total assets of $4.1 million, of which $4 million consisted of the YourBankOnline software. (Because the financial statements covered the period ended 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.)

20. There was an inadequate 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.

21. The Company's use of the $2 per share assigned value 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 issued by Consolidated added further uncertainty to its fair value.

22. 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, and the only prior sale of the software had been for $410,000. By recording the asset at $4,000,000, Consolidated materially overstated its assets.

F. Butcher Engaged In Improper Professional Conduct In His Audit Of Consolidated's Financial Statements.

23. In July 1999, Consolidated retained Butcher to audit its financial statements for the fiscal year ended March 31, 1999. Consolidated was a new client for Butcher. Butcher falsely represented, in an independent auditor's report containing an unqualified opinion, that Consolidated's financial statements were prepared in conformity with GAAP and that his audit was performed in accordance with generally accepted auditing standards ("GAAS").

24. Butcher's audit failed to comply with GAAS. Under GAAS, an auditor must exercise due professional care in the performance of the audit and the preparation of the audit report. Moreover, an auditor must obtain sufficient competent evidential matter to afford a reasonable basis for an opinion and must maintain an attitude of professional skepticism.

25. Butcher failed to take reasonable steps to evaluate whether the software - an asset which by his own calculation accounted for 99% of Consolidated's assets - was valued in conformity with GAAP. As discussed above, when stock is issued in exchange for an asset, the asset must be recorded at its fair value (either the value of the stock or the value of the asset, whichever is more clearly evident). Rather than obtain evidence supporting the valuation, Butcher relied both on the arbitrary stock price assigned to the stock in the contract between Consolidated and the owner and the price at which the stock traded after the transaction was announced in the March 30, 1999 press release. Butcher performed minimal analysis of the fair value of the YourBankOnline software, despite his knowledge that the software was the Company's primary asset.

26. Butcher did not adequately review the history of the acquired software. He never talked to the bank which designed the software, the licensee, or the owner; he did not request an appraisal of the software or compare the value of comparable programs; he did not obtain evidence of Consolidated's revenue forecasts for the software. Because he failed to obtain sufficient competent evidence of the software's value, Butcher failed to comply with GAAS. In rendering his audit report, Butcher falsely represented that Consolidated's financial statements were presented in conformity with GAAP.

27. Based on the foregoing, Butcher engaged in improper professional conduct under Rule 102(e)(1)(ii) of the Commission's Rules of Practice.


Based on the foregoing, the Commission deems it appropriate to accept the Offer submitted by Butcher. Accordingly, IT IS HEREBY ORDERED pursuant to Rule 102(e) of the Commission's Rules of Practice that:

A. Butcher is temporarily denied the privilege of appearing or practicing before the Commission as an accountant.

B. After one year from the date of this Order, Butcher 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 Butcher'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) Butcher 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) Butcher 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 Butcher 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 Butcher to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to Butcher's character, integrity, professional conduct, or qualifications to appear or practice before the Commission.

By the Commission.

Jonathan G. Katz


1 Rule 102(e)(1)(ii) [17 C.F.R. 201.102(e)(1)(ii)] 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 after notice and opportunity for a hearing in the matter to have engaged in improper professional conduct.
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, the Company is referred to as "Consolidated" or "the Company" in the Offer and the Order.


Modified: 07/03/2001