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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. 46177 / July 10, 2002

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1591 / July 10, 2002

ADMINISTRATIVE PROCEEDING
File No. 3-10827


In the Matter of

Steven C. Veen, CPA

Respondent.


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ORDER INSTITUTING PUBLIC ADMINISTRATIVE PROCEEDINGS PURSUANT TO RULE 102(e)(3) OF THE COMMISSION'S RULES OF PRACTICE AND FINDINGS AND ORDER OF THE COMMISSION

I.

The Securities and Exchange Commission ("Commission" or "SEC") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Steven Conrad Veen ("Veen" or "Respondent") pursuant to Rule 102(e)(3) of the Commission's Rules of Practice, 17 C.F.R. § 201.102(e)(3).1

II.

In anticipation of the institution of these proceedings, Veen has submitted an Offer of Settlement, which the Commission has determined that it is in the public interest 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, and without admitting or denying the findings set forth herein, except that he admits the Commission's finding that a Final Judgment has been entered against him as set forth in paragraphs III.F below and admits the Commission's jurisdiction over him and over the subject matter of this proceeding, Veen consents to the issuance of this Order Instituting Public Administrative Proceedings Pursuant to Rule 102(e)(3) of the Commission's Rules of Practice and Findings and Order of the Commission ("Order").

III.

On the basis of this Order and Veen's Offer of Settlement, the Commission makes the following findings:2

  1. Veen, age 46, is and has been a certified public accountant licensed to practice in the State of California. He served as the Chief Financial Officer of Aura Systems, Inc. ("Aura") and NewCom, Inc. ("NewCom"). Veen resides in southern California.

  2. Aura Systems, Inc. ("Aura"), a Delaware corporation headquartered in El Segundo, California, formerly sold sound related and multi-media products, and now sells an induction power system for mobile power applications. Aura's common stock is registered with the SEC pursuant to Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act") and was quoted on the NASDAQ national market system until July 1999, when its stock was delisted. Aura's stock currently trades on the over-the-counter bulletin board under the symbol "AURA." Aura's fiscal year ends February 28. On October 2, 1996, the SEC entered a Cease-and-Desist Order by consent against Aura and others for violations of Section 17(a) of the Securities Act of 1933 ("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 promulgated thereunder.

  3. NewCom, Inc. ("NewCom"), formerly headquartered in Westlake Village, California, was incorporated under the laws of Delaware in June 1994 as a wholly owned subsidiary of Aura and was in the business of selling computer communication and multimedia products. In September 1997, NewCom completed an initial public offering. As of the end of its 1998 fiscal year, Aura owned approximately 69% of NewCom's stock. NewCom's common stock was registered with the SEC pursuant to Section 12(g) of the Exchange Act and was quoted on the NASDAQ national market system. NewCom ceased operations and its stock was delisted in May 1999.

  4. On June 11, 2002, the Commission filed a Complaint against Veen in Securities and Exchange Commission v. Aura Systems, Inc., et. al., in United States District Court for the Central District of California, under case number 02-4555 (NM).

  5. Simultaneously with the filing of the Complaint, and without admitting or denying the allegations in the Complaint, except as to jurisdiction, which he admitted, Veen consented to the entry of the Final Judgment as to Steven C. Veen; and

  6. on June 27, 2002 the United States District Court for the Central District of California entered the Final Judgment as to Steven C. Veen,

    1. permanently enjoining Veen from engaging in acts, practices or courses of business which constitute or would constitute violations of Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], and Sections 10(b) and 13(b)(5) of the Exchange Act [15 U.S.C. §§ 78j(b), 78m(b)(5)], and Rules 10b-5, 13b2-1, and 13b2-2 [17 C.F.R. §§ 240.10b-5, 240.13b2-1, and 240.13b2-2] promulgated thereunder;

    2. prohibiting Veen for a period of five (5) years from acting as an officer or director of any issuer having a class of securities registered with the Commission pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)]; and

    3. ordering Veen to pay a civil penalty in the amount of $50,000.00 pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)].

  7. The Commission's complaint in Aura Systems, Inc. alleges, among other things, as follows:

    1. In fiscal 1997 and 1998, Veen and others knowingly or recklessly overstated Aura's revenue by booking a total of $26.5 million in fictitious computer monitor sales, and provided false documents to Aura's independent auditors during the year end audit.

    2. Veen and others caused Aura to make two incorrect revenue recognition entries relating to contracts Aura had to install its electric valve actuators in engines, while knowing or being reckless in not knowing that the revenue had not been earned during those quarters. The entries resulted in material revenue overstatements of $1.04 million in the second quarter and $1.5 million in the third quarter. Veen then reversed the $1.5 million entry by netting it against an unrelated $3.5 million license fee receivable, and directly reversed the $1.04 million entry at year end.

    3. Veen knew or was reckless in not knowing that NewCom inflated its fiscal 1999 pre-tax net income by at least $43.2 million. These overstatements resulted from booking fictitious sales, overstating inventory, failing to post customer credits and rebates, and overstated income due to a contract manufacturing company.

IV.

In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the following relief as agreed to in Respondent Veen's Offer of Settlement.

Accordingly, IT IS HEREBY ORDERED, effective immediately, that:

  1. Respondent is suspended from appearing or practicing before the Commission as an accountant.

  2. 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:

      1. 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") or an organization providing equivalent oversight and quality control functions ("equivalent organization");

      2. 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 or equivalent organization; and

      3. As long as Respondent appears or practices before the Commission as an independent accountant, he will remain either a member of, or associated with a member firm of, the SEC Practice Section or equivalent organization, and will comply with all applicable SEC Practice Section or equivalent organization requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education.

  3. 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

______________________________
1 Paragraph (3) of Rule 102(e) provides, in relevant part, that:
...(i) 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.
2 The findings herein are made pursuant to Veen's Offer of Settlement and are not binding on any other person or entity in this or in any other proceeding.


http://www.sec.gov/litigation/admin/34-46177.htm


Modified: 07/22/2002