UNITED STATES OF AMERICA
| ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO RULE 102(e) OF THE COMMISSION'S RULES OF PRACTICE, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Laurence M. Simon, CPA ("Respondent" or "Simon") pursuant to Rule 102(e)(3)(i) of the Commission's Rules of Practice.1
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.
On the basis of this Order and Respondent's Offer, the Commission finds that:
1. Laurence M. Simon, age 38, was, at all relevant times, a certified public accountant licensed to practice in the State of New Jersey. He served as Chief Financial Officer of Medi-Hut Company, Inc. ("Medi-Hut") from 2001 until his termination in March 2003.
2. Medi-Hut was, at all relevant times, a Nevada corporation with its principal place of business in Lakewood, New Jersey, and later, Wall Township, New Jersey. Medi-Hut was engaged in the business of wholesaling pharmaceutical drugs and medical supplies. At all relevant times, Medi-Hut's common stock was registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 ("Exchange Act"), and traded on the NASDAQ Small Cap Market until March 28, 2003, when it was delisted.
3. On August 19, 2003, the Commission filed a complaint against Simon in SEC v. Medi-Hut Co., Inc. et al. (Civil Action No. 03-3921) (D.N.J. 2003). On August 27, 2003, the Court entered an order permanently enjoining Simon, by consent, from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and from violating or 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-13, 13b2-1 and 13b2-2 thereunder. The Court also prohibited Simon 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.
4. The Commission's complaint alleged, among other things, the following: Simon, along with Medi-Hut's former Chief Executive Officer and its former Vice President of Sales, inflated Medi-Hut's revenues and earnings through fictitious period-end invoices and other accounting irregularities. In addition, Simon knew or was reckless in not knowing that Medi-Hut's Vice President of Sales secretly owned and controlled one of Medi-Hut's largest customers and failed to disclose that fact to the investing public. Simon created false records and took steps to conceal the accounting irregularities and the Vice President of Sales' control of the customer from Medi-Hut's auditors. These accounting and disclosure violations enabled Medi-Hut to falsely report revenue growth and caused Medi-Hut's Form 10-K for the fiscal year ended October 31, 2001, and three Forms 10-Q for the fiscal year ended October 31, 2002, to be materially false and misleading.
In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanction agreed to in Respondent Simon's Offer.
Accordingly, it is hereby ORDERED, effective immediately, that Simon is suspended from appearing or practicing before the Commission as an accountant.By the Commission.
Jonathan G. Katz
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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