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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. 49204 / February 6, 2004

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1953 / February 6, 2004

Admin. Proc. File No. 3-10083


In the Matter of

Lee R. Fontaine, CPA,


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ORDER GRANTING APPLICATION FOR REINSTATEMENT TO APPEAR AND PRACTICE BEFORE THE COMMISSION AS AN ACCOUNTANT RESPONSIBLE FOR THE PREPARATION OR REVIEW OF FINANCIAL STATEMENTS REQUIRED TO BE FILED WITH THE COMMISSION

On October 21, 1999, Lee R. Fontaine ("Fontaine") was suspended from appearing or practicing as an accountant before the Commission as a result of settled public administrative proceedings instituted by the Commission against Fontaine pursuant to Rule 102(e) of the Commission's Rules of Practice.1 This order is issued in response to Fontaine's application for reinstatement to practice before the Commission as an accountant responsible for the preparation or review of financial statements required to be filed with the Commission.

During fiscal year 1994, KnowledgeWare, Inc. ("KnowledgeWare" or the "Company"), filed with the Commission three consecutive quarterly reports that materially misstated the Company's revenue and net income. In addition, KnowledgeWare reported a profit in the third quarter when, in fact, the Company incurred a loss. Fontaine, KnowledgeWare's former manager of financial reporting, prepared the financial statements and other materially false and misleading portions of the September 1993, December 1993 and March 1994 Forms 10-Q. On October 4, 1999, Fontaine settled an injunctive action on which the 1999 suspension order was based.

As a result of the 1999 suspension order, the Georgia State Board of Accountancy placed Fontaine's license on probation for one year and conditioned his reinstatement on his compliance with the terms outlined in its order. At the end of the probationary period, the Georgia Board voted to take Fontaine off probation.

In his capacity as an accountant responsible for the preparation or review of financial statements of a public company to be filed with the Commission, Fontaine has undertaken to have his work reviewed by the independent audit committee of any company for which he works, or in some other manner acceptable to the Commission, while practicing before the Commission in this manner. Fontaine is not, at this time, seeking to appear or practice before the Commission as an independent accountant. If he should wish to resume appearing and practicing before the Commission as an independent accountant, he will be required to submit an application to the Commission showing that he has complied and will comply with the terms of the original suspension order in this regard. Therefore, Fontaine's suspension from practice before the Commission as an independent accountant continues in effect until the Commission determines that a sufficient showing has been made in this regard in accordance with the terms of the original suspension order.

Rule 102(e)(5) of the Commission's Rules of Practice governs applications for reinstatement, and provides that the Commission may reinstate the privilege to appear and practice before the Commission "for good cause shown." This "good cause" determination is necessarily highly fact specific.

On the basis of information supplied, representations made, and undertakings agreed to by Fontaine, it appears that Fontaine has complied with the terms of the October 21, 1999 order suspending him from practice before the Commission as an accountant, that no information has come to the attention of the Commission relating to his character, integrity, professional conduct or qualifications to practice before the Commission that would be a basis for adverse action against Fontaine pursuant to Rule 102(e) of the Commission's Rules of Practice, and that Fontaine, by undertaking to have his work reviewed by the independent audit committee of any company for which he works, or in some other manner acceptable to the Commission, in his practice before the Commission as a preparer or reviewer of financial statements required to be filed with the Commission, has shown good cause for reinstatement. Therefore, it is accordingly,

ORDERED pursuant to Rule 102(e)(5)(i) of the Commission's Rules of Practice that Lee R. Fontaine, CPA is hereby reinstated to appear and practice before the Commission as an accountant responsible for the preparation or review of financial statements required to be filed with the Commission.

By the Commission.

Jonathan G. Katz
Secretary


Endnotes

Rule 102(e)(5)(i) provides:

"An application for reinstatement of a person permanently suspended or disqualified under paragraph (e)(1) or (e)(3) of this section may be made at any time, and the applicant may, in the Commission's discretion, be afforded a hearing; however, the suspension or disqualification shall continue unless and until the applicant has been reinstated by the Commission for good cause shown." 17 C.F.R. 201.102(e)(5)(i).


http://www.sec.gov/litigation/admin/34-49204.htm


Modified: 02/06/2004