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Counsel of Record: Local Counsel: UNITED STATES DISTRICT COURT
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Securities and Exchange Commission, Plaintiff, vs. ROBERT QUATTRONE ARTHUR CHRISTENSEN LAWRENCE FRANSEN JOHN VAN SICKELL GEORGE VIEIRA BATTAGLIA & COMPANY, INC. CALIFORNIA MILK MARKET LNN ENTERPRISES, INC. PACKING PRODUCTS, INC. and WEST COAST COMMODITIES, INC. Defendants. |
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Civil Action No. COMPLAINT |
The United States Securities and Exchange Commission ("Commission") alleges:
1. This action involves a financial fraud designed to falsely inflate the sales revenue, accounts receivable, and inventory of Suprema Specialties, Inc. ("Suprema"), a publicly-traded company based in Paterson, New Jersey that was formerly engaged in the manufacturing, processing, and distribution of cheese and cheese products. The fraudulent scheme commenced in or around 1998 or earlier, and continued into February 2002, when Suprema filed for bankruptcy.
2. The fraudulent scheme was orchestrated by Suprema's management with the direct participation of Suprema's employees and certain vendors to and customers of Suprema, and their owners and operators. The named defendants are Suprema employees, vendors, customers, and the owners and operators of Suprema customers and vendors.
3. The fraudulent scheme had three main components. First, the scheme involved fictitious circular "round-tripping" transactions between Suprema and certain of its customers and vendors. From 1998 through and including the first quarter of 2002, these fictitious round-tripping transactions resulted in Suprema's reporting of fictitious sales that represented approximately 60% of Suprema's total reported revenue of approximately $1.13 billion. From 1998 through the bankruptcy filing, the fictitious sales revenue on Suprema's books and records totaled over $700 million. The fictitious sales also accounted for approximately 30%, 65%, 85%, and 87% of the accounts receivable reported by Suprema at the end of fiscal years 1998, 1999, 2000, and 2001, respectively. Second, imitation cheese and non-cheese products were falsely re-labeled as premium cheeses to fraudulently inflate Suprema's inventory. Third, certain of Suprema's cheese products were adulterated with various imitation cheese and other non-cheese ingredients in order to reduce Suprema's costs and boost sales. The illegal adulteration of Suprema's cheeses was contrary to the repeated statements in the company's filings with the Commission that Suprema sold "natural" or "all natural" cheeses that met applicable federal standards. All three components of the fraudulent scheme resulted in material misstatements in Suprema's periodic reports filed with the Commission during its fiscal years 1998 through 2001 and the first quarter of 2002, as well as Suprema's registration statements filed with the Commission for its secondary public offerings in 2000 and 2001.
4. While the defendants were engaged in this fraudulent scheme, Suprema continued to offer additional securities for sale, using fraudulent and materially false financial statements and financial information in the course of those offers and sales. As a result of the fraudulent scheme, Suprema's public investors and potential investors were deceived into believing that Suprema's revenues were materially better than they actually were.
5. By knowingly or recklessly engaging in the acts alleged in this Complaint, defendants violated, or aided and abetted violations of, the anti-fraud, reporting, books and records, internal controls, and lying to auditors provisions of the federal securities laws.
6. Unless enjoined by this Court, it is likely that each defendant will continue to engage in such violative conduct. Therefore, the Commission seeks this Court's injunction against future violations directed to each defendant, officer and director bars against the individual defendants, as well as disgorgement of unjust enrichment, prejudgment interest, and statutory civil penalties as described in its prayer for relief.
7. The Commission brings this action pursuant to Sections 20(b) and 20(d) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. § 77t(b), (d)], and Section 21(d) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § 78u(d)].
8. This Court has jurisdiction of this action pursuant to Sections 20 and 22(a) of the Securities Act [15 U.S.C. § 77t and 77v(a)] and pursuant to Sections 21(d) and (e) and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), (e) and 78aa].
9. The defendants, and each of them, directly or indirectly, have made use of the means or instrumentalities of interstate commerce, or of the mails, or the facilities of a national securities exchange in connection with the transactions, acts, practices, and courses of business alleged herein.
10. ARTHUR CHRISTENSEN, age 34, began working as an accountant with Suprema in 1994 and served as controller of the company from 1997 until his resignation on December 19, 2001.
11. JOHN VAN SICKELL, age 43, was the operations manager of Suprema's plant in Paterson, New Jersey from 1996 until 2000, when he was promoted to be assistant to the executive vice president of Suprema. VAN SICKELL continued to work for Suprema until March 2002, when Suprema's bankruptcy proceeding was converted to a Chapter 7 liquidation.
12. GEORGE VIEIRA, age 42, became chief operations officer for Suprema's subsidiary facility in California following the death of the company's former executive vice president in August 2001 and remained in that position until March 2002. From at least 1998 through March 2002, VIEIRA owned and/or operated California Milk Market and West Coast Commodities, Inc. and was president and chairman of the board of West Coast Commodities, Inc.
13. CALIFORNIA MILK MARKET ("CMM") is a non-public corporation incorporated and located in California that brokers the sale of milk and milk-related products.
14. WEST COAST COMMODITIES, INC. ("WCC") is a non-public corporation incorporated and located in California that brokers the sale of cattle and animal food products.
15. LAWRENCE FRANSEN, age 49, owns LNN Enterprises, Inc., and also owns a 25% interest in Wall Street Cheese, LLC, both of which he operates. FRANSEN is also the founder and president of LNN Enterprises, Inc.
16. LNN ENTERPRISES, INC. ("LNN") is a sole proprietorship incorporated and located in California that brokers cheese transactions.
17. ROBERT QUATTRONE, age 46, owns, operates, and is president of both Battaglia & Company, Inc. and Packing Products, Inc.
18. BATTAGLIA & COMPANY, INC. ("BATTAGLIA") is a non-public corporation incorporated and located in New Jersey that imports and sells cheese, as well as other food products.
19. PACKING PRODUCTS, INC. ("PACKING PRODUCTS") is a non-public corporation incorporated and located in New Jersey that imports and sells cheese, as well as other food products.
20. California Goldfield Cheese Trading, LLC ("California Goldfield") is a non-public company registered as an LLC and located at different times in California and in Colorado that purchases and sells cheese products.
21. Founded in 1983, Suprema, a New York corporation based in Paterson, New Jersey, held itself out as a manufacturer, processor and distributor of "all natural" gourmet Italian cheeses. Suprema maintained three wholly owned subsidiary facilities in California, New York, and Idaho. Suprema held its initial public offering in 1991 and registered its securities with the Commission pursuant to Section 12(g) of the Exchange Act. As such, the company was required to file periodic reports with the Commission pursuant to Section 13 of the Act. The company adopted a fiscal year ending on June 30. Suprema's common stock was traded on the over-the-counter market starting on April 25, 1991, as well as on the NASDAQ National Market System from March 22, 1993 until March 1, 2002, when the stock was delisted. Suprema is presently liquidating pursuant to a Chapter 7 proceeding in federal bankruptcy court.
22. Wall Street Cheese, LLC ("Wall Street") is a non-public company registered as an LLC and located in California that purchases and sells cheese products.
23. In every fiscal year from 1996 forward, Suprema claimed annual double-digit growth in sales and revenues. The company borrowed against its accounts receivable and inventory to obtain a revolving credit line with a consortium of banks that rose to $140 million by the end of 2001. Suprema held secondary public offerings in August 2000 and November 2001 that raised over $8 million and $48 million, respectively. In fiscal 2001, which ended on June 30 of the calendar year, Suprema reported over $420 million in revenues, an increase of over 50% from the prior fiscal year, and reported $8.9 million in net income.
24. From at least 1998 through the first quarter of 2002, however, Suprema's apparent success was the product of a fraudulent scheme orchestrated and managed by the company's management with the defendants' direct and knowing involvement. The scheme had three main components.
25. First, from at least 1998 through early 2002, Suprema engaged in circular round-tripping transactions that generated fictitious sales revenues. Each round-tripping "circle" in this scheme involved three parties: Suprema, a third-party "customer," and a related "vendor." In most instances, the customer and vendor in these circles shared a common owner. With some exceptions as noted below, the fraud operated as follows: Fictitious paperwork was created purporting to represent sales of cheese products from Suprema to a customer involved in the fraud. The customer then purportedly sold those or other products to the related vendor. This was followed by a fictitious sale of other products (often purporting to be the raw materials for cheese manufacturing) from the vendor back to Suprema. With rare exception, no goods were actually sold or purchased, or otherwise changed hands, in these transactions.
26. On each leg of the circle — Suprema to the customer, customer to the vendor, and vendor back to Suprema — the entity purporting to sell goods created false and fictitious invoices and bills of lading to document the false transaction, and the entity purporting to buy goods generated a check in payment for the same false transaction.
27. These circular round-tripping transactions resulted in a continuous flow of checks from Suprema to the vendors involved in the fraud, from the vendors to the related customers, and from the customers back to Suprema, all purportedly in payment for the fictitious sales. Typically, the checks from Suprema to the vendors involved in the fraud were greater than the corresponding checks from the related customer back to Suprema. This difference in the checks represented a kick-back or "commission" paid to the common owner of the customer and vendor for his participation in the fraudulent scheme. Funds for the checks, including commissions, were drawn on Suprema's line of credit, which increased as Suprema's accounts receivable grew.
28. From at least 1998 through the first quarter of 2002, Suprema engaged in round-tripping transactions with BATTAGLIA as a customer and PACKING PRODUCTS as a vendor; both of these companies were owned and operated by defendant QUATTRONE. During this period, Suprema recognized approximately $108 million in fraudulent revenue from the round-tripping transactions with BATTAGLIA and PACKING PRODUCTS. Defendant QUATTRONE participated in the round-tripping fraud, received false invoices reflecting fictitious sales from Suprema to BATTAGLIA, generated false invoices reflecting fictitious purchases by Suprema from PACKING PRODUCTS, circulated checks purportedly in payment for these fictitious transactions, and signed false audit confirmations that were provided to Suprema's independent auditors purporting to confirm the existence of the fictitious transactions. For his participation in the fraudulent scheme to inflate Suprema's publicly reported revenues, QUATTRONE was paid approximately $1.3 million in "commissions."
29. From at least 1998 through the first quarter of 2002, Suprema engaged in round-tripping transactions with WCC and CMM; both of these companies were owned and/or operated by defendant VIEIRA. In most transactions, WCC assumed the role of a customer and CMM assumed the role of a vendor, although there were variations on this arrangement. During this period, Suprema recognized approximately $34 million in fraudulent revenue from the round-tripping transactions with WCC and CMM. Defendant VIEIRA participated in the round-tripping fraud, received false invoices reflecting fictitious sales from Suprema to WCC, generated false invoices reflecting fictitious purchases by Suprema from CMM, circulated checks purportedly in payment for these fictitious transactions, and signed false audit confirmations that were provided to Suprema's independent auditors purporting to confirm the existence of the fictitious transactions. For his participation in the fraudulent scheme to inflate Suprema's publicly reported revenues, VIEIRA was paid between $200,000 and $300,000 in "commissions."
30. From at least 2000 through the first quarter of 2002, Suprema engaged in round-tripping transactions with Wall Street as a customer and LNN as a vendor; both of these companies were owned in whole or in part and were operated by defendant FRANSEN. In some instances, California Goldfield rather than LNN assumed the role of a vendor in Suprema's round-tripping transactions with Wall Street. During this period, Suprema recognized approximately $27 million in fraudulent revenue from the round-tripping transactions with Wall Street and LNN. Defendant FRANSEN participated in the round-tripping fraud, received false invoices reflecting fictitious sales from Suprema to Wall Street, generated false invoices reflecting fictitious purchases by Suprema from LNN, circulated checks purportedly in payment for these fictitious transactions, and signed false audit confirmations that were provided to Suprema's independent auditors purporting to confirm the existence of the fictitious transactions. For his participation in the fraudulent scheme to inflate Suprema's publicly reported revenues, FRANSEN was paid approximately $112,000 in "commissions."
31. In furtherance of the round-tripping fraud, one or more officers and directors of Suprema not named as defendants in this Complaint created false paperwork and instructed QUATTRONE, VIEIRA, and FRANSEN to sign the false audit confirmations, all of which were provided to Suprema's independent auditors purporting to confirm the existence of the fictitious transactions.
32. In furtherance of the round-tripping fraud, defendant VAN SICKELL, acting at the direction of one or more of Suprema's officers, relabeled the company's inventory, delivered and retrieved checks in person, and created fraudulent paperwork. VAN SICKELL knew that no goods changed hands in the transactions referenced in the fraudulent paperwork he created.
33. From at least 1998 to August 2001, defendant CHRISTENSEN knew of the creation of false invoices and bills of lading reflecting fictitious sales by Suprema, but turned a blind eye to this practice on instruction from one or more officers of Suprema. Starting at least as early as 2000, CHRISTENSEN himself also participated in this practice. Following the death of Suprema's former executive vice president in August 2001, defendant CHRISTENSEN assumed responsibility, at the direction of one or more officers of Suprema, for coordinating the flow of false invoices and checks in the round-tripping scheme. CHRISTENSEN continued in this role until December 2001, when he resigned as Suprema's controller.
34. In December 2001, following CHRISTENSEN's resignation, defendant VIEIRA, then chief operating officer for Suprema's subsidiary facility in California, assumed responsibility for coordinating the flow of false invoices and checks in the round-tripping scheme. VIEIRA continued in this role until February 2002, when Suprema filed for bankruptcy.
35. VAN SICKELL, CHRISTENSEN, VIEIRA, QUATTRONE, and FRANSEN each knew, or were reckless in not knowing, that their respective conduct would result in material misstatements of revenue in the financial statements that Suprema filed with the Commission. By and through their principals, BATTAGLIA, CMM, LNN, PACKING PRODUCTS, and WCC each knew, or were reckless in not knowing, that their respective conduct would result in material misstatements of revenue in the financial statements that Suprema filed with the Commission.
36. QUATTRONE's participation in fictitious sales transactions with Suprema through BATTAGLIA and PACKING resulted in overstatements in Suprema's reported revenue by approximately 5.7%, 7.4%, 8.8%, 11.6%, and 10.4% in fiscal years 1998, 1999, 2000, 2001, and the first quarter of 2002, respectively. Similarly, VIEIRA's participation through WCC and CMM resulted in overstatements in Suprema's reported revenue by approximately 0.025%, 0.016%, 4.5%, 4.0%, and 3.19% in fiscal years 1998, 1999, 2000, 2001, and the first quarter of 2002, respectively. FRANSEN's participation through Wall Street and LNN resulted in overstatements in Suprema's reported revenue by approximately 1.11%, 3.95%, and 5.87% in fiscal years 2000, 2001, and the first quarter of 2002, respectively. Collectively, the participation of QUATTRONE, VIEIRA, and FRANSEN resulted in overstatements in Suprema's reported revenue by approximately 5.75%, 7.41%, 14.25%, 19.51%, and 19.48% in fiscal years 1998, 1999, 2000, 2001, and the first quarter of 2002, respectively.
37. As a consequence, the round-tripping scheme resulted in material overstatements of Suprema's revenue in the following forms that the company filed with the Commission: a Form 10-K for each of its fiscal years 1998, 1999, 2000, and 2001; a Form 10-Q for the first three quarters of each of those fiscal years and for the first quarter of its fiscal year 2002; and a Form S-2 registration statement for each of the secondary public offerings in August 2000 and November 2001.
38. The second component of the fraudulent scheme involved a deliberate overvaluation of Suprema's inventory through the purchase of imitation cheeses and other non-cheese products and the subsequent relabeling of these products as high priced premium cheeses. This component thus enabled Suprema, among other things, to conceal from its auditors and others the fraudulent invoicing scheme and to conceal the fact that Suprema possessed less inventory, or less valuable inventory, than it claimed to have in its filings with the Commission.
39. VAN SICKELL regularly traveled to Suprema's warehouses to meet incoming trucks delivering imitation cheese products from one or more vendors. These shipments usually occurred in the months leading up to the end of Suprema's fiscal year, in anticipation of the fiscal year-end audit by the company's outside auditors. VAN SICKELL switched the product labels and bills of lading to designate the products falsely as higher-valued premium cheeses shipped from one of Suprema's subsidiaries. At the direction of one or more company officers, VAN SICKELL was then to destroy the original product labels and bills of lading for the imitation cheese products.
40. VAN SICKELL knew, or was reckless in not knowing, that this conduct would result in material misstatements of inventory in the financial statements that Suprema filed with the Commission.
41. The fraudulent inflation of Suprema's assets resulted in material misstatements of the company's inventory in the following forms that the company filed with the Commission: a Form 10-K for each of its fiscal years 1999, 2000, and 2001; a Form 10-Q for the first three quarters of each of those fiscal years and for the first quarter of its fiscal year 2002; and a Form S-2 registration statement for each of the secondary public offerings in August 2000 and November 2001.
42. The third component of the fraudulent scheme involved the "cutting" or adulteration of Suprema's cheeses with inexpensive imitation cheese products, in order to reduce the company's costs and boost sales, contrary to statements in Suprema's filings with the Commission that the company's cheeses were "natural" or "all natural" and met applicable federal standards.
43. VAN SICKELL and others adulterated Suprema's cheese products using formulas that were developed in response to competitive pressures; the lower the price paid by the customer, the greater the degree of adulteration. The adulterating ingredients specified by these formulas often consisted principally of food starch and partially hydrogenated soybean oil, as well as other fillers.
44. VAN SICKELL knew, or was reckless in not knowing, that this conduct would result in material misstatements and omissions in Suprema's filings with the Commission.
45. To the contrary, Suprema described its cheeses as "natural" in its annual reports in 1998 and 1999, and as "all natural" both in its annual reports and in its registration statements in 2000 and 2001. Suprema's annual report and registration statement in 2001 added that its cheese products were "premium quality all natural cheeses that meet or exceed all federal and industry standards for purity, freshness, taste, appearance and texture." In all of these filings with the Commission, Suprema further stated that its cheese products contained no "preservatives, additives, sweeteners, dehydrated fillers or artificial flavorings," and that the company was in "substantial compliance" with "all material government laws and regulations," including federal laws and regulations governing the labeling of its products. Suprema also failed to disclose its cheese adulteration, not only in all of these filings with the Commission, but also on its product labels or otherwise to its customers.
46. Suprema's claim to sell "natural" or "all natural" cheeses that met applicable federal standards, and its failure to disclose the cheese adulteration, constituted material misstatements and omissions in the following forms that the company filed with the Commission: a Form 10-K for each of its fiscal years 1998, 1999, 2000, and 2001, and a Form S-2 registration statement for each of the secondary public offerings in August 2000 and November 2001.
47. On December 21, 2001, after the close of trading, Suprema issued a press release announcing the resignations of its chief financial officer and its controller. The same press release also stated that the company had "initiated an internal investigation of its prior reported financial results and ha[d] instructed its auditors to review the Company's financial records."
48. Also after the close of trading on December 21, 2001, the Nasdaq halted trading in Suprema's common stock. The trading halt continued until the Nasdaq delisted Suprema's common stock on March 1, 2002.
49. On February 24, 2002, Suprema filed a voluntary bankruptcy petition for a Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York. On March 20, 2002, the bankruptcy was converted to a Chapter 7 liquidation. In re the Jointly Administered Estate of Suprema Specialties, Inc., et al., No. 02-10823 (CB) (Bankr. S.D.N.Y.).
50. Paragraphs 1 through 49 are realleged and incorporated herein by this reference.
51. Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Exchange Act Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5] prohibit a person from, inter alia, employing any device, scheme or artifice to defraud; making any untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaging in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
52. By virtue of the conduct described above in paragraphs 1 to 49 inclusive, defendants CHRISTENSEN, FRANSEN, QUATTRONE, VAN SICKELL, VIEIRA, BATTAGLIA, CMM, LNN, PACKING PRODUCTS, and WCC, and each of them, violated Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5 thereunder.
53. Paragraphs 1 through 52 are realleged and incorporated herein by this reference.
54. Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)] makes it unlawful for a person, inter alia, to employ any device, scheme, or artifice to defraud; to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or to engage in any transaction, practice, or course of business which operates or would operate as a fraud upon the purchaser, in the offer or sale of any securities.
55. In connection with the acts and omissions described above in paragraphs 1 to 52 inclusive, defendants CHRISTENSEN and VAN SICKELL acted knowingly, recklessly, or negligently. They knew, or were reckless in not knowing, or should have known, that the above-described filings with the Commission contained material misstatements and omissions. By reason of the foregoing, defendants CHRISTENSEN and VAN SICKELL, and each of them, violated Section 17(a) of the Securities Act.
56. Paragraphs 1 through 55 are realleged and incorporated herein by this reference.
57. Section 13(b)(5) of the Exchange Act [15 U.S.C. § 78m(b)(5)] and Exchange Act Rule 13b2-1 thereunder [17 C.F.R. § 240.13b2-1] prohibit a person from, inter alia, knowingly circumventing internal accounting controls and falsifying, or causing to be falsified, corporate books and records.
58. By virtue of the conduct described above in paragraphs 1 to 55 inclusive, defendants CHRISTENSEN, VAN SICKELL, and VIEIRA, and each of them, violated Section 13(b)(5) of the Exchange Act and Exchange Act Rule 13b2-1 thereunder.
59. Paragraphs 1 through 58 are realleged and incorporated herein by this reference.
60. Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Exchange Act Rules 13a-1 and 13a-13 thereunder [17 C.F.R. §§ 240.13a-1 and 240.13a-13] require all issuers with registered securities to file with the Commission factually accurate annual and quarterly reports. Exchange Act Rule 12b-20 [17 C.F.R. § 240.12b-20] provides that in addition to the information expressly required to be included in a statement or report, there shall be added such further material information as may be necessary to make the required statements, in light of the circumstances under which they were made, not misleading.
61. Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. § 78m(b)(2)(A)] requires issuers of registered securities to make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer. Section 13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)] requires issuers to, among other things, devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that the company's transactions were recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles.
62. By reason of the conduct described above in paragraphs 1 to 58 inclusive, Suprema violated Sections 13(a) and 13(b)(2)(A) and (B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 13a-13.
63. Defendants CHRISTENSEN, FRANSEN, QUATTRONE, VAN SICKELL, VIEIRA, BATTAGLIA, CMM, LNN, PACKING PRODUCTS, and WCC each knowingly provided substantial assistance to Suprema in connection with its above-described violations of the federal securities laws.
64. By virtue of the conduct described above in paragraphs 1 to 58 inclusive, and pursuant to Exchange Act Section 20(e) [15 U.S.C. § 78t(e)], defendants CHRISTENSEN, FRANSEN, QUATTRONE, VAN SICKELL, VIEIRA, BATTAGLIA, CMM, LNN, PACKING PRODUCTS, and WCC, and each of them, are liable as aiders and abettors of Suprema's violations of Sections 13(a) and 13(b)(2)(A) and (B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 13a-13.
65. Paragraphs 1 through 64 above are realleged and incorporated herein by this reference.
66. Exchange Act Rule 13b2-2 [17 C.F.R. § 240.13b2-2] prohibits an officer or director, among other things, from making, or causing to be made, materially false statements or omissions to an accountant in connection with an audit or a filing with the Commission.
67. By virtue of the conduct described above in paragraphs 1 to 64 inclusive, one or more Suprema officers and directors not named as defendants in this Complaint violated Exchange Act Rule 13b2-2.
68. Defendants CHRISTENSEN, FRANSEN, QUATTRONE, VAN SICKELL, VIEIRA, BATTAGLIA, CMM, LNN, PACKING PRODUCTS, and WCC each knowingly provided substantial assistance to one or more Suprema officers and directors in connection with those officers' and directors' violations of Exchange Act Rule 13b2-2.
69. By virtue of the conduct described above in paragraphs 1 to 64 inclusive, and pursuant to Exchange Act Section 20(e) [15 U.S.C. § 78t(e)], defendants CHRISTENSEN, FRANSEN, QUATTRONE, VAN SICKELL, VIEIRA, BATTAGLIA, CMM, LNN, PACKING PRODUCTS, and WCC, and each of them, are liable as aiders and abettors of one or more Suprema officers' and directors' violations of Exchange Act Rule 13b2-2.
WHEREFORE, the Commission respectfully requests that this Court grant the following requested relief
The Commission respectfully requests that this Court enter Orders
A. permanently restraining and enjoining all defendants from violating Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5 thereunder;
B. permanently restraining and enjoining all defendants from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-13, and 13b2-2;
C. requiring all defendants to pay disgorgement of all unlawful gains; and
D. imposing civil monetary penalties on all defendants pursuant to Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)].
In addition to the foregoing requested relief, the Commission respectfully requests that this Court enter an Order prohibiting defendants CHRISTENSEN, FRANSEN, QUATTRONE, VAN SICKELL, and VIEIRA, and each of them, from acting as an officer or a 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, pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)].
In addition to the foregoing requested relief, the Commission respectfully requests that this Court enter Orders
A. permanently restraining and enjoining defendants CHRISTENSEN and VAN SICKELL from violating Section 17(a) of the Securities Act and Section 13(b)(5) of the Exchange Act and Exchange Act Rule 13b2-1;
B. imposing civil monetary penalties against defendants CHRISTENSEN and VAN SICKELL, pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)]; and
C. prohibiting defendants CHRISTENSEN and VAN SICKELL 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 any issuer required to file reports pursuant to Section 15 of the Exchange Act, pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)].
In addition to the foregoing requested relief, the Commission respectfully requests that this Court enter an Order permanently restraining and enjoining defendant VIEIRA from violating Section 13(b)(5) of the Exchange Act and Exchange Act Rule 13b2-1 thereunder.
In addition to the foregoing requested relief, the Commission respectfully requests that this Court grant such other and additional relief as the Court may deem just and proper.
Dated: January 6, 2004
Respectfully submitted,
______________________________
Arthur S. Lowry (AL9541)
Russell G. Ryan
Nina B. Finston (NF6112)
Jason P. Lee
Stephen G. Yoder
Attorneys for Plaintiff
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0911
(202) 942-4868 (Lowry)
(202) 942-9581 (fax)
Local Counsel:
Michael Chagares (MC5483)
Assistant U.S. Attorney
U.S. Attorney's Office
for the District of New Jersey
970 Broad Street, Sixth Floor
Newark, NJ 07102
(973) 645-2839
(973) 645-2857 (fax)
http://www.sec.gov/litigation/complaints/comp18534.htm
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