U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19719 / June 7, 2006
Accounting and Auditing Enforcement Release No. 2438 / June 7, 2006
SEC v. Joseph P. Micatrotto, Sr., (U.S.D.C. Minnesota, Civil Action Number 06-CV-2319, filed June 7, 2006)
The Securities and Exchange Commission today announced the filing of a settled civil injunctive action against Joseph P. Micatrotto, Sr. (Micatrotto), the former Chief Executive Officer, President, and Chairman of the Board of Buca, Inc. (Buca), the corporate parent of the Buca di Beppo and Vinny T's of Boston national restaurant chains. The Commission's complaint, filed today in federal court in Minneapolis, alleges that Micatrotto received undisclosed compensation and participated in undisclosed related party transactions.
Specifically, the Commission's complaint alleges that from 2000 to 2003, Micatrotto obtained undisclosed compensation in the amount of $849,100 by improperly billing Buca for a variety of personal and non-business expenses. The complaint charges that Micatrotto improperly sought and obtained reimbursement for, among other things, $131,000 in ATM withdrawals; $127,000 in airline tickets submitted for reimbursement multiple times; the entire bill for the groom's dinner at his son's wedding; and other personal expenses, including dog kenneling and the remodeling of his homes in California, Las Vegas and Minneapolis. The complaint further alleges that, since these payments were for personal expenses, not legitimate business expenses, they constituted additional compensation to Micatrotto that should have been reflected in Buca's proxy statements. According to the Commission's complaint, Buca's proxy statements failed to disclose any of these payments as additional compensation to Micatrotto. As a result, Buca's proxy statements for this time period understated Micatrotto's annual compensation by amounts ranging from 27% to 74%.
The Commission's complaint further alleges that Buca's public filings, which Micatrotto reviewed and approved, failed to disclose two related party transactions involving Micatrotto. First, Micatrotto sought reimbursement from Buca for his purchase and renovation of an Italian villa titled in Micatrotto's and his wife's names. Second, Micatrotto deposited into his personal bank account a payment of $65,000 from one of Buca's vendors, even though this payment was intended as a contribution towards one of Buca's corporate conferences.
Upon the filing of the Commission's complaint, and without admitting or denying the allegations in the complaint, Micatrotto consented to the entry of a final judgment permanently enjoining him from violating Section 17(a) of the Securities Act of 1933 (Securities Act), Sections 10(b), 13(b)(5), and 14(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13a-14, 13b2-1, 13b2-2, 14a-3, and 14a-9 thereunder and aiding and abetting Buca's violations of Sections 13(a), 13b(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. Micatrotto also agreed to be barred from acting as an officer or director of a publicly-traded company and to pay disgorgement of $65,000 plus prejudgment interest and a civil penalty of $500,000.
The Commission and the United States Attorney's Office for the District of Minnesota conducted parallel investigations of this matter. Simultaneous with the Commission's announcement of this action, the United States Attorney's Office announced the filing of wire fraud charges against Micatrotto.