U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20417 / December 27, 2007
SEC v. Greg A. Gadel and Daniel J. Skrypek (U.S.D.C. Minn., Civil Action Number 06-CV-2320, filed June 7, 2006)
The Securities and Exchange Commission (Commission) announced that, on December 21, 2007, the United States District Court for the District of Minnesota entered Final Judgments against Greg A. Gadel (Gadel), the former Chief Financial Officer, and Daniel J. Skrypek (Skrypek), the former Controller, of Buca, Inc. (Buca), the corporate parent of the Buca di Beppo national restaurant chain. The Commission's complaint, filed on June 7, 2006, alleged that, due to Gadel's and Skrypek's conduct, Buca's public filings materially understated the executive compensation received by Gadel and Buca's former CEO by $96,630 and $849,100 respectively. Gadel's undisclosed compensation included reimbursements for family vacations and visits to strip clubs. The complaint further alleged that Gadel and Skrypek knew about and failed to ensure disclosure of a series of related party transactions totaling more than $1 million between Buca and an information technology company of which Gadel was a director and shareholder and a related party transaction in which Buca's former CEO used Buca's funds to purchase an Italian villa titled in his and his wife's names. The complaint also alleged that Gadel directed and Skrypek participated in a course of conduct whereby Buca inflated its income by nearly $12 million from 2000 to 2004 through the improper capitalization of numerous expenses. This fraudulent scheme caused Buca to overstate its annual income in amounts ranging from 18.8% to 36.9%.
The final judgments, entered pursuant to Gadel's and Skrypek's consents, permanently enjoin them 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, 13b2-1, 13b2-2, 14a-3, and 14a-9 thereunder and from 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, and 13a-13 thereunder. The Final Judgment against Gadel also permanently enjoins him from violating Rule 13a-14 of the Exchange Act and bars him from serving as an officer or director of a public company. The Final Judgment against Skrypek further orders him to pay a $50,000 civil penalty and bars him from serving as an officer or director of a public company for five years.
In June 2006, the Commission filed a settled civil injunctive action against Buca's former CEO and the complaint against Gadel and Skrypek. See Litigation Release numbers 19719 and 19720 (June 7, 2006). On September 27, 2007 the Commission filed a settled civil injunctive action against Buca, Inc., relating to the same conduct. See Litigation Release number 20312 (September, 28, 2007).