U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20898 / February 11, 2009
Accounting and Auditing Enforcement Release No. 2936 / February 11, 2009
Securities and Exchange Commission v. Meridian Holdings, Inc., Anthony C. Dike and Michelle V. Nguyen, Case No. CV 07-06335 DDP (SSx) (C.D. Cal.)
The Securities and Exchange Commission ("Commission") announced today that the Honorable Dean D. Pregerson, United States District Court Judge for the Central District of California, entered final judgments, by consent, permanently enjoining Meridian Holdings, Inc. ("Meridian"), Anthony C. Dike ("Dike") and Michelle V. Nguyen ("Nguyen") from future violations of Sections 10(b), 13(a) and 13(b)(2)(A) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20 and 13a-13 thereunder. In addition, both Meridian and Dike were permanently enjoined from future violations of Section 302(b) of Regulation S-T, and Dike was further permanently enjoined from future violations of Exchange Rule 13a-14. Dike was also ordered to pay a civil penalty in the amount of $25,000, and is prohibited for five years from the date of the judgment from acting as an officer or director of a public company. Nguyen was ordered to pay a civil penalty in the amount of $15,000 and, in a separate administrative proceeding, was suspended from appearing or practicing before the Commission as an accountant, with the right to request reinstatement after three years.
Meridian, which was located in Culver City, California, owned interests in companies that engage in e-commerce in the medical industry, and provided management services to those companies. The Commission's complaint, filed on September 28, 2007, alleged that the financial statements filed with Meridian's 2004 second and third quarter reports caused Meridian to materially overstate it assets and represent it had significant gains, when, in fact, it should have reported losses. Meridian also backdated officer certifications required by the Sarbanes-Oxley Act, the Commission alleged.
The Commission's complaint alleged that during the second and third quarters of its 2004 fiscal year, Meridian improperly recognized a $30 million default judgment and interest as assets and income when it had no reasonable basis to believe the judgment was collectible. As a result, Meridian turned quarterly losses of seven cents per share into earnings of $2.12 per share. Similarly, Meridian recognized additional interest on the default judgment during the third quarter of 2004. The complaint alleged that this improper recognition again turned quarterly losses into quarterly gains.
In addition to Meridian, the complaint alleged that Dike, Meridian's chairman and chief executive officer, and Nguyen, a CPA, and Meridian's former principal financial officer and interim chief financial officer, prepared Meridian's misleading financial statements by booking the $30 million default judgment when neither had any reasonable basis to believe the judgment was collectible. The complaint further alleged that when Dike filed Meridian's second and third quarter reports, he included Nguyen's name on the Sarbanes-Oxley Act certifications filed with the reports even though he knew Nguyen had not signed them. While Nguyen is alleged to have signed the certifications included with Meridian's second quarter report after it had been filed, she never signed the certifications included with Meridian's third quarter report. Meridian also provided the Commission staff with backdated certifications filed with its 2004 annual report.
On, October 30, 2009, Meridian filed with the Commission a certification and notice of termination of its registration under Section 12(g) of the Exchange Act.
See also: LR-20318 (October 1, 2007); SEA Release 34-59317 (January 29, 2009); AAER 2928 (January 29, 2009).