U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22035 / July 12, 2011
SECURITIES AND EXCHANGE COMMISSION v. RETAIL PRO, INC. (fka Island Pacific, Inc.), et al., Civil Action No. 08 CV 1620 WQH (RBB) (S.D. Cal.)
SEC OBTAINS FINAL JUDGMENT AFTER JURY VERDICT AGAINST RAN H. FURMAN, FORMER CFO OF ISLAND PACIFIC
On July 8, 2011, following a February 25, 2011 jury verdict in favor of the Commission and partial summary judgment granted in the Commission’s favor on November 18, 2009, the Honorable William Q. Hayes of the United States District Court for the Southern District of California issued a final judgment permanently enjoining Ran H. Furman, the former CFO of Island Pacific, Inc., and a resident of San Diego, California, from violating the antifraud, books and records, lying to auditors, and certification provisions of the federal securities laws, prohibiting him for seven years from acting as an officer or director of a public company, and assessing a $75,000 civil penalty.
On September 4, 2008, the Securities and Exchange Commission filed a Complaint alleging that
Island Pacific improperly recorded and reported $3.9 million in revenue from a sham transaction that was based on a License Agreement that had been altered by Furman, unbeknownst to the other party to the transaction. In its June 23, 2011 Order granting relief, the Court found, among other things, “the evidence presented at trial and on summary judgment demonstrates that Furman knowingly participated in and facilitated the alteration of the License Agreement, [engaged in] repeated violations of GAAP and the company’s revenue recognition policy, [participated in] the firing of [a whistle-blowing company employee] and [made] repeated misrepresentations to the auditors” which merited imposition of requested relief. The Court further concluded that “Furman played an essential and knowing role in the securities law violations at issue.”
The Court permanently enjoined Furman from future violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, the record-keeping and internal control provisions of Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder, the false statements to auditors provisions of Exchange Act Rule 13b2-2, and the officer certification provisions of Rule 13a-14 of the Exchange Act, and aiding and abetting violations of the issuer reporting provisions of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. In addition, the Court prohibited Furman from acting as an officer or director of a public company for a period of seven years and assessed a third tier civil penalty of $75,000.
Previously, on October 16, 2008, the Court entered final judgments of permanent injunction and other relief against Island Pacific and former CEOs Barry M. Schechter and Harvey Braun, pursuant to their consents, and on October 24, 2008, the Commission instituted an administrative proceeding against Schechter, pursuant to which he was permanently suspended from appearing or practicing before the Commission as an accountant. For further information, see Litigation Release No. 20703 (Sept. 5, 2008) and Release No. 34-58849 (Oct. 24, 2008).