UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16519 / April 18, 2000
Securities and Exchange Commission v. ABS Industries, Inc., William J. McCarthy, Theodore Ursu III, John M. McHale, and David R. Bush, Civil Action No. 1:99CV2600 (N.D.Ohio, Eastern Division)
The Securities and Exchange Commission announced that an Order of Permanent Injunction and other Equitable Relief (Order) was entered against David R. Bush (Bush) in Securities and Exchange Commission v. ABS Industries, Inc., William J. McCarthy, Theodore Ursu III, John M. McHale, and David R. Bush, Civil Action No. 1:99CV2600 (N.D.Ohio, Eastern Division). Mr. Bush consented to entry of the Order without admitting or denying any of the allegations made against him in the complaint filed by the Commission. That complaint, filed in October, 1999, alleged that Mr. Bush and other employees or officers of ABS Industries, Inc. (ABS), an Ohio company, defrauded investors in the company's stock by intentionally overstating the company's revenues by millions of dollars in 1994 and the first three quarters of the company's 1995 fiscal year. Also named in the suit were William J. McCarthy (McCarthy) of Ashtabula, Ohio, Theodore Ursu III (Ursu) of Highland Heights, Ohio, and John McHale (McHale) of Massillon, Ohio.
Specifically, the Commission's complaint alleged that ABS, McCarthy, Ursu, McHale and Bush engaged in a scheme to prematurely recognize revenue by improperly recording purported "bill and hold" sales at ABS. The complaint further alleged that the sales recorded as "bill and hold" sales were for goods which were neither billed nor shipped to the customers and which, in some cases, did not exist or were not completely manufactured. The purpose of the scheme, according to the complaint, was to meet prior sales projections for ABS established by McCarthy.
The Honorable John M. Manos of the United States District Court for the Northern District of Ohio entered the Order enjoining Bush from further violations of Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934, and Rules 10b-5 and 13b2-1 thereunder. The Order against Bush partially waived payment of disgorgement and did not impose a civil penalty based on Bush's demonstrated inability to pay such relief.