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SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 17044 / June 21, 2001

SECURITIES AND EXCHANGE COMMISSION V. RICHARD P. SMYTH, ARNOLD E. JOHNS, JR., MICHAEL J. BECKER AND ALAN T. DAVIS, Civil Action No. 1:01-CV-1344 (N.D. Ga.)

SEC SUES FORMER OFFICERS, AUDITOR OF VISTA 2000, INC.

The Securities and Exchange Commission announced today that it has filed a complaint and an amended complaint against four men for various violations of the federal securities law. The four defendants are Arnold E. Johns, Jr. of Atlanta, Georgia, Alan T. Davis of Gainesville, Georgia, Michael J. Becker of Marietta, Georgia, and Richard P. Smyth of Fernandina Beach, Florida. Johns, Becker and Smyth are former officers of Vista 2000, Inc., a now defunct consumer products company formerly headquartered in Roswell, Georgia. Smyth was Vista's co-founder, chief executive officer and chairman of its board, Johns was a director of Vista and its president, and Becker was Vista's chief financial officer. Davis was Vista's outside auditor.

The amended complaint alleges a wide-range of securities law violations, including that misstatements were made by Vista in filings with the Commission. Smyth and Johns are charged with direct violations as control persons of Vista arising from those filings. The allegations include the following: (1) Vista's revenues, income, earnings per share, and assets were overstated by Smyth from 1994 through 1996, by Johns during 1995 and 1996, and by Davis during 1995 and 1996, (2) Smyth failed to properly and accurately disclose the use of Vista's proceeds from its October 1994 initial public offering, (3) Smyth issued ten false and/or misleading press releases from 1994 through 1996, (4) Smyth misappropriated $481,000 in 1996, (5) Smyth failed to file beneficial stock ownership reports during 1994, 1995 and 1996, (6) Smyth illegally sold short Vista stock during 1996, (7) Smyth, Johns, Davis and Becker engaged in illegal insider selling of Vista common stock during 1995 and 1996, (8) Davis engaged in illegal insider trading and tipping of information regarding a company to be acquired by Vista during 1995, and (9) Davis caused Vista's 1994 Form 10-KSB to be false by his failure to be independent and his failure to conduct his audit in accordance with generally accepted auditing standards.

Smyth is charged with violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. He is charged, as a control person, with misstatements in filings with the Commission that violated Sections 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13 thereunder. Smyth is also charged, as a control person, with internal accounting controls and books and records violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. He is further charged with books and records violations of Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder. As a final count against him, Smyth is charged with violations of stock ownership reporting and short selling provisions of Sections 16(a) and 16(c) of the Exchange Act and Rules 16a-2 and 16a-3 thereunder.

Johns is charged with violations of the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. He is charged, as a control person, with misstatements in filings with the Commission that violated Section 13(a) of the Exchange Act and Rules 12b-20, 13a-11, 13a-13 thereunder. Johns is also charged, as a control person, with internal accounting controls and books and records violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. He is further charged with books and records violations of Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder.

As to the remaining defendants, Davis is charged with violations of the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and with books and records violations of Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder. Davis is also charged with violations of the tender offer provisions of Section 14(e) of the Exchange Act and Rule 14e-3 thereunder. Becker is charged only with violations of the antifraud provisions of Sections 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

The amended complaint asks the Court to issue permanent injunctions and to order disgorgement plus prejudgment interest against each defendant. The Commission also seeks an order against Smyth barring him from serving as an officer and director in the future.

http://www.sec.gov/litigation/litreleases/lr17044.htm

Modified: 06/21/2001