Litigation Release No. 17140 / September 19, 2001

Accounting and Auditing Enforcement Release No. 1453 / September 19, 2001

SEC CHARGES FORMER EXECUTIVES OF TIMBER COMPANY MADERA INTERNATIONAL WITH FALSIFYING FINANCIAL STATEMENTS

MADERA'S INDEPENDENT ACCOUNTANTS CHARGED WITH AUDIT FAILURES

SECURITIES AND EXCHANGE COMMISSION v. MADERA INTERNATIONAL, INC., RAMIRO FERNANDEZ-MORIS and DANIEL S. LEZAK, Civ. No. 01-10985 (JR) (D.D.C.)

SECURITIES AND EXCHANGE COMMISSION v. REGINA FERNANDEZ, Civ. No. 01-10986 (JR) (D.D.C.)

IN THE MATTER OF MADERA INTERNATIONAL, INC., Administrative Proceeding File No. 3-10577

IN THE MATTER OF REGINA FERNANDEZ, Administrative Proceeding File No. 3-10578

IN THE MATTER OF HARLAN & BOETTGER, LLP, WILLIAM C. BOETTGER and P. ROBERT WILKINSON, Administrative Proceeding File No. 3-10580

IN THE MATTER OF RALPH SANCHEZ, Administrative Proceeding File No. 3-10579

The Securities and Exchange Commission announced today the filing of two complaints in the United States District Court for the District of Columbia, charging three former officers of Madera International, Inc. with falsifying Madera's financial statements and fraudulently inflating the company's assets, sales and net income. Madera was engaged in exporting timber from South America.

Named in the first complaint are Madera, Ramiro Fernandez-Moris, who beginning in March 1996 was Madera's president, chief executive officer and chairman, and Daniel S. Lezak, who was Madera's chief executive officer and chairman until March 1996 and thereafter functioned as its chief financial officer. The complaint alleges that during the period from 1994 through early 2000, the defendants: (1) recorded as assets of Madera various purported timber-producing properties to which it had no apparent legal title; (2) assigned unrealistic values to those properties; (3) recorded revenues from phony sales; (4) failed to disclose significant related party transactions; and (5) furnished false sales invoices, shipping documents, cash receipts records, and audit confirmations to Madera's auditors. These practices resulted in the filing with the Commission of numerous false and misleading periodic reports during the period from 1994 to 2000. The defendants in this action also issued false press releases concerning, among other things, Madera's results of operations and business prospects. Fernandez-Moris and Lezak enriched themselves by selling Madera stock during the period of their falsification of the Company's public disclosures.

The Commission's Complaint seeks from Madera, Fernandez-Moris and Lezak permanent injunctions against future violations of the antifraud, reporting, books and records, and internal control provisions of the Securities Exchange Act of 1934 ("Exchange Act"), Sections 10(b), 13(a) and 13(b)(2)(A) and (B) and 13(b)(5) and Rules 10b-5, 12b-20, 13a-1, and 13a-13, 13b2-1, and 13b2-2 thereunder, as well as civil money penalties pursuant to Section 21(d)(3) of the Exchange Act, and, additionally with respect to Fernandez-Moris and Lezak, disgorgement and officer and director bars.

The Commission also instituted an administrative proceeding pursuant to Section 12(j) of the Exchange Act to determine whether the registration of Madera's common stock should be revoked. Madera has failed to file periodic reports with the Commission since its quarterly report on Form 10-Q for the quarter ended December 31, 1999. In addition, according to allegations of the Commission's Division of Enforcement, Madera included in its annual report on Form 10-K for its fiscal year ended March 31, 1998 and quarterly report on Form 10-Q for the quarter ended June 30, 1999 financial statements that failed to conform with Generally Accepted Accounting Principles in that they materially overstated the value of Madera's revenues and gross profits.

The Commission also authorized administrative proceedings and the filing of a civil action against Regina Fernandez, Madera's corporate secretary. Simultaneously with the institution of the administrative proceedings, and without admitting or denying the Commission's findings, Fernandez consented to the issuance of an order requiring that she cease and desist from committing or causing violations of the antifraud, reporting, books and records provisions of the Exchange Act. In addition, Fernandez consented, without admitting or denying the allegations in the Commission's Complaint, to a Final Judgment in an action filed against her in U.S. District Court for the District of Columbia, ordering her to pay a civil penalty of $15,000.

The Commission also authorized the institution and simultaneous settlement of administrative proceedings pursuant to Rule 102(e) of the Commission's Rules of Practice against Madera's former outside auditor, Harlan & Boettger, LLP, its two audit partners, William C. Boettger and P. Robert Wilkinson as well as the Company's successor auditor, Ralph Sanchez. Harlan & Boettger, LLP, William C. Boettger and P. Robert Wilkinson consented to the entry of an order permanently denying each of them the privilege of practicing as accountants before the Commission. Ralph Sanchez consented to the entry of an order denying him the privilege of practicing as an accountant before the Commission with a right to reapply after one year.


*  SEC Complaint in this matter.