UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17389 / March 1, 2002
SECURITIES AND EXCHANGE COMMISSION v. EAGLE BUILDING TECHNOLOGIES, INC. AND ANTHONY DAMATO, No. 1:02CV00397ESH (D.D.C.)
The Commission today filed an action in federal court and obtained preliminary injunctions against Eagle Building Technologies, Inc. and Anthony Damato for financial fraud and false and misleading statements. The complaint alleges that Eagle and Damato engaged in a massive financial fraud by falsely recognizing millions of dollars of non-existent revenue from its foreign operations in India. This revenue, which was reported in Eagle's 2000 Form 10-K and its Forms 10-Q for the first three quarters of 2001, was almost completely fictitious, according to the complaint. Additionally, the complaint asserts that Eagle and Damato issued three false and misleading press releases touting anti-terrorism security measures marketed by Eagle that capitalized on the public's anxiety post-September 11.
Judge James Robertson in the United States District Court for the District of Columbia entered the preliminary injunctions against Eagle, and Damato, both located in Boca Raton, Florida. The Commission alleged that Eagle violated Sections 10(b), 13(a), and 13(b)(2) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 12b-20, 13a-1, 13a-13, and 13b2-1 thereunder. The Commission further alleged that Damato violated Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 12b-20, 13b2-1, and 13b2-2 thereunder, and aided and abetted Eagle's violations of Section 13(a) and 13(b)(2) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder. Each of the defendants consented to the entry of the preliminary injunctions against them, without admitting or denying the allegations of the Commission's complaint. In addition to the emergency relief granted by the Court, the action seeks permanent injunctions against Eagle and Damato, and disgorgement plus prejudgment interest, civil penalties and an accounting from Damato.
Previously, on February 14, 2002, the Commission suspended trading in the securities of Eagle for a ten day period pursuant to Section 12(k) of the Exchange Act.