U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission

Securities and Exchange Commission

Litigation Release No. 17634 / July 29, 2002

SEC Settles Financial Fraud Charges Against Eric C. Brown


New York --  The Securities and Exchange Commission announced that on June 21, 2002, the Honorable Barbara S. Jones, United States District Judge for the Southern District of New York, entered a Final Judgment of Disgorgement by Consent against Eric C. Brown ("Brown") of Morgan Hill, California, which provided that the Commission's claim for disgorgement against Brown is satisfied by the $25.2 million in restitution ordered in a related criminal proceeding, United States v. Eric Brown, CR 96-251-SI (N.D. Cal.).

Previously, the Court entered a Partial Judgment of Permanent Injunction and Other Equitable Relief by Consent against Brown which enjoined him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Rule 13b2-2 promulgated under Section 13(b) of the Exchange Act. Brown was also barred from serving as an officer or director of a public corporation. In the related criminal proceeding, Brown pled guilty to one count of conspiracy to file false reports with the Commission, and sentenced to serve a term of probation and community service and to pay $25.2 million in restitution.

The Commission's Amended Complaint, filed on May 9, 1996, alleged that Brown and others engaged in a scheme to inflate the revenues, assets, and earnings reported in the public filings of Scorpion Technologies, Inc., a publicly traded company that maintained its offices in Los Gatos, California. Between 1991 and 1993, Brown falsified Scorpion's books and records, prepared or directed the preparation of fictitious purchase orders, invoices, payment documentation, confirmations, and product return documentation, and provided false and misleading information and documents to Scorpion's independent auditors.

See also: L.R. 14814 (February 9, 1996)



Modified: 07/29/2002