UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17648 / August 1, 2002
ACCOUNTING AND AUDITING ENFORCEMENT
Securities and Exchange Commission v. John R. Boyd, and Christopher Curbello, Case No. 02-80726-CIV-Judge Hurley (S.D.Fla.). (filed August 1, 2002)
PARAGON CONSTRUCTION INTERNATIONAL, INC. FORMER SENIOR MANAGEMENT TEAM SUED FOR FRAUD
The Commission announced today that it filed a complaint in the United States District Court for the Southern District of Florida against John R. Boyd (Boyd), the former president of Paragon Construction International, Inc. (Paragon), formerly a wholly owned subsidiary of Golden Bear Golf, Inc. (Golden Bear or the Company), and Christopher Curbello (Curbello), Paragon's former vice president for operations.
The complaint alleges that Boyd and Curbello were responsible for a scheme at Paragon whereby from at least the second quarter of 1997 through the first quarter of 1998, Paragon artificially inflated and accelerated its revenue and gross margin recognition by misrepresenting the true status of its construction contracts, causing Golden Bear to file false and misleading financial statements for its 1997 fiscal year and for the first quarter of 1998. Under the scheme directed by Boyd and Curbello, Paragon overstated contract profitability or ignored expected losses by (i) understating estimated construction costs, (ii) accelerating revenue and income recognition by overstating progress on construction projects, (iii) overstating estimated construction revenues and (iv) recording revenue and gross margin in connection with non-existent project agreements. As a result of the defendant's conduct, the Commission alleges that Boyd and Curbello violated, or aided and abetted violations of, Sections 10(b), 13(a), 13(b)(2)(A) and (B) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act"), and Exchange Act Rules 10b-5, 13a-1, and 13a-13. As relief, the Commission seeks final judgments permanently enjoining defendants from further violations of these provisions and imposing civil money penalties.