U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18566 February 5, 2004
Accounting and Auditing Enforcement
Release No. 1951 / February 5, 2004
Securities and Exchange Commission v. Cumulus Media Inc. et al., (U.S.D.C. N.D. Ill., Case Number 03-C-8908, filed December 10, 2003)
The Securities and Exchange Commission announced that on January 22, 2004, Judge Ronald Guzman of the United States District Court for the Northern District of Illinois, entered Final Judgments and Orders of Permanent Injunction against Cumulus Media Inc., its former Chief Financial Officer, Richard J. Bonick, Jr., its former Vice President of Finance, Daniel O'Donnell, and its former Executive Chairman, Richard W. Weening, based on their involvement in two separate schemes to artificially inflate Cumulus' financial position. The Commission's Complaint, filed on December 10, 2003, alleged that throughout 1999, Cumulus and Bonick prematurely recorded revenue from advertising contract packages into Cumulus' books, records and accounts causing Cumulus to overstate its net revenues and broadcast cash flows and understate its net losses for the first and third quarters of 1999. The Commission's Complaint further alleged that in a second scheme, Cumulus, Weening and O'Donnell engaged in an attempt to manage Cumulus' earnings and broadcast cash flow for the fourth quarter of 1999 in order to bring those figures in line with Wall Street analyst's expectations for that quarter.
The Final Judgments, entered pursuant to Cumulus, Bonick, O'Donnell and Weening's consents and without admitting or denying the allegations of the Commission's Complaint, permanently enjoined them from violating or aiding and abetting violations of the federal securities laws and ordered Bonick, O'Donnell and Weening to pay civil penalties. Specifically, the Court permanently enjoined Bonick from violating or aiding and abetting violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, Sections 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 12b-20, 13a-13 and 13b2-1 and imposed a civil penalty of $50,000 against him. The Court permanently enjoined Weening and O'Donnell from violating or aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder and imposed civil penalties of $75,000 and $40,000 respectively against them. The Court permanently enjoined Cumulus from violating Sections 17(a)(2) and 17(a)(3) of the Securities Act, Sections 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the Exchange Act and Rules 12b-20, 13a-13 and 13b2-1 thereunder.
For further information, see LR-18504 (December 12, 2003).