U.S. Securities and Exchange Commission
LITIGATION RELEASE NO. 18652 / April 1, 2004
Accounting and Auditing Enforcement Release No. 1983 / April 1, 2004
SECURITIES AND EXCHANGE COMMISSION v. MICHAEL B. JOHNSON, MICHAEL JOHNSON & CO., LLC, DAVID C. SKINNER, JR. AND AMERICAN TELEVISION AND FILM COMPANY f/k/a WINNERS INTERNET NETWORK, INC., No. 04-RB-0626 (USDC D. Colorado).
The Securities and Exchange Commission ("Commission") announced that it filed an injunctive action on March 31, 2004 against Colorado resident Michael B. Johnson, his Colorado-based accounting firm, Michael Johnson & Co., LLC ("Johnson & Co."), American Television and Film Company f/k/a Winners Internet Network, Inc. ("Winners"), a Nevada corporation, and Florida resident David C. Skinner, Jr., Winners' former president and chairman of the board of directors. The Commission's complaint alleges that between December 1999 and December 2000, Winners and Skinner carried out a scheme to defraud investors by filing reports and a registration statement with the Commission containing false financial statements that fraudulently overstated Winners' revenues, income, assets and cash inflows and understated expenses. According to the complaint, Johnson and Johnson & Co. assisted in the scheme by performing a range of accounting functions for Winners, including purporting to audit financial statements they had previously prepared for Winners. Further, between January and October 2000, Skinner and Winners reviewed or disseminated three promotional "analyst reports" containing baseless financial projections.
The Commission's complaint alleges that: (1) Johnson, Johnson & Co. and Skinner violated Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 13b2-1 thereunder, and aided and abetted violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-11 and 13a-13 thereunder; and (2) Winners violated Sections 10(b), 13(a) and 13(b)(2) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13 thereunder. The complaint seeks injunctions and third-tier civil penalties against all of the defendants; disgorgement and prejudgment interest from Johnson, Johnson & Co., and Skinner; and officer and director and penny stock bars against Skinner only. Without admitting or denying the Commission's allegations, Skinner has consented to the entry of an order that would enjoin him from future violations of the foregoing provisions and direct him to pay disgorgement and prejudgment interest in an amount to be determined after the completion of the Commission's discovery in this action; and in which he would agree to the Court's continuing jurisdiction over the action for the purpose of determining whether to assess civil penalties against him.