U.S. Securities and Exchange Commission
Litigation Release No. 18686 / April 29, 2004
Accounting and Auditing Enforcement Release No. 1994 /April 29, 2004
Securities and Exchange Commission v. Carnegie International Corporation, et al., No. 1:03CV01513 (D.D.C.) (EGS)
SEC Obtains Final Judgment Against Carnegie International Corporation Chairman Edward David Gable in Financial Fraud Case
On April 22, 2004, the Honorable Emmet G. Sullivan, United States District Court Judge for the District of Columbia, entered a final judgment by default against Edward David Gable, the chairman and former chief operating officer of Carnegie International Corporation, in a civil action instituted by the Securities and Exchange Commission in July 2003. The final judgment permanently enjoins Gable from future violations of the federal securities laws, permanently bars him from serving as an officer or director of a public company, and orders him to pay disgorgement of $843,028, prejudgment interest of $257,833 and civil penalties of $110,000.
The permanent injunction against Gable prohibits him from violating Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(b)(5) and 16(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rules 10b-5, 13b2-1, 13b2-2 and 16a-2 and 16a-3. The permanent injunction further prohibits Gable from aiding and abetting violations of Exchange Act Sections 12(g), 13(a), 13(b)(2)(A), and 13(b)(2)(B), and Exchange Act Rules 12b-20 and 13a-1. These provisions prohibit the commission of fraud, and impose requirements relating to an issuer's books and records, internal controls and reporting obligations, and a corporate insider's obligation to disclose transactions in a corporation's securities.
The Commission alleged in its Complaint that Gable and others carried out a financial fraud that resulted in Carnegie fraudulently reporting millions of dollars in revenue and income for several transactions in filings with the Commission from 1998 through 2000. The Complaint also alleged that Gable personally benefited from the fraud by selling Carnegie shares at inflated prices through an offshore trust, and failed to disclose these sales in filings with the Commission, as required by federal securities law.
Gable was one of seven defendants, including Carnegie and certain of its other current and former officers, sued by the Commission in July 2003. The other six defendants, two of whom were also named as relief defendants, settled this action by consenting, at the time the action was instituted, to the entry of final judgments against them, without admitting or denying the allegations of the Commission's Complaint. The Court's entry of the final judgment by default against Gable brings this civil action to a conclusion.
For further information, see Litigation Release No. 18229 (July 14, 2003).