U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19614 / March 20, 2006
Accounting and Auditing Enforcement Release No. 2394 / March 20, 2006
SEC v. Barry Richard Kusatzky, 1:04CV00700 (D.D.C. February 17, 2006)
FINAL JUDGMENT ENTERED AGAINST FORMER CONTROLLER OF CALIFORNIA AMPLIFIER, INC. FOR FRAUD AND INSIDER TRADING
On February 17, 2006, the United States District Court for the District of Columbia entered a settled final judgment against Barry Richard Kusatzky, former controller of California Amplifier, Inc., for falsifying the company's financial statements and books and records and insider trading. Kusatzky consented to the final judgment enjoining him from violating the antifraud provisions of the federal securities laws, imposing a permanent officer and director bar, and ordering payment of partial disgorgement of $25,000.
The Commission filed a complaint on April 28, 2004, alleging that Kusatzky caused California Amplifier to materially overstate income and equity in its quarterly and annual financial statements for the period November 27, 1999, through November 25, 2000, by hiding $7.8 million in expenses. The Complaint alleged that Kusatzky fabricated California Amplifier's financial statements, falsified its books and records, and presented false records to the company's auditors. Further, according to the Complaint, in January 2000, Kusatzky sold 15,000 shares of California Amplifier stock while in possession of material, non-public information that the company's reported earnings were materially overstated. By selling his stock before the overstatement of California Amplifier's earnings was disclosed, Kusatzky avoided losses of over $350,000.
In January 2005, Kusatzky pled guilty to two counts of securities fraud in a criminal proceeding filed by the United States Attorney's office for the Central District of California. On April 25, 2005, Kusatzky was sentenced to a prison term of eighteen months and three years of supervised release thereafter.
Without admitting or denying the allegations in the Complaint, Kusatzky consented to the entry of a final judgment permanently enjoining him from violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5, 13b2-1, and 13b2-2 promulgated thereunder, as well as, aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 promulgated thereunder. Kusatzky agreed to pay disgorgement of $25,000 and the final judgment waives Kusatzky's remaining liability of $333,000 in disgorgement and prejudgment interest thereon based on sworn representations in his Statement of Financial Condition and other documents and information submitted to the Commission. In addition, Kusatzky consented to an order barring him from serving as an officer or director of a public company.
In a related action, the Commission previously instituted a settled administrative proceeding against California Amplifier. [In the Matter of California Amplifier, Inc. (Rel. 34-49630; File No. 3-11469)]
For more information, see Litigation Release No. 18688 (April 29, 2004).