Case Name
Contact | Defendants/
Respondents1 | Issuer | Nature of Case and Charges | Range of Over-Statements and Insider Trading Profits |
Total
Actions: 15 | Total: 68 | Total: 15 | | |
| SEC v. Mitchell C. Kahn, Paul M. Van Eyl and Thomas R. Ehmann In the Matter of Steven R. Zemaitis and Julie Freisinger Contact:
Daniel R. Gregus
Chicago Office
312/353-7423 | Mitchell C. Kahn
President & CEO
Paul M. Van Eyl
VP of Strategic Planning
Thomas R. Ehmann
Chief Information
Officer
Steven R. Zemaitis
Financial Analyst
Julie Freisinger
Operations Manager
| First Merchants Acceptance Corp. Headquartered:
Deerfield, Illinois First Merchants was a corporation engaged in the financing of used automobiles, a "sub-prime lender." First Merchants filed for Chapter 11 bankruptcy on July 11, 1997. First Merchants' common stock was listed on Nasdaq until July 1997. | Fraudulent accounting scheme to overstate earnings. During 1996, uncollectible and delinquent accounts began rising. In order to avoid charging off these accounts as part of their allowance for credit losses, the defendants/respondents employed a variety of methods to make more than 7000 accounts appear current, including: treating accounts where both borrowers and cars were missing as repossessions, writing company checks to adjust customer account balances and unilaterally deferring payments for months at a time. Antifraud, Reporting, Books and Records, Lying to Auditors and Internal Controls Violations. Injunctive Action against Kahn, Van Eyl and Ehmann. Settled Cease-and-Desist Proceedings against Zemaitis and Freisinger. | Overstated net income by $76.7 million, or 729%, in its 1996 10-K that was filed with the SEC, and in a Feb. 4, 1997 press release. |
| SEC v. Robert H. Sutton In the Matter of Material Sciences Corp. Contact:
Richard E. Weber
Chicago Office
312/353-7429
| Material Sciences Corp. Robert H. Sutton
Plant Controller and
Asst. Plant Controller | Material Sciences Corp. Headquartered:
Elk Grove Village, Illinois MSC is a technology-based manufacturer of continuously processed coated and specialty engineered materials and services. Its stock is listed on the NYSE.
| Sutton made improper accounting entries that resulted in the overstatement of inventories and the understatement of accounts payable in one of MSC's four divisions. MSC failed to implement proper and adequate internal accounting controls that would have detected Sutton's fraud. Antifraud, Books and Records, Reporting and Internal Controls Violations. Injunctive Action against Sutton. Settled Cease-and-Desist proceeding against MSC.
| Overstatements of MSC's quarterly net earnings for 1996 and 1997 ranged between 6.27% to more than 300%. |
| SEC v. Lawrence Borowiak and Joanne Borowiak (as relief defendant) Contact:
Jennifer L. Wilson
Chicago Office
312/353-7412 | Lawrence Borowiak
Accounting Manager
Joanne Borowiak
(as relief defendant) | Mercury Finance Company
(now known as MFN Financial Corp.) Headquartered:
Lake Forest, Illinois Mercury is a corporation engaged in the financing of used automobiles, a "sub-prime lender." Mercury filed for bankruptcy in July 1998, reorganized and is now known as MFN Financial Corp.
| Fraudulent accounting scheme to overstate earnings. In 1995 and 1996, as with First Merchants, Mercury also experienced increasing delinquent and uncollectible accounts. Borowiak, among other things, inflated income accounts, failed to charge off losses incurred and otherwise falsified company records to offset the declining revenues of Mercury. Antifraud, Books and Records and Internal Controls Violations. Injunctive Action against the Borowiaks.
| Overstated net income for 1995 by $22.7 million. |
| SEC v. Mar-Jeanne Tendler, Arthur S. Tendler and Billie M. Jolson Contact:
San Francisco Office
Helane Morrison
415/705-2450
| Mar-Jeanne Tendler
Chairman and
CEO
Arthur S. Tendler
President and Board
Member
Billie M. Jolson
CFO
| WIZ Technology, Inc. Headquartered:
San Juan Capistrano, CA WIZ was a packager and marketer of low-cost software. WIZ has been in Chapter 7 bankruptcy since Aug. 1998. WIZ was listed on Amex until Feb. 1997.
| Deliberate issuance of false and misleading press releases and periodic reports by WIZ concerning WIZ's net income, revenue and assets. Antifraud, Books and Records, Reporting, Internal Controls, and Beneficial Ownership Reporting Violations. M. Tendler, A. Tendler and Jolson also are charged with insider trading violations. Injunctive Action against the Tendlers and Jolson. Staff seeks officer and director bars against all three.
| For the second quarter of 1997, WIZ's revenue was overstated by 47%. By trading stock based on material non-public information regarding the accounting fraud, M. Tendler and A. Tendler avoided losses of $218,705 and Jolson avoided losses of $63,183. |
| SEC v. Computone Corp., Thomas J. Anderson, Gregory A. Alba, Donald A. Pearce, Brian D. Kretschman and Duncan E. Hume In the Matter of Ricky D. Barkley In the Matter of Danny R. Auerbach, Michael L. Glaser and James D. Montgomery, II Contact:
Atlanta Office
William P. Hicks
404/842-7675
| Computone Corp. Thomas J. Anderson
President, CEO and COO
Gregory A. Alba
Controller, CFO
Donald A. Pearce
VP of Finance and
Principal Accounting
Officer
Ricky D. Barkley
Accounting Manager
Brian D. Kretschman
VP of North American
Sales
Duncan E. Hume
VP of International Sales
James D. Montgomery, II
Director of
Original Equipment
Manufacturing Sales
Danny R. Auerbach
National Sales Manager
Michael L. Glaser
Pres. of CYMA
(customer of
Computone)
| Computone Corporation Headquartered:
Alpharetta, Georgia Computone designs, manufacturers and sells computer hardware and software products. Computone's common stock was listed on Nasdaq's Small Cap market until Oct. 1992. Its stock was relisted on the Nasdaq Small Cap market in Nov. 1994 and was delisted again in Dec. 1998. Computone's stock currently is quoted on the OTC Bulletin Board. | Pervasive fraud by senior management to overstate Computone's income from 1993 through 1997 in approximately 240 transactions. Antifraud, Books and Records, Reporting, Internal Controls, and Lying to Auditors Violations. Injunctive Action against Anderson, Alba, Peace, Kretschman and Hume. Officer and Director Bar sought against Anderson. Litigated Cease-and-Desist proceeding against Auerbach, Glaser and Montgomery. Settled Cease-and-Desist proceeding against Barkley.
| On January 3, 1997, Computone reported income from continuing operations of $126,000, when it should have reported a loss of $488,992. |
| SEC v. Francis A. Tarkenton, Donald P. Addington, Rick W. Gossett, Lee R. Fontaine, William E. Hammersla, III, Eladio Alvarez and Edward Welch In the Matters of Laura M. Drews,
Stephen J. Pace, Robert S. Chamberlain and Joseph A. Mathes Contacts:
Andrew J. Geist
212/748-8186
Robert Knuts
212/748-8192
Scott York
212/748-8242
| Francis A. Tarkenton
Chairman & CEO
Donald P. Addington
President & COO
Rick W. Gossett
CFO
Lee R. Fontaine
Manager of Financial
Reporting
William E. Hammersla, III
VP
Laura M. Drews
VP
Stephen J. Pace
VP
Robert S. Chamberlain
VP
Eladio Alvarez
District Sales Manager
Edward Welch
District Sales Manager
Joseph A. Mathes
District Sales Manager
| KnowledgeWare, Inc. Headquartered:
Atlanta, Georgia KnowledgeWare was a computer software and consulting company. It merged with another software company in 1994. KnowledgeWare's common stock was listed on Nasdaq. | Multi-million dollar financial fraud in which KnowledgeWare's reporting earnings were materially inflated during its fiscal year ended June 30, 1994. Antifraud, Books and Records, Reporting, Internal Controls and Lying to Auditors Violations. In addition, Hammersla and Alvarez are charged with insider trading violations. Settled Injunctive Action against Tarkenton, Addington, Gossett, Fontaine, and Hammersla. Litigated Injunctive Action against Alvarez and Welch. Settled Cease-and-Desist Proceeding against Drews, Pace, Chamberlain and Mathes. | KnowledgeWare's income overstated by 205% or more. Tarkenton, Addington, Gossett, Hammersla, Drews, Pace, Chamberlain and Mathes required to disgorge bonuses and, in Hammersla's case, insider trading profits. The total amount to be disgorged is approximately $227,000. Tarkenton, Addington, Gossett, Fontaine and Hammersla pay civil penalties totaling $245,000. |
| SEC v. FastComm Communications Corp. SEC v. Charles L. DesLaurier In the Matter of Peter Madsen and Mark Rafferty Contact:
Richard C. Sauer
Washington, D.C.
Office
202/942-4777
| FastComm Communications Corp. Peter Madsen
CEO
Mark Rafferty
CFO & Treasurer
Charles DesLaurier
VP
| FastComm Communications Corp. Headquartered:
Sterling, Virginia FastComm develops, manufactures, markets and services analog and digital products to access public and private computer networks. In June 1998, FastComm filed for Chapter 11 bankruptcy. FastComm was listed on Nasdaq until June 1998 and now is listed on the OTC Bulletin Board.
| FastComm fraudulently recognized revenue from transactions that were subject to material contingencies or otherwise could not properly be recorded as revenue. Specifically, on at least two occasions, FastComm recognized revenue on sales of incomplete product that had been packaged and shipped after midnight at quarter end. FastComm also failed to disclose a significant transaction, representing 18% of that quarter's revenue, between its president and his brother-in-law. Antifraud, Books and Records, Reporting and Record Keeping and Internal Controls Violations. Settled Injunctive Actions against FastComm and DesLaurier. Settled Cease-and-Desist Proceeding against Madsen and Rafferty. | FastComm overstated revenues by 33%. |
| SEC v. C.E.C. Industries Corp., Gerald H. Levine and Marie A. Levine Contact:
Gregory S. Bruch
Washington, D.C. Office
202/942-4548 | C.E.C. Industries Gerald H. Levine
President, CEO &
Director
Marie A. Levine
Principal Financial
Officer, Principal Accounting Officer, Treasurer, Secretary and Director | C.E.C. Industries
Headquartered:
Henderson, Nevada C.E.C. has no core business or significant revenue. Public filings claimed assets including land with mineral rights, a collection of artwork by Sky Jones, and shares of a thinly-traded company. C.E.C. was listed on the Nasdaq Small Cap market until Aug. 1995 when it was delisted. It has since been quoted on the OTC Bulletin Board. | C.E.C. materially overstated assets and revenues for its 1996 and 1997 fiscal years. While C.E.C. claimed total assets ranging from $4.8 million to $11 million during the relevant period, most of these assets actually represented apparently worthless artwork, non-existent land and nearly worthless holdings of stock. The company has been chronically late in its public filings, and has not filed annual or quarterly reports since July 1998. Injunctive Action against C.E.C and both Levines. Staff seeks Officer and Director bars against both Levines. | Most significant assets are worthless and substantially all recent revenue was improperly recognized. |
| SEC v. Itex Corp., Terry L. Neal, Michael T. Baer, Graham H. Norris Sr., Cynthia Pfaltzgraff and Joseph M. Morris Contact:
Gregory S. Bruch
Washington, D.C.
Office
202/942-4548 | Itex Corporation Terry L. Neal
Former President &
Chairman
Michael T. Baer
President, CEO &
Chairman
Graham H. Norris, Sr.
President & CEO
Cynthia Pfaltzgraff, CMA
Controller & Director
Joseph M. Morris, CPA
CFO | Itex Corporation Headquartered:
Portland, Oregon Itex is a company engaged in the barter business. It was listed on the Nasdaq Small Cap market until it was delisted in December 1998. | From December 1993 through February 1998, Neal and senior management at Itex conducted a broad-ranging fraudulent scheme by making materially false and misleading disclosures about the company's business and failing to disclose numerous suspect and, in many cases, sham barter deals between Itex and various offshore entities related to and/or controlled by Neal. Antifraud, Securities Registration, Books and Records, Reporting, Beneficial Ownership Reporting, Lying to Auditors, and Internal Controls Violations. Neal, Baer and Morris also are charged with insider trading violations. Injunctive Action against Itex, Neal, Baer, Norris, Pfaltzgraff and Morris. Staff also seeks Officer and Director bars against Neal, Baer and Morris. | During fiscal years 1994 through 1997, sham barter transactions represented approximately 56%, 56%, 43% and 60% of Itex's reported revenues. Neal had insider trading profits of approximately $6.3 million; Baer had insider trading profits of $1.4 million; Morris had insider trading profits of $45,000. |
| SEC v. David E. Stevenson and Mark A. Stevenson In the Matter of Paul T. Fink Contact:
Antonia Chion
Washington, D.C.
Office
202/942-4567
| David Stevenson
President, CEO &
Chairman
Paul T. Fink
CFO
Mark A. Stevenson
David Stevenson's
brother
| Photran Corp. Headquartered:
Lakeville, Minnesota Photran developed, manufactured and marketed high-performance film coated glass used in such products as computer screens, photocopiers, TVs, watches and mirrors. Photran's common stock was listed on the Nasdaq market. On April 15, 1999, Photran cease operations. It filed for Chapter 7 bankruptcy on May 3, 1999. | From December 1995 through the third quarter of 1996, Photran reported fictitious revenue, prematurely recognized revenue and improperly recorded revenue from consigned sales. David Stevenson orchestrated the scheme and Mark Stevenson assisted him by creating a network of shell corporations and bank accounts to effect fraudulent equipment purchases and fictitious sales transactions. Fink did not take any affirmative steps to determine the validity of the fraudulent transactions. Antifraud, Books and Records, Internal Controls and Lying to Auditors Violations. Settled Injunctive Action and Officer and Director bar against David Stevenson. Settled 102(e) against David Stevenson (based on entry of injunction). Settled Injunctive Action against Mark Stevenson. Administrative, Cease-and-Desist and Rule 102(e) proceedings against Fink. | For 1995-1996, Photran reported pre-tax earnings of $441,114, when its actually had a loss of more than $2.2 million. |
| SEC v. Harold M. Ickovics and Stephen J. Kesh SEC v. Robert M. Cankes In the Matter of Kenneth Schwartz and Joel Steinberg In the Matter of Model Imperial, Inc. Contact:
Richard C. Sauer
Washington, D.C. Office
202/942-4777 | Harold M. Ickovics
President, CEO & Chairman
Stephen J. Kesh
CFO & Director
Robert M. Cankes
President of a major supplier of Model
Kenneth Schwartz
Partner in Cosmetics Plus, a retail fragrance shop
Joel Steinberg
Partner in Cosmetics Plus Model Imperial, Inc.
(Admin. proceeding to seek cancellation of its securities registration)
| Model Imperial, Inc. Headquartered:
Boca Raton, Florida Model was a wholesale distributor of brand name fragrances and cosmetics to retailers. Model's common stock was listed on the Nasdaq market until April 1996. Model filed for Chapter 11 bankruptcy in July 1996. A privately owned company acquired all of its common stock. | During 1994 and 1995, Model recorded an unsubstantiated $1.3 million gain from a barter transaction, improperly recorded sales revenues, recorded sham sales, overstated gross profits on retail sales, and paid commercial bribes. These practices resulted in Model filing false and misleading periodic reports with the SEC. Antifraud, Books and Records, Record Keeping, Internal Controls, and Lying to Auditors Violations. Settled Injunctive Action against Ickovics, Kesh and Cankes. Cease-and-Desist Proceedings against Schwartz and Steinberg. Settled 102(e) proceeding against Kesh (based on the entry of the injunction). Administrative Proceedings against Model to determine whether the registration of its common stock should be revoked. | Model's pre-tax earnings were overstated by up to 1,442%. |
| SEC v. Bradley J. Buchanan Contact:
James T. Coffman
Washington, D.C.
Office
202/942-4574
| Bradley J. Buchanan
Financial and Operations Controller of ElDorado (Buchanan was indicted on Sept. 21, 1999 based on his conduct in this case.) | Thor Industries, Inc.
Headquartered:
Jackson Center, Ohio Thor is the 2nd largest manufacturer of recreational vehicles in the U.S. and Canada and the largest producer of small and mid-sized buses. Thor's stock is listed on the NYSE. ElDorado was a wholly-owned subsidiary of Thor. | From November 1995 to March 1998, Buchanan stole $400,000 from ElDorado and then made false entries into ElDorado's books and records to conceal his theft. Antifraud, Books and Records, Reporting, and Internal Controls Violations. Injunctive Action against Buchanan. Staff also seeks an Officer and Director bar against Buchanan. | Thor's quarterly net income was overstated by up to $770,260 or approximately 15%. |
| SEC. v. Jerry M. Walker and Craig R. Clark In the Matter of Raintree Healthcare Corporation and Lisa M. Beuche Contact:
Jerry A. Isenberg
Washington, D.C. Office
202/942-4652
| Raintree Healthcare Corp., f/k/a Unison Healthcare Corp. Jerry M. Walker
President, CEO & Board member
Craig R. Clark
CFO & Board Member
Lisa M. Beuche
Controller & VP
| Raintree Healthcare Corp., f/k/a Unison Healthcare Corp. Headquartered:
Scottsdale, Arizona In 1996, Raintree owned and operated more than 50 health care facilities. Unison's stock was listed on Nasdaq. Unison filed Chapter 11 bankruptcy in May 1998 and subsequently changed its name to Raintree.
| In preparing Unison's financial statements for the second quarter of 1996, Walker, Unison's CEO, directed Beuche, Unison's controller, to increase Unison's net income by $800,000. In Nov. 1996, Walker and Clark, Unison's CFO, directed Beuche to make entries in Unison's books and records increasing revenue by $3.391 million and reducing expenses by $1.7 million. In both cases, the unsubstantiated adjustments were make to ensure that Unison met analysts' expectations. Antifraud, Books and Records, Reporting and Lying to Auditors Violations. Settled Injunctive Action and Rule 102(e) proceeding against Walker. Litigated Injunctive Action against Clark. Settled Administrative, Cease-and-Desist and Rule 102(e) proceeding against Beuche. Settled Cease-and-Desist proceeding against Raintree. | For the second quarter of 1996, Unison's net income was increased from $51,000 to $851,000, an overstatement of more than 1500%. For the third quarter of 1996, the overstatements allowed Unison to report net income of $1.2 million, instead of a loss of nearly $4 million. |
| SEC v. Jose Carlos Villares, Jose E. Rivera and Guillermo Quinones Contact:
William R. Baker, III
Washington, D.C.
Office
202/942-4570 | Jose Carlos Villares
VP & General Manager
Jose E. Rivera
Director of Finance
Guillermo Quinones
Controller
| Pepsi-Cola Puerto Rico Bottling Company
Headquartered:
San Juan, Puerto Rico Pepsi P.R. is a holding company that produces, distributes and markets PepsiCo. beverages. Its stock is listed on the NYSE. [In May 1998, Pepsi P.R. settled to a Cease-and-Desist order.] | During the first two quarters of the fiscal year ended September 1996, Villares, Rivera and Quinones engaged in a fraudulent scheme to overstate the company's financial results. The scheme enabled Pepsi P.R. to report a profit during the first quarter, even though the company had experienced a loss, and to report a smaller than actual loss during the second quarter. Antifraud, Books and Records, Reporting and Lying to Auditors Violations. Settled Injunctive Action against Villares, Rivera and Quinones. Settled Rule 102(e) proceeding against Rivera - 5 year bar. | For the first quarter of 1996, Pepsi reported net income of $129,000, which was overstated by approximately $3.3 million. For the second quarter, its net income was overstated by approximately $5.7 million. |
| SEC v. Noah Steinberg, Enriquez Reyes Carrion, Gershon Tannenbaum, Jay Vermonty and Carmen Vermonty (as relief defendant) Contact:
Paul Berger
202/942-4854
| Noah Steinberg
Pres., CEO and Chairman of Power Phone
Enriquez Reyes Carrion
Pres. and CEO of TMC Agroworld
Gershon Tannenbaum
Secretary and Director of a non-profit company
Jay M. Vermonty
President of a company that promoted Power Phone and TMC
Carmen Vermonty
(as relief defendant)
| Dominican Cigar Corp. (the successor entity of Power Phone, Inc. and TMC Agroworld Corporation) Headquartered:
Boca Raton, Florida Dominican is engaged in the business of manufacturing premium, hand-rolled cigars from the Dominican Republic. Dominican's stock is quoted on the OTC Bulletin Board. | The senior management of Power Phone and TMC orchestrated a fraudulent scheme to falsify and inflate the companies' financial condition in filings with the Commission and in press releases. They accomplished the scheme by falsely claiming to own three assets. The claimed assets consisted of software and artwork, valued at $4 million, and a slaughterhouse and meat processing plant purportedly worth $74 million. Two stock promoters also touted and sold Power Phone and TMC to unsuspecting investors. Antifraud, Books and Records and Lying to Auditors Violations. Injunctive Action against Steinberg, Carrion, Tannenbaum and the Vermontys.
| Power Phone and TMC did not own the claimed assets. |
