Escala Group, Inc., Gregory Manning, and Larry Lee Crawford, CPA

Escala Group, Inc., Gregory Manning, and Larry Lee Crawford, CPA


Litigation Release No. 21630 / August 24, 2010

Accounting and Auditing Enforcement Release No. 3174 / August 24, 2010

Securities and Exchange Commission v. Escala Group, Inc., Gregory Manning, and Larry Lee Crawford, CPA, Civil Action No. 09 CV 2646 (S.D.N.Y., August 23, 2010)

SEC Settles Disclosure and Accounting Fraud Charges Against Escala Group, Inc.'s Former CEO, Gregory Manning.

The Securities and Exchange Commission announced that on August 23, 2010, the Honorable Denise Cote of the United States District Court for the Southern District of New York entered a Final Judgment against the founder and former CEO of Escala Group, Inc., Gregory Manning ("Manning"), 64, who was charged, along with then-NASDAQ National Market issuer Escala Group, Inc. ("Escala"), and former CFO Larry Lee Crawford, 62, with disclosure and accounting fraud violations concerning related party transactions between Escala and its parent company, Afinsa Bienes Tangibles, S.A. ("Afinsa").

The Final Judgment, to which Manning consented without admitting or denying the allegations in the complaint, permanently restrains and enjoins Manning from: (i) violation of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]; (ii) violation of Section 13(b)(5) of the Exchange Act [15 U.S.C. §§ 78m(b)(5)] and Exchange Act Rules 13b2-1 and 13b2-2 [17 C.F.R. §§ 240.13b2-1 and 13b2-2]; (iii) aiding and abetting Escala Group Inc's violation of Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) [15 U.S.C. §§ 78m(a), 78m(b)(2)(A), and 78m(b)(2)(B),] and Rules 12b-20, 13a-1, 13a-13 [17 C.F.R. §§ 240.12b-20, 13a-1, and 13a-13]; (iv) violation of Exchange Act Rule 13a-14 [17 C.F.R. § 240.13a-14]. It also orders Manning to pay $669,489 in disgorgement, prejudgment interest and penalties, and bars Manning from serving as an officer or director of a public company for 10 years.

Escala, now known as Spectrum Group International, Inc., was a network of companies in the collectibles market specializing in stamps. Afinsa was a privately held Spanish company that sold investments in portfolios of stamps in Europe. The Commission's complaint, filed on March 23, 2009, and amended on August 28, 2009, among other things, alleged a fraudulent business scheme based upon the secret and dramatic manipulation of collectible stamp values, in which Manning violated the antifraud and reporting provisions of the federal securities laws by failing to disclose the related party status of Barrett & Worthen, Inc., resulting in control of the Brookman Catalogue, and failing to disclose the revenues obtained by virtue of Afinsa and Manning's control of the prices in the Brookman Catalogue; falsely representing that Escala sold Afinsa several large stamp archives at prices determined by reference to independent stamp catalogues and appraisals when in fact Manning set the catalogue prices and influenced and edited the appraisals; and that Escala and Manning also violated the antifraud provisions by selling back to Afinsa in a round-trip transaction inventory acquired from Afinsa in direct contravention of Escala's public promise not to do so.

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Last Reviewed or Updated: June 27, 2023