UNITES STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION Securities Exchange Act of 1934 Release No. 38765 / June 24, 1997 Accounting and Auditing Enforcement Release No. 927 / June 24, 1997 Administrative Proceeding File No. 3-9338 In the Matter of GARY A. PRINCE, CPA ORDER INSTITUTING PROCEEDINGS AND OPINION AND ORDER PURSUANT TO RULE 102(e) OF THE COMMISSION'S RULES OF PRACTICE I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest to institute proceedings against Gary A. Prince ("Prince") pursuant to Rule 102(e) of the Commission's Rules of Practice. Accordingly, IT IS HEREBY ORDERED that said proceedings be, and hereby are, instituted. II. OFFER Simultaneous with the institution of this proceeding, Prince has submitted an Offer of Settlement ("Offer") solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission, or to which the Commission is a party. Under the terms of the Offer, which the Commission has determined to accept, Prince, without admitting or denying the factual assertions, findings or conclusions set forth herein, except that he admits the jurisdiction of the Commission over him and over the subject matter of this proceeding, consents to the entry of this Order Instituting Proceedings and Opinion and Order Pursuant to Rule 102(e) of the Commission's Rules of Practice. III. FINDINGS The Commission makes the following findings: Prince is a certified public accountant whose license in the State of Maryland lapsed in 1986. From 1988 until July 1990, Prince served as Senior Vice President and Chief Financial Officer of United Press International ("UPI"). He then became Senior Vice President - Finance of Financial News Network ("FNN"). He has practiced before the Commission within the meaning of Rule 102(f) of the Commission's Rules of Practice in connection with the preparation of FNN's financial statements and other documents and by his conduct during the independent accountants' 1990 audit of FNN's financial statements. UPI was a privately-held Delaware corporation engaged in the business of gathering and disseminating news reports and photographs. FNN was a California corporation operating a cable television network that reported financial news and information. FNN's common stock was registered with the Commission pursuant to Section 12 of the Securities Exchange Act of 1934 ("Exchange Act") (15 U.S.C.  78l) and quoted on the National Association of Securities Dealers, Inc. Automated Quotation system. On June 28, 1993, the Commission filed a complaint in the United States District Court for the District of Columbia against Prince and others, captioned SEC v. Bolen, et al., 93 Civ. 1331 (CRR) (D.D.C.). On August 10, 1994, Prince consented to the entry of a Final Judgment of Permanent Injunction and Other Equitable Relief ("Final Judgment"), without admitting or denying the allegations in the complaint, except as to subject matter jurisdiction, which he admitted. On August 18, 1994, the Honorable Charles R. Richey, United States District Judge for the District of Columbia, entered the Final Judgment, which: permanently restrains and enjoins Prince from engaging in conduct violative of Section 10(b) of the Exchange Act and Rules 10b-5 and 13b2-2 promulgated thereunder. The complaint in SEC v. Bolen alleges, among other things, that Prince, while he was UPI's chief financial officer, helped facilitate a fraudulent scheme engineered by two of FNN's executive officers to inflate FNN's revenues and earnings for its fiscal year 1989 and during the first three quarters of its fiscal year 1990 by causing, among other things: (1) an overstatement of revenues FNN received from two related companies, including UPI; and (2) causing FNN to enter into numerous equipment sales/leaseback transactions in which the quantity, type and value of the equipment being sold, the identities of the sellers and the disposition of the proceeds from the transactions were falsified. As set forth in the complaint, as a result of this fraudulent scheme, FNN's financial statements for its fiscal year ended 1989 were materially misleading in that they overstated total revenues by approximately 17%, ======END OF PAGE 2====== pretax income from continuing operations by 96%; total current assets by 24.5%, and total assets by 8%, and understated the loss from FNN's discontinued operations by 46%. FNN's quarterly statements for the first three quarters of its fiscal year ended 1990 were also materially misleading as follows: in the first quarter, FNN overstated revenues by approximately 42.5% and pretax income by 382%; in the second quarter, FNN overstated revenues by approximately 40% and pretax income by 421%; and in the third quarter, FNN overstated revenues by approximately 44%, pretax income by 483%, total current assets by 28% and total assets by 12%. In addition, the complaint alleges that upon appointment as Senior Vice President - Finance of FNN, Prince, who knew of or recklessly disregarded the fraudulent scheme, failed to take steps to cause FNN to restate any of its previously filed financial statements which he knew, or was reckless in not knowing, were false and misleading. Finally, the complaint alleges that during the audit of FNN's fiscal year 1990 financial statements, Prince provided certain documents and information to the auditors which were materially false or misleading. Based on the foregoing, the Commission finds that Prince willfully violated Rule 13b2-2 promulgated under the Exchange Act. As a further consequence of the alleged conduct set forth above, Prince was named as a defendant in a criminal information and on September 6, 1995 pled guilty to two felony counts in the District Court for the Central District of California. The counts to which Prince entered a plea were general federal conspiracy in violation of 18 U.S.C.  371 and filing a false statement with the Securities and Exchange Commission in violation of 18 U.S.C.  1001. Prince's sentencing is pending the outcome of related criminal proceedings in which he is a cooperating government witness against the remaining indicted defendants. ======END OF PAGE 3====== IV. In view of the foregoing, the Commission finds that it is appropriate and in the public interest to impose the sanction that is consented to in the Offer submitted by Prince. Accordingly, IT IS HEREBY ORDERED that: Prince is permanently denied the privilege of appearing or practicing before the Commission as an accountant. By the Commission. Jonathan G. Katz Secretary ======END OF PAGE 4======