Walter Cercavschi, CPA

SECURITIES ACT OF 1933
Release No. 7988 / June 19, 2001

SECURITIES EXCHANGE ACT OF 1934
Release No. 44447 / /June 19, 2001

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1408 / June 19, 2001

ADMINISTRATIVE PROCEEDING
File No. 3-10516

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest to institute public administrative proceedings against Respondent Walter Cercavschi ("Cercavschi" or "Respondent") pursuant to paragraph (3) of Rule 102(e) of the Commission's Rules of Practice [17 C.F.R.§ 201.102(e)].¹

II.

In anticipation of the institution of these proceedings, Cercavschi has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceeding brought by or on behalf of the Commission or to which the Commission is a party, and without admitting or denying the findings, except as to the Commission's jurisdiction over the subject matter of these proceedings and as to the entry of the injunction set forth in Section III, which are admitted, Cercavschi consents to the entry of this the Order Instituting Public Proceedings, Making Findings and Imposing Remedial Sanctions Pursuant to Rule 102(e) of the Commission's Rules of Practice ("Order").²

III.

The Commission finds the following³:

A. Cercavschi, age 45, is a certified public accountant licensed in Illinois and was, during the relevant period covered by this Order, a partner at Arthur Andersen LLP. Cercavschi was a member of the engagement team for the audits of the financial statements of Waste Management, Inc. for the years 1994 through 1996.

B. Arthur Andersen LLP is a national public accounting firm and, during the relevant period covered by this Order, served as the independent public accountant for Waste Management, Inc.

C. Waste Management, Inc. was, during the relevant period covered by this Order, a Delaware corporation with its principal place of business in Oak Brook, Illinois. At all times pertinent to the period covered by this Order, the common stock of Waste Management was registered with the Commission pursuant to Section 12(b) of the Securities Exchange Act of 1934 ("Exchange Act") and traded on the New York Stock Exchange.

D. On June 19, 2001, the Commission filed a complaint against Cercavschi and others in the United States District Court for the District of Columbia. SEC v. Arthur Andersen LLP, et al., No. 1:01CV01348 (JR) (D.D.C.). The Commission's complaint alleged, among other things, that (1) Cercavschi, as a partner and member of the engagement team, knowingly or recklessly caused the issuance of materially false and misleading audit reports on Waste Management's financial statements for the period 1994 through 1996, (2) those false and misleading audit reports were incorporated into registration statements Waste Management filed with the Commission pursuant to the Securities Act of 1933 ("Securities Act"), and (3) as a result of his conduct, Cercavschi violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5.

E. On June 19, 2001 the United States District Court for the District of Columbia entered a final judgment permanently enjoining Cercavschi from violating Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5. Cercavschi consented to the entry of the final judgment without admitting or denying the allegations of the Commission's complaint.

IV.

Based on the foregoing, the Commission deems it appropriate and in the public interest to accept Cercavschi's Offer of Settlement and accordingly,

IT IS HEREBY ORDERED, effective immediately, that Cercavschi is denied the privilege of appearing or practicing before the Commission as an accountant, and

IT IS FURTHER ORDERED that, after three (3) years from the date of this Order, Cercavschi may request that the Commission consider his reinstatement by submitting an application (attention: Office of the Chief Accountant) to resume appearing or practicing before the Commission as:

1. a preparer or reviewer, or a person responsible for the preparation or review, of any public company's financial statements that are filed with the Commission. Such an application must satisfy the Commission that Respondent's work in his practice before the Commission will be reviewed either by the independent audit committee of the public company for which he works or in some other acceptable manner, as long as he practices before the Commission in this capacity; and/or

2. an independent accountant. Such an application must satisfy the Commission that: (a) Cercavschi, or the firm with which he is associated, is a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms ("SEC Practice Section"), (b) Cercavschi, or the firm, has received an unqualified report relating to his firm's most recent peer review conducted in accordance with the guidelines adopted by the SEC Practice Section, and (c) as long as Cercavschi appears or practices before the Commission as an independent accountant, he will remain either a member of the SEC Practice Section or associated with a member firm of the SEC Practice Section, and will comply with all applicable SEC Practice Section requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education.

IT IS FURTHER ORDERED, that the Commission's review of an application by Cercavschi to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to Cercavschi's character, integrity, professional conduct, or qualifications to appear or practice before the Commission.

By the Commission.

Jonathan G. Katz
Secretary

Footnotes