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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933
Release No. 8631 / February 4, 2004

SECURITIES EXCHANGE ACT OF 1934
Release No. 49186 / February 4, 2004

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1950 / February 4, 2004

Admin. Proc. File No. 3-11392


In the Matter of

RICHARD R. ROSS, CPA,

Respondent.


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ORDER INSTITUTING PUBLIC ADMINISTRATIVE PROCEEDINGS PURSUANT TO RULE 102(e)(3) OF THE COMMISSION'S RULES OF PRACTICE, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Richard R. Ross ("Ross" or "Respondent"), CPA pursuant to Rule 102(e)(3) of the Commission's Rules of Practice.1

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings contained herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings and the findings contained in Section III.3 below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Rule 102(e)(3) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions ("Order"), as set forth below.

III.

On the basis of this Order and Respondent's Offer, the Commission finds that:

1. Richard R. Ross, CPA, age 36, was the chief financial officer of Styling Technology Corporation ("Styling") from April 1997 to April 2000. Prior to joining Styling, Ross worked in Arthur Andersen LLP's office in Phoenix, Arizona, and was the manager on two Styling audits. Ross is a certified public accountant licensed in California.

2. Styling Technology Corporation is a Delaware corporation headquartered in Scottsdale, Arizona that at all relevant times was engaged in the development, production and marketing of beauty salon products. Styling's common stock is registered with the Commission under Section 12(g) of the Securities Exchange Act of 1934 ("Exchange Act") and until November 1999 was listed for trading on the Nasdaq National Market System. In August 2000, Styling entered a proceeding under Chapter 11 of the U.S. Bankruptcy Code and shortly thereafter restated its financial statements for 1997, 1998 and the first two quarters of 1999. Pursuant to a plan of reorganization filed in the bankruptcy court, Styling sold off all of its business assets.

3. On December 4, 2003, the U.S. District Court for the District of Columbia entered a final judgment by consent against Ross, permanently enjoining him from violating Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1 and 13b2-2 thereunder and from 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 thereunder in a civil action entitled Securities and Exchange Commission v. Sam Leopold et al., Civil Action Number 1:03-cv-02491-RMU. The Court also ordered Ross to disgorge $100,000, based on the payment of two bonuses to him and his exercise of Styling options during 1998, and ordered that he be permanently barred from acting as an officer or director of a public company.

4. The Commission's complaint alleged, among other things, that Ross and others engaged in a fraudulent scheme which resulted in Styling filing materially false and misleading financial statements in its annual reports on Form 10-K for the fiscal years ended December 31, 1997 and December 31, 1998 and in its quarterly reports on Form 10-Q for the first two quarters of fiscal year 1999. The complaint alleged that Ross engaged in a number of accounting practices that did not conform with generally accepted accounting principles ("GAAP") and that materially inflated Styling's reported earnings. The complaint specifically alleged that, during 1997 and 1998, Ross, among other things, directed or approved the recording of revenue from transactions in which Styling did not ship any product or in which the company merely shipped product between warehouses it controlled. The complaint further alleged that during 1999 Ross continued to direct or approve the recognition of revenue from sales that did not meet GAAP criteria, and that Ross and others falsely attributed the write-off of $5.1 million of uncollectible accounts receivable to a strategic business realignment.

IV.

In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanction agreed to in Respondent Ross' Offer.

Accordingly, IT IS HEREBY ORDERED, effective immediately, that Ross is suspended from appearing or practicing before the Commission as an accountant.

By the Commission.

Jonathan G. Katz
Secretary


Endnotes

The Commission, with due regard to the public interest and without preliminary hearing, may, by order, . . . suspend from appearing or practicing before it any . . . accountant . . . who has been by name . . . permanently enjoined by any court of competent jurisdiction, by reason of his or her misconduct in an action brought by the Commission, from violating or aiding and abetting the violation of any provision of the Federal securities laws or of the rules and regulations thereunder.


http://www.sec.gov/litigation/admin/33-8631.htm


Modified: 02/04/2004