SECURITIES EXCHANGE ACT OF 1934
Release No. 41676 / July 30, 1999
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1145 / July 30, 1999
ADMINISTRATIVE PROCEEDING
File No. 3-9943
| In the Matter of RICHARD I. BREWER, CPA, |
ORDER INSTITUTING PUBLIC PROCEEDING 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 an administrative proceeding against Richard I. Brewer ("Brewer") pursuant to paragraph (3) of Rule 102(e) of the Commission's Rules of Practice [17 C.F.R. §201.102(e)(3)]. /
In anticipation of the institution of this proceeding, Brewer has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. 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, and without admitting or denying the Commission's findings contained herein, except the Commission's finding that a Final Judgment of Permanent Injunction and Other Equitable Relief has been entered against him as set forth in Paragraph III, which is admitted, Brewer consents to the Order Instituting Public Proceeding and Opinion and Order Pursuant to Rule 102(e) of the Commission's Rules of Practice and to the entry of findings and the imposition of the remedial sanctions set forth below.
II.
The Commission finds the following:
A. Brewer, age 50, is the former comptroller of Excal Enterprises, Inc. ("Excal"), formerly known as "Assix International, Inc." Brewer prepared Excal's quarterly and annual filings for the fiscal years ended June 30, 1990, 1991, and 1992.
B. Excal is a Delaware corporation with its headquarters located in Tampa, Florida. Excal's common stock is registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 ("Exchange Act"). At all times relevant to the allegations herein, Excal was required to file reports with the Commission pursuant to Section 13(a) of the Exchange Act.
C. On September 26, 1995, the Commission filed a Complaint against Brewer and others in SEC v. Excal, et al., Civil Action No. 95-1583-CIV-T-23B (M.D. Fla.). On January 31, 1996, the Commission filed an amended complaint which included additional allegations and claims against defendants other than Brewer (the "Amended Complaint"). On March 24, 1999, Brewer 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 July 21, 1999, the United States District Court for the Middle District of Florida entered the Final Judgment, which permanently enjoins Brewer from violating Section 10(b) of the Exchange Act and Rules 10b-5, 13b2-1 and 13b2-2 thereunder.
D. The Complaint alleges, among other things, that: (1) between 1989 and 1992 Excal's President and top officers engaged in a scheme to mislead the investing public into believing that Excal was a financially sound and growing company, when in fact it was in the process of losing every one of its significant customers; (2) Excal and its senior management carried out this scheme by, among other things, filing numerous false periodic reports with the Commission, creating and maintaining false and inaccurate books and records, and repeatedly lying to the company's auditors; (3) Brewer falsified Excal's books and records by preparing and recording sham monthly invoices for Western Auto (an Excal customer) for February, March and April 1991, and falsely recording the January 1991 advance payment of $125,000 from Western Auto as revenue; (4) This conduct concealed Excal's loss of revenues from its TM6000 contract with Western Auto, which was terminated as of December 1990; (5) Brewer falsified Excal's books and records by making fictitious contemporaneous offsetting entries for "promotional expenses" of $375,000 purportedly incurred as a result of a test conducted at certain Western Auto stores; (6) In connection with this scheme, Brewer wrote Western's Auto's Vice President requesting three fictitious, backdated invoices for the months of February, March and April 1991; (7) The Western Auto VP prepared, backdated, and sent the invoices to Brewer as requested, even though he knew they were fictitious; and, (8) Brewer then provided the invoices to the auditors, knowing they were fictitious. Brewer neither admits nor denies the allegations set forth in the Amended Complaint.
III.
FINDINGS
Based on the foregoing, the Commission finds that Brewer was permanently enjoined from violating Section 10(b) of the Exchange Act and Rules 10b-5, 13b2-1 and 13b2-2 thereunder.
IV.
OFFER OF SETTLEMENT
Brewer has submitted an offer of settlement to the Commission in which he, prior to a hearing pursuant to the Commission's Rules of Practice, 17 C.F.R. § 201.101 et seq., and without admitting or denying any of the above, except that he admits the jurisdiction of the Commission with respect to the matters set forth herein, consents to the issuance of this Order denying him the privilege of appearing or practicing before the Commission as an accountant for five years.
V.
ORDER IMPOSING SANCTIONS
Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer of Settlement submitted by Brewer and accordingly,
IT IS HEREBY ORDERED, effective immediately, that:
A. Brewer is denied the privilege of appearing or practicing before the Commission as an accountant.
B. Five years from the date of this Order, Brewer may apply to the Commission by submitting an application to the Office of the Chief Accountant which requests that he be permitted to resume appearing or practicing before the Commission as:
1. a preparer or reviewer, or a person responsible for the preparation or review, of financial statements of a public company to be filed with the Commission upon submission of an application satisfactory to the Commission in which Brewer undertakes that, in his practice before the Commission, his work will be reviewed by the independent audit committee of the company for which he works or in some other manner acceptable to the Commission;
2. an independent accountant upon submission of an application containing a showing satisfactory to the Commission that:
(a) Brewer, or any firm with which he is or becomes associated in any capacity, is and will remain a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for SPA Firms ("SEC Practice Section") as long as he appears or practices before the Commission as an independent accountant;
(b) Brewer or the firm has received an unqualified report relating to his or the firm's most recent peer review conducted in accordance with the guidelines adopted by the SEC Practice Section; and
(c) Brewer will comply with all applicable SEC Practice Section requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education, as long as he appears or practices before the Commission as an independent accountant; and
C. The Commission's review of any request or application by Brewer to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to Brewer's character, integrity, professional conduct or qualifications to appear or practice before the Commission.
By the Commission.
Jonathan G. Katz
Secretary