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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 41729 / August 11, 1999

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1150 / August 11, 1999

ADMINISTRATIVE PROCEEDING
File No. 3-9969

In the Matter of

OWEN D. TARANTA, CPA,
Respondent.

ORDER INSTITUTING PUBLIC
PROCEEDING, MAKING FINDINGS 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 Owen D. Taranta ("Taranta") 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, Taranta 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 that he admits the jurisdiction of the Commission over him and over the matters set forth in this Order and admits the Commission's finding that a Final Judgment of Permanent Injunction and Other Equitable Relief has been entered against him as set forth in Section III, Taranta consents to the entry of findings and the imposition of the remedial sanctions set forth below.

II.

The Commission finds the following:

A. Taranta, a certified public accountant, was acting Chief Financial Officer of MiniScribe Corporation ("MiniScribe") from September 1987 until early 1988, and he also held various high-level operations positions.

B. MiniScribe, a former manufacturer of computer disk drives, was a Delaware corporation with its headquarters in Longmont, Colorado and manufacturing facilities in Longmont, Singapore and Hong Kong. MiniScribe's common stock was registered with the Commission pursuant to Section 12(g) of the Exchange Act, and, until it was delisted on February 1, 1990, was quoted on the NASDAQ National Market System.

C. On May 13, 1999, Taranta was permanently enjoined by the U.S. District Court for the District of Colorado from violating Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 13b2-1 and 13b2-2 thereunder, and ordered to pay disgorgement totaling $10,000, in the action SEC v. Q.T. Wiles, et al., Civ. No. 91-M-1393 (D. Colo.).

D. In its Complaint, filed August 14, 1991, the Commission alleged, among other things, (1) that Taranta was acting Chief Financial Officer of MiniScribe from September 1987 until early 1988, and he also held various high-level operations positions; (2) in September 1987, Taranta and others discovered a material shortfall in MiniScribe's inventory, and, with other MiniScribe officers, concealed a portion of the shortfall from the company's independent auditors by recording on the company's Far East accounting records the fictitious transfer of non-existent inventory from the company's headquarters in Longmont, Colorado and repackaging scrap and obsolete customer service and warranty parts to make them appear to be good inventory, by receiving certain shipments of raw materials into the physical inventory of the Far East plants without recording the corresponding liabilities, by packing bricks into computer disk drive boxes and shipping them to distributors, and shipping improperly labeled scrap to warehouses; (3) in fiscal 1987, MiniScribe overstated its net income by $22 million, or 244 percent; (4) in January 1988, Taranta and others packaged as good inventory scrap that had been written off the books, thus materially increasing the value of the company's inventory; (5) in the second quarter of 1988 MiniScribe overstated its net income by $14.5 million; (6) in the third quarter of 1988 MiniScribe overstated net income by $17.2 million. Taranta neither admitted nor denied the Commission's allegations.

III. Findings

Based on the foregoing, the Commission finds that (a) on August 14, 1991, the Commission filed a complaint against Taranta and others in SEC v. Q.T. Wiles, et al., Civil Action No. 95-1583 (D. Colo.); (b) on May 13, 1999, Taranta consented to the entry of a Final Judgment without admitting or denying the allegations in the amended complaint, except that he admitted subject matter jurisdiction; and (c) on May 13, 1999, the United States District Court for the District of Colorado entered the Final Judgment, which permanently enjoins Taranta from violating Section 17(a) of the Securities Act and Sections 10(b) of the Exchange Act and Rules 10b-5, 13b2-1 and 13b2-2 thereunder;

IV. Order Imposing Sanctions

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

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

IT IS FURTHER ORDERED, that five years from the date of this Order, Taranta 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:

a. 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 Taranta 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;

b. an independent accountant upon submission of an application containing a showing satisfactory to the Commission that:

(i) Taranta, 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 Practices Section") as long as he appears or practices before the Commission as an independent accountant;

(ii) Taranta 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

(iii) Taranta 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

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

By the Commission.

Jonathan G. Katz

Secretary

http://www.sec.gov/litigation/admin/34-41729.htm


Modified:08/12/1999