Danny R. Auerbach, Michael L. Glaser, and James Montgomery, II

Securities Exchange Act of 1934
Release No. 41931 / September 28, 1999

Accounting and Auditing Enforcement
Release No. 1180 / September 28, 1999

Administrative Proceeding
File No. 3-10042 CEASE AND DESIST PROCEEDINGS INSTITUTED AGAINST DANNY R. AUERBACH, MICHAEL L. GLASER AND JAMES D. MONTGOMERY, II,

The Commission announced that on September 28, 1999, it instituted administrative cease-and-desist proceedings against Danny R. Auerbach, of Lawrenceville, GA, Michael L. Glaser, of Tempe, AZ, and James Montgomery, II, of Auburn, GA. Montgomery was a director of sales for Computone Corporation of Alpharetta, GA. Auerbach was Computone's national sales manager and is currently its director of North American sales. Glaser is the president of a customer of Computone.

In the Order, the Division of Enforcement alleges that these individuals took steps that caused Computone to violate the federal securities laws prohibiting fraud, the filing of false reports with the Commission, the failure to keep accurate books and records, and the failure to maintain an adequate system of internal accounting controls. Montgomery and Auerbach are also alleged to have knowingly falsified Computone's books, records and accounts.

The Division of Enforcement alleges that Montgomery altered a customer's purchase order so that Computone could recognize the sale and lied to Computone's outside auditors about the altered purchase order. As a result, the Order alleges that Montgomery violated Section 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 13b2-1 thereunder, and that he caused Computone to violate Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 13a-13 and 13b2-1 thereunder. Auerbach is alleged to have created a fictitious sales order while knowing that no such order was placed. The Order alleges that Auerbach violated Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder, and that he caused Computone to violate Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 13a-13 and 13b2-1 thereunder. Finally, the Order alleges that Glaser agreed to falsely represent to Computone's auditors that his employer had entered into a contract to purchase computer equipment from Computone and that it owed Computone the purchase price when in fact his employer would pay for the products only if it sold them. As a result, the Order alleges Glaser caused Computone to violate Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5 and 13a-1 thereunder

A hearing will be held before an administrative law judge to determine whether the allegations in the Order are true and, if so, what, if any, remedial sanctions against Montgomery, Auerbach and Glaser are appropriate.