UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 42124 / November 10, 1999
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1205 / November 10, 1999
File No. 3-10094
: ORDER INSTITUTING A
In the Matter of : PUBLIC PROCEEDING AND
: OPINION AND ORDER
JIMMY L. DUCKWORTH, CPA, : PURSUANT TO RULE 102(e)
: OF THE COMMISSION'S
Respondent. : RULES OF PRACTICE
The Securities and Exchange Commission (Commission) deems it appropriate and in the public interest that a public administrative proceeding be, and hereby is, instituted against Jimmy L. Duckworth (Duckworth) pursuant to Rule 102(e)(3) of the Commission's Rules of Practice.1
In anticipation of the institution of this proceeding, Duckworth has submitted an Offer of Settlement (Offer), which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceedings brought by or on behalf of the Commission or to which the Commission is a party, Duckworth consents to the issuance of this Order, the entry of the findings contained herein, and the imposition of the sanction set forth below without admitting or denying the findings or conclusions contained herein except that he admits (1) the Commission's jurisdiction over him and the subject matter of this proceeding and (2) the entry of the permanent injunction against him described below.
The Commission makes the following findings:
A. Jimmy L. Duckworth, a certified public accountant, was Executive Vice President of Sales and a member of the board of directors of Scientific Software-Intercomp, Inc. (SSI). Duckworth resigned from SSI in June 1995.
B. During the period 1992-1995, SSI was a Colorado corporation, headquartered in Denver, Colorado. SSI developed, sold and provided software and consulting services for the oil and gas industry. SSI's common stock was registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 (Exchange Act) [15 U.S.C. § 781(g)] and during the relevant period was listed on NASDAQ. On September 11, 1997, the Commission filed a civil injunctive complaint in the United States District Court for the District of Columbia, captioned SEC v. Scientific Software-Intercomp, Inc., 97-CV-2091 (JGP) (D.D.C.), against SSI alleging violations of Section 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules l0b-5, 12b-20, 13a-1, l3a-11 and l3a-13 thereunder. Simultaneous with the filing of the complaint, SSI consented, without admitting or denying the allegations of the complaint, to injunctive relief and agreed to restate its financial statements for the years ending December 31, 1993, 1994 and 1995.
C. On October 28, 1999, Duckworth was permanently enjoined by the U.S. District Court for the District of Colorado from violating Section 17(a) of the Securities Act and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1, and 13b2-2 thereunder, ordered to pay a $35,000 civil penalty, and barred for a period of five years from serving as an officer and director of a public company. SEC v. Hottovy, et al., Civil Action No. 98-S-1636 (D. CO.).
D. The Commission's amended complaint alleged, among other things, that: (1) beginning in 1992 or earlier and continuing until at least 1995, SSI materially overstated its revenue and earnings by backdating or misdating contracts, booking revenue without contracts, overaccruing project revenues and providing confidential side letters modifying payment obligations; (2) as a result of these practices, SSI reported materially false and misleading financial information in its Annual Reports for fiscal 1993 and 1994, its Quarterly Reports for the first three quarters of fiscal 1994 and the first quarter of fiscal 1995, and in its S-1 registration statement in June 1994; (3) Duckworth made or caused the making of materially false and misleading accounting entries in SSI's books and records and provided false information to the company's independent auditors in connection with the audit of SSI's financial statements; and (4) Duckworth knew or was reckless in not knowing that the SSI's financial statements were materially false and misleading.
Based on the foregoing, the Commission deems it appropriate and in the public interest to accept Duckworth's Offer of Settlement and accordingly,
IT IS HEREBY ORDERED, effective immediately, that Duckworth is denied the privilege of appearing or practicing before the Commission as an accountant.
By the Commission.
Jonathan G. Katz
1 Rule 102(e)(3)(i), in relevant part, provides that the Commission may suspend from appearing or practicing before it any accountant who by name has been permanently enjoined, by a court of competent jurisdiction in an action brought by the Commission, from violating any provision of the federal securities laws or the rules and regulations thereunder. 17 C.F.R. §201.102(e)(3)(i).