UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE
COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 44240 / May 1, 2001
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1387 / May 1, 2001
ADMINISTRATIVE PROCEEDING File No. 3-9138
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In the Matter of Joseph Bevacqua, CPA
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ORDER GRANTING APPLICATION FOR REINSTATEMENT TO PRACTICE AS AN ACCOUNTANT RESPONSIBLE FOR THE PREPARATION OR REVIEW OF FINANCIAL STATEMENTS OF A PUBLIC COMPANY TO BE FILED WITH THE COMMISSION |
On October 2, 1996, Joseph Bevacqua ("Bevacqua") was suspended from appearing or practicing as an accountant before the Commission as a result of settled public administrative proceedings instituted by the Commission against Bevacqua pursuant to Section 8A of the Securities Act of 1933, Section 21C of the Securities Exchange Act of 1934 and Rule 102(e)(1)(iii) of the Commission's Rules of Practice.1 This order is issued in response to Bevacqua's application for reinstatement to practice before the Commission as an accountant responsible for the preparation or review of financial statements of a public company to be filed with the Commission.
During its 1993 and 1994 fiscal years, Aura Systems Inc. ("Aura") filed with the Commission annual and quarterly reports that described, in false or misleading terms, its success in developing new commercial markets for products using its proprietary electromagnetic technology. During the relevant time period, Bevacqua, Aura's former vice president of finance and chief accounting officer, was a consultant to John Jory Company ("Jory") and participated in structuring and facilitating a sham transaction between Aura and Jory that materially overstated Aura's revenues for its third quarter of fiscal 1994.
The sham transaction involved an arrangement with Jory, a construction contractor, which was contrived in order for Aura to recognize revenue. The transaction involved the "sale" of engineering services and materials for $1.5 million by Aura to Jory. However, the transaction lacked substance since Aura, with the assistance of Bevacqua, subsequently arranged for Jory to pay for these engineering services and materials by routing the necessary funds to Jory through a related construction company which was owned by a friend of Bevacqua. The revenue recorded by Aura on this transaction accounted for 11% of the Company's fiscal 1994 revenues, and was included in Aura's financial statements included in the Company's Form 10-Q for the nine months ended November 30, 1993. Bevacqua participated in a meeting with certain officers of Aura in October 1993 in which the Jory transaction was discussed, and in which fictitious purchase orders related to the transaction were drafted. Bevacqua further participated in drafting a fictitious invoice from the construction company owned by Bevacqua's friend to Aura, and in facilitating the flow of funds from Aura to Jory to pay for the purported engineering services and materials provided to Jory by Aura. The suspension order alleges that Bevacqua knew, or was reckless in not knowing that the Jory transaction was a sham.
In his capacity as an accountant responsible for the preparation or review of financial statements of a public company to be filed with the Commission, Bevacqua has undertaken to have his work reviewed by the independent audit committee of any future employer, or in some other manner acceptable to the Commission, while practicing before the Commission in this manner. Bevacqua is not, at this time, seeking to practice before the Commission as an independent accountant and has represented to the Commission staff that if he should ever seek to resume practicing before the Commission as an independent accountant, he will submit an application to the Commission showing that he has complied and will comply with the terms of the original suspension order in this regard. Therefore, Bevacqua's suspension from practice before the Commission as an independent accountant continues in effect until the Commission determines that a sufficient showing has been made in this regard in accordance with the terms of the original suspension order.
On the basis of information supplied, representations made, and undertakings agreed to by Bevacqua, it appearing that Bevacqua has complied with the terms of the October 2, 1996 order suspending him from practice before the Commission as an accountant responsible for the preparation or review of financial statements of a public company to be filed with the Commission, that no information has come to the attention of the Commission relating to his character, integrity, professional conduct or qualifications to practice before the Commission that would be a basis for adverse action against Bevacqua pursuant to Rule 102(e) of the Commission's Rules of Practice, that Bevacqua's undertaking to have his work reviewed by the independent audit committee of any future employer, or in some other manner acceptable to the Commission, in his practice before the Commission as a preparer or reviewer of financial statements of a public company to be filed with the Commission is in the public interest, it is accordingly,
ORDERED pursuant to Rule 102(e)(5)(i) of the Commission's Rules of Practice that Joseph Bevacqua, CPA is reinstated to appear and practice before the Commission as an accountant responsible for the preparation or review of financial statements of a public company to be filed with the Commission.
By the Commission.
Jonathan G. Katz
Secretary
Footnotes
1 See Accounting and Auditing Enforcement Release No. 839, dated October 2, 1996. Bevacqua was permitted, pursuant to the order, to apply for reinstatement after three years upon making certain showings.