U.S. Securities & Exchange Commission
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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. 45612 / March 21, 2002

Accounting and Auditing Enforcement
Release No. 1527 / March 21, 2002

Administrative Proceeding
File No. 3-10732

In the Matter of


The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Frank Valdez ("Valdez" or "Respondent").


In anticipation of the institution of these administrative proceedings, Valdez has submitted an Offer of Settlement ("Offer") which the Commission has determined to accept. Solely for the purpose of these proceedings, and any other proceedings brought by or on behalf of the Commission, or in which the Commission is a party, without admitting or denying the findings set forth below, except as to jurisdiction of the Commission over him and over the subject matter of these proceedings, which Respondent admits, Respondent consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order ("Order") set forth below.

Accordingly, it is ordered that proceedings pursuant to Section 21C of the Exchange Act be, and hereby are, instituted.


The Commission makes the following findings:1

A. Respondent

Frank Valdez, age 51, was the President of USA Detergents from February 1995 until February 1997, when he resigned. He resides in Bedminster, New Jersey.

B. Other Relevant Entity

USA Detergents, at all times relevant, was a Delaware corporation with its principal executive offices in North Brunswick, New Jersey. The company was a manufacturer and marketer of laundry and household cleaning products. Its common stock was registered with the Commission pursuant to Section 12(g) of the Exchange Act and traded on the NASDAQ National Market System. On May 21, 2001, Church & Dwight Co., Inc. announced that its wholly owned subsidiary, US Acquisition Corp., had completed a $7.00 per share cash tender offer for the outstanding shares of USA Detergents common stock. As a result of that acquisition, USA Detergents is no longer a Section 12 registrant.

C. Respondent's Violative Conduct

During the last half of 1996, USA Detergents management became increasingly concerned that the company would not be able to meet its stated sales goals for its fiscal year ended December 31, 1996. Valdez, who was USA Detergents' President at the time, was present at meetings in late 1996 during which managers discussed various means designed to increase the final sales numbers for the year. Thereafter, Valdez pushed the company's Vice President for Distribution to make two shipments as soon as possible. One shipment was of goods for which a customer had given only an oral indication of interest. The second shipment was for an order that the customer had asked to have shipped after the first of the year. The Vice President for Distribution ordered the shipments made in 1996, and the company recognized the revenue from those shipments in that year. The improper revenue recognition was subsequently reflected in the company's financial statements for 1996, as Valdez knew or should have known would be the case.

D. False Filing

In March of 1997, USA Detergents filed with the Commission its annual report on Form 10-K for 1996. The filing was false and misleading because, as a result of the shipments made at the end of 1996 and the related, improper revenue recognition, it included financial statements that misrepresented the company's financial condition and results of operations, overstating its sales and revenue.

Violation of the Exchange Act Reporting Provisions

Section 13(a) of the Exchange Act and Rule 13a-1 thereunder require issuers with securities registered under Section 12 of the Exchange Act to file annual reports with the Commission and to keep this information current. The obligation to file such reports embodies the requirement that they be true and correct. See, e.g., SEC v. Savoy Indus., Inc., 587 F.2d 1149, 1165 (D.C. Cir. 1978), cert. denied, 440 U.S. 913 (1979). Exchange Act Rule 12b-20 further requires the inclusion of any additional material information that is necessary to make required statements, in light of the circumstances under which they were made, not misleading. Information regarding the financial condition of a company is presumptively material. SEC v. Blavin, 760 F.2d 706, 711 (6th Cir. 1985).

USA Detergents' 1996 annual report on Form 10-K was false and misleading inasmuch as it included financial statements that misrepresented the company's financial condition and results of operations. Based on the conduct described above, Valdez was a cause of the company's violation of Section 13(a) of the Exchange Act and Exchange Act Rules 13a-1 and 12b-20.


Based on the foregoing, the Commission finds that Valdez was a cause of USA Detergents' violation of Section 13(a) of the Exchange Act and Exchange Act Rules 13a-1 and 12b-20.


In view of the foregoing, the Commission deems it appropriate to accept Valdez' Offer.

Accordingly, IT IS HEREBY ORDERED that

Pursuant to Section 21C of the Exchange Act, Valdez cease and desist from causing any violation and any future violation of Section 13(a) and Rules 13a-1 and 12b-20.

By the Commission.

Jonathan G. Katz


1 The findings herein are made pursuant to Valdez' Offer and are not binding on any other person or entity in these or any other proceedings.



Modified: 03/22/2002