U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20068 / April 3, 2007
Accounting and Auditing Enforcement
Release No. 2592 / April 3, 2007
SEC v. Jimmy Lynn Bradley and Lesley Don Cole, Civ. No. 07-CV-00629-MSK-CBS (D. Colo.)
SEC Settles with Former Chief Financial Officer and Outside Audit Partner for UCAP, Inc.
The Securities and Exchange Commission ("Commission") today announced that it has filed a settled civil fraud action against UCAP, Inc.'s former chief financial officer Jimmy Lynn Bradley, a resident of Katy, Texas, and the former engagement partner from UCAP's former outside auditor Lesley Don Cole, a resident of Roland, Arkansas. The Commission's complaint, filed in the United States District Court for the District of Colorado, alleged that Bradley and Cole fraudulently caused UCAP to overstate revenue by recording only half of a revenue adjustment necessary to make the company's financial statements comply with generally accepted accounting principles ("GAAP") and by overstating the value of its real estate. Together, these actions enabled UCAP to meet falsely a key financial covenant required to save the company's sole line of credit. Additionally, the complaint alleged that Bradley and Cole caused UCAP to record fraudulently revenue from a real estate transaction with a related party and fail to record an expense for a settlement agreement between UCAP and a third party. As a result, UCAP's financial statements for the annual period ended September 30, 2002 understated the company's pre-tax net loss by over $1.8 million, or 26 percent, and were therefore false and misleading.
The Commission's complaint further alleged that Bradley certified falsely UCAP's 2002 Form 10-KSB and filed it with the Commission on January 15, 2003. Moreover, the Commission's complaint alleged that Cole caused UCAP's outside auditing firm to issue an unqualified audit report that was included in UCAP's 2002 Form 10-KSB, which falsely stated that the audit had been performed in accordance with generally accepted auditing standards, and that the financial statements were free of material misstatements and were presented in conformity with GAAP.
Without admitting or denying the Commission's claims, Bradley consented to the entry of an order permanently enjoining him from future violations of Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 13a-14 and 13b2-1 thereunder, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder. Further, Bradley consented to a bar from acting as an officer or director of any public company. The Commission did not seek a civil penalty against Bradley based on his demonstrated inability to pay.
Additionally, Cole, without admitting or denying the Commission's claims, consented to the entry of an order permanently enjoining him from future violations of Section 10(b) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder, and from aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder. Cole further consented to pay a $25,000 civil penalty.
In addition to the relief described above, Bradley and Cole each consented to the entry of an order in separate Commission administrative proceedings suspending them, pursuant to Rule 102(e) of the Commission's Rules of Practice, from appearing or practicing as accountants before the Commission with the right to apply for reinstatement after five years.
See SEC Complaint in this matter.
On April 2, 2007, the Commission instituted settled cease-and-desist proceedings against Danny Edward Moudy, the former chief executive officer of UCAP, Inc. (Exchange Act Rel. No. 55568; Accounting and Auditing Rel. No. 2590).
On August 23, 2005, the Commission revoked the registration of UCAP, Inc. securities pursuant to Section 12 of the Exchange Act. (Exchange Act Rel. No. 34-52322; Admin. Proc. File No. 3-11992).