U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20126 / May 23, 2007
Accounting and Auditing Enforcement Release No. 2612 / May 23, 2007
Securities and Exchange Commission v. Arthur A. Goodwin, Civil Action No. 02-11913-JTL (D. Mass.)
The Commission announced today that a final judgment by consent was entered by the United States District Court for the District of Massachusetts against Arthur A. Goodwin, former senior vice-president of worldwide sales of Interspeed, Inc., a now-defunct North Andover, Massachusetts Internet equipment provider. The final judgment against Goodwin, age 45, of Plano, Texas, entered on May 21, 2007, permanently enjoins Goodwin from violating antifraud provisions of the federal securities laws and permanently bars him from serving as an officer or director of a public company.
The Commission's Complaint, filed on September 30, 2002, alleges that during 2000, Goodwin, the company's senior vice president of world-wide sales, orchestrated a scheme to inflate Interspeed's revenue in order to meet analysts' revenue expectations and to boost his own bonus. The Complaint alleges that Goodwin arranged transactions containing secret side letters, arranged "round-trip" transactions in which funds were funneled to a customer to use to pay for Interspeed products, and forged a signature and falsified the terms of a contract. In November 2000, Interspeed filed amended Forms 10-Q with the Commission restating revenue for the first three quarters of fiscal year 2000. According to the Complaint, Interspeed's reported revenue for the period decreased 60% from $14.1 million to $5.4 million, and its net loss increased from $8.5 million to $12 million. According to the restatement, Interspeed had overstated its revenue by between 25% and 93% for each of the three affected filing periods. Interspeed's fraudulent quarterly reports were also incorporated by reference in a Form S-8 registration statement, filed with the Commission on August 24, 2000.
To settle the Commission's charges, Goodwin consented, without admitting or denying the allegations of the Complaint, to entry of a final judgment permanently enjoining him from violations of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5, 13b2-1 and 13b2-2 thereunder and from aiding and abetting violations of Section 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder. The judgment imposes a permanent officer and director bar. The judgment further orders that Goodwin is liable for disgorgement of his performance-based bonus of $70,500, plus pre-judgment interest of $30,021, but waives payment based on sworn representations by Goodwin in his statement of financial condition and other documents and information submitted to the Commission.
In a related criminal proceeding, on June 9, 2006, Goodwin was convicted of eight counts of securities and wire fraud following a nine day jury trial prosecuted by the U.S. Attorney's office for the District of Massachusetts. On October 13, 2006, Goodwin was sentenced to serve a prison term of 30 months, followed by supervised release for three years.
For further information, see Litigation Release No. 18758 (June 22, 2004), Litigation Release No. 18468 (November 17, 2003), Litigation Release No. 18180 (June 6, 2003), and Litigation Release No. 17758 (October 1, 2002).