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U.S. Securities and Exchange Commission


Litigation Release No. 20686 / August 21, 2008

Accounting and Auditing Enforcement
Release No. 2864 / August 21, 2008

Securities and Exchange Commission v. Ranko Cucuz, William D. Shovers, Jesus Bonilla-Valdez, Ronald Lee Kolakowski, and HLI Operating Company, Inc., f/k/a Hayes Lemmerz International, Inc., Civil Action No. 2:06-CV-11935 (E.D. Mich.)


The Securities and Exchange Commission announced today that on August 20, 2008, a federal jury returned a verdict in the SEC’s favor on securities fraud charges against Ranko Cucuz, the former Chief Executive Officer of automobile parts manufacturer Hayes Lemmerz International, Inc., and William D. Shovers, the former Chief Financial Officer of the company. The verdict followed a two-week jury trial in Detroit, Michigan, before the Honorable Arthur J. Tarnow, United States District Judge for the United States District Court for the Eastern District of Michigan.

The Commission’s complaint, filed on April 25, 2006, alleged that Hayes, acting through former senior officers and employees, engaged in a fraudulent scheme to achieve corporate earnings targets and mask declining operating results. The complaint alleged that as a result of the fraudulent accounting scheme, Hayes made materially false filings with the Commission in fiscal years 1999 and 2000 and for the first quarter of 2001, including the company's annual report on Form 10-K for the fiscal year ending January 31, 2001, and the quarterly reports on Forms 10-Q for the quarterly periods ended April 30, 2000, July 31, 2000, October 31, 2000 and April 30, 2001.

The complaint also alleged that, upon learning of the fraudulent accounting scheme, Cucuz and Shovers made affirmative misrepresentations to the company's outside independent auditor about Hayes' financial statements and caused Hayes to make Commission filings containing material misrepresentations. The complaint further alleged that Cucuz and Shovers took affirmative steps to conceal information about the improper accounting practices from Hayes' outside independent auditor and Hayes' Audit Committee and Board of Directors. Finally, the complaint alleged that Cucuz and Shovers made material misrepresentations about Hayes' financial condition in connection with a $300 million Rule 144A bond offering by Hayes in June 2001.

The jury found that Shovers violated: (i) the antifraud provisions of both the Securities Act of 1933 (Section 17(a)(3)) and the Securities Exchange Act of 1934 (Section 10(b) and Rule 10b-5 thereunder); (ii) the internal controls and books and records provisions of the Exchange Act (Section 13(b)(5) and Exchange Act Rule 13b2-1); and (iii) the lying-to-auditor provision of the Exchange Act (Rule 13b2-2). The jury also found that Shovers aided and abetted violations of the issuer reporting, books and records, and internal control provisions of the Exchange Act (Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) and Exchange Act Rules 12b-20, 13a-1, and 13a-13). Finally, the jury found Cucuz liable for violations of the antifraud provisions of the Securities Act (Section 17(a)(3)). Cucuz was found not liable on the other claims against him. Remedies against Cucuz and Shovers will be determined by Court.

Cucuz and Shovers are the last two remaining defendants in this action. Previously, the Commission reached settlements with the company, Ronald Lee Kolakowski (the former President of Hayes’ North American Wheel Group), and Jesus Bonilla-Valdez (former Vice President of Hayes’ Aluminum Wheel Group). Moreover, in previously settled related administrative proceedings, the Commission issued Orders Instituting Administrative Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions against three other former Hayes employees: Allen Buntin, James Jarrett, and Greg Jones.

Additional information concerning this action and Commission actions related to this matter can be found at:



Modified: 08/21/2008