Diatect International Corp., et al.

U.S. Securities and Exchange Commission

Litigation Release No. 21524 / May 11, 2010

Accounting and Auditing Enforcement Release No. 3134 / May 11, 2010

Securities and Exchange Commission v. Diatect International Corp., et al., Case Number 2:07CV00709 (D. Utah, filed September 24, 2007)

The United States District Court for the District of Utah entered a Final Judgment of permanent Injunction and Other Relief Against Defendants David H. Andrus (Andrus), Jay W. Downs (Downs) and Michael P. McQuade (McQuade), permanently restraining and enjoining them from future violations of antifraud and aiding and abetting future violations of issuer reporting and books and records violations of the federal securities laws.  The Court barred Andrus from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (Exchange Act) or that is required to file reports pursuant to Section 15(d) of the Exchange Act for a period of five years.  Downs and McQuade were permanently barred from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act.

The Court restrained and enjoined Andrus and Downs from violations of Section 17(a) of the Securities Act of 1933 (Securities Act), and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1, 13b2-2 and 13a-14, and aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) and (B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13.  The Court restrained and enjoined McQuade from violations Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-13 and 13b2-2.

The Court also ordered Andrus to disgorge $150,205.88, together with prejudgment interest of $66,075.50, for a total of $216,281.38 but waived payment of disgorgement and prejudgment interest and did not impose a civil penalty based on Andrus' statement of financial condition.  The Court ordered Downs to pay disgorgement of $24,257.34, together with prejudgment interest of $7,236.76, and a civil penalty of $25,000.00.  The Court ordered McQuade to pay a civil penalty of $50,000.  Andrus, Downs and McQuade consented to the Court's entry of Final Judgment without admitting or denying the Complaint's allegations.   

The action against Diatect International Corporation is still pending.