U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23190 / February 6, 2015
Accounting and Auditing Enforcement Release No. AAER-3628 / February 6, 2015
Securities and Exchange Commission v. David Rivard, Civil Action No. 15 Misc 0221
Securities and Exchange Commission v. David Rivard, Civil Action No. 04 Civ. 1464
SEC Charges Accountant with Violating Commission Suspension Order, Seeks Disgorgement of Compensation Received During Suspended Period, and Also Seeks Contempt for Non-Payment of Moneys Owed On Prior Judgment.
The Commission today announced that on February 5, 2015, it filed two applications in U.S. District Court for the Eastern District of New York against David Rivard, a former certified public accountant. The first is an application seeking to enforce a prior Commission order suspending Rivard from practicing accounting before the Commission. Securities and Exchange Commission v. David Rivard, 15 Misc 0221 (E.D.N.Y.). The second seeks an order holding Rivard in contempt of a money judgment entered against him in a prior action. SEC v. Rivard, No. 04 Civ. 1464 (E.D.N.Y. Apr. 8, 2004) (2004 Action). Rivard is a resident of East Setauket, New York, and had previously been licensed as a certified public accountant by the State of New York from February 1992, until he surrendered his license, effective March 2008.
The Commission alleged that Rivard violated an October 27, 2004 Commission Order issued under Rule 102(e)(3)(i) of the Commission's Rules of Practice (2004 Commission Order) that suspended Rivard from appearing or practicing before the Commission as an accountant. In The Matter of David Rivard, CPA, Securities Exchange Act of 1934 Rel. No. 50598, Accounting and Auditing Enforcement Rel. No. 2130, Administrative Proceeding File No. 3-11722 (October 27, 2004). According to the application, from at least April 2009 to April 2014, Rivard violated the 2004 Commission Order. Specifically, in April 2009, Rivard became a financial consultant to Verint Systems, Inc. (Verint), a reporting company under the Exchange Act, whose stock is publicly traded on the NASDAQ. Verint engaged Rivard to help the company restate several years of financial statements. In that capacity, Rivard participated in Verint's financial reporting process by, among other things: editing footnotes to financial statements; compiling data in support of those footnotes; reviewing sales contracts for proper categorization under applicable revenue recognition rules and principles; and preparing internal memoranda on certain accounting processes.
In the related application in the 2004 Action, the Commission also alleges that from at least April 2009, Rivard hid assets and income and failed to make payments due under a final judgment entered on consent on November 4, 2004 (2004 Final Judgment). Judge I. Leo Glasser issued the 2004 Final Judgment in a civil injunctive action the Commission filed against Rivard, stemming from his role in the $1.4 billion securities and accounting fraud at Computer Associates. In that action, the Commission alleged that Rivard, as the head of Sales Accounting and the company's revenue recognition expert, had allowed Computer Associates to record revenue prematurely from software contracts, backdated his signature on contracts, and lied to outside counsel and the company's auditor, and obstructed the company's internal investigation and the Commission's investigation. Among other things, the 2004 Final Judgment ordered Rivard to pay a total of $158,700.96, comprised of disgorgement ($65,000), prejudgment interest ($18,700.96), and a civil penalty ($75,000). The Commission's application alleges that despite being paid nearly one million dollars in income since April 2009, Rivard has not willingly made a single payment toward his indebtedness. In fact, Rivard actively sought to evade paying his debt by setting up a company in his wife's name, to which he diverted his earnings from Verint during the period of his consultancy. And Rivard made false or misleading statements about his financial and employment situation on sworn financial disclosure forms he submitted to the United States Department of Treasury in connection with his offers to compromise his indebtedness.
The Commission seeks an order directing Rivard to comply with both the 2004 Commission Order and 2004 Final Judgment, requiring Rivard to disgorge moneys earned by violating the 2004 Commission order, imposing an asset freeze, directing Rivard to provide an accounting, and imposing a finding of civil contempt that Rivard can cure by demonstrating his satisfaction of the 2004 Final Judgment.