U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23531 / May 5, 2016
Securities and Exchange Commission v. Joseph F. Apuzzo, Civil Action No. 3:07-cv-1910 (D.Ct)
Court Enters Permanent Officer and Director Bar Against Joseph F. Apuzzo, Former CFO of Terex Corporation
On May 4, 2016, Judge Alvin W. Thompson of the U.S. District Court for the District of Connecticut granted the SEC's motion for an officer and director bar against Joseph F. Apuzzo, former Chief Financial Officer of Terex Corporation. The ruling follows an evidentiary hearing on the Commission's motion and resolves the case against Apuzzo in its entirety. Apuzzo had previously consented, without admitting or denying the allegations in the Commission's complaint, to be permanently enjoined from violations of Sections 10(b) and 13(b)(5) of the Securities and Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 13b2-1 thereunder, and from aiding and abetting violation of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rule 13a-1 thereunder, and to pay a penalty of $100,000.
In its analysis of the factors to be considered in determining whether to impose an officer and director bar, the Court found that the "egregiousness of Apuzzo's violation, his role or position when he engaged in the fraud, his high degree of scienter, and the likelihood that misconduct will recur" merited a permanent bar. The Court found that Apuzzo's "inability to recognize the wrongfulness of the egregious conduct in which he engaged... and his lack of candor even when under oath" indicated that he "is likely to fail to live up to the trust with which" officers and directors of public companies are endowed.
The Commission's complaint, filed on December 27, 2007, charged Apuzzo with aiding and abetting a fraudulent accounting scheme involving two sale-leaseback transactions, carried out between 2000 and 2002 by United Rentals, Inc. ("URI") and Michael J. Nolan ("Nolan"), a former CFO of URI. The transactions were structured to improve URI's 2000 and 2001 financial results by allowing URI to recognize revenue prematurely and to inflate the profit generated from the sales. The complaint alleges that Apuzzo substantially assisted URI and Nolan in implementing the fraudulent scheme by, among other things, signing agreements with URI that he knew or was reckless in not knowing were designed to hide URI's continuing risks and financial obligations relating to the sale-leaseback transactions, and directing or approving the issuance of inflated invoices that he knew or was reckless in not knowing URI, through Nolan and others, would use to inflate URI's gain on the transactions. As a result of the fraudulent transactions, URI materially overstated its financial results in its Forms 10-K for fiscal years 2000 and 2001, as well as in other filings and public releases.
In addition to the relief set out above, Apuzzo had also previously agreed to a Commission order, entered on September 16, 2015, suspending him from appearing as an accountant before the Commission, with a right to apply for reinstatement after five years.
For further information, see Litigation Release Nos. 20396 (December 12, 2007), 20418 (December 31, 2007), 20706 (September 8, 2008), and 23356 (September 21, 2015), and Administrative Proceeding No. 34-75933 (September 16, 2015).