The Securities and Exchange Commission (Commission) announced today that John R. Boyd and Christopher Curbello, former Golden Bear Golf, Inc., executives who headed Paragon Construction International, Inc., Golden Bear Golf's defunct golf course construction subsidiary, have settled the enforcement action the Commission filed against them in August 2002 which alleged that Boyd and Curbello directed a scheme that had the effect of artificially inflating Golden Bear's results by overstating Paragon's revenues and concealing losses. Boyd is the former president of Paragon and Curbello was Paragon's vice president for operations. Boyd and Curbello consented to the settlements without admitting or denying the Commission's allegations. The settlements permanently enjoin Boyd and Curbello from violating Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") [15 U.S.C. § 78j(b)] and Rule 10b-5 promulgated thereunder [17 C.F.R. § 240.10b-5], Section 13(b)(5) [15 U.S.C. § 78m(b)(5)] of the Exchange Act and Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) [15 U.S.C. §§ 78m(a), 78m(b)(2)(A) and 78m(b)(2)(B) of the Exchange Act.
In addition to agreeing to settlements with the Commission, Boyd and Curbello also have pled guilty to federal criminal charges arising out of their scheme. Curbello entered a guilty plea to conspiracy to commit securities fraud charges in October 2003 and Boyd entered a guilty plea to the same charges in November 2003. As a result of those guilty pleas, Curbello currently is serving a three and a half year prison sentence and Boyd is serving a five-year prison sentence.
In connection with pleading guilty to federal criminal charges, Boyd and Curbello admitted that they conspired to artificially inflate and accelerate Paragon's revenue and gross margin recognition by misrepresenting the true status of its construction contracts, causing Golden Bear to file false and misleading financial statements for its 1997 fiscal year and for the first quarter of 1998. Under the scheme, Paragon overstated contract profitability or ignored expected losses by (i) understating estimated construction costs, (ii) accelerating revenue and income recognition by overstating progress on construction projects, (iii) overstating estimated construction revenues and (iv) recording revenue and gross margin in connection with non-existent project agreements. The loss amount to shareholders was determined to be in excess of $49 million.
The Commission acknowledges the efforts of the United States Attorney for the Southern District of Florida and the Federal Bureau of Investigation.
See also Litigation Release No. 17648 (August 1, 2002) and Litigation Release No. 18042 (March 19, 2003).
For further information contact: Thomas C. Newkirk at (202) 942-4550 or James T. Coffman at (202) 942-4574.