SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 15385 / June 11, 1997

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 924 / June 11, 1997

SECURITIES AND EXCHANGE COMMISSION v. PATRICK J. LEONARD AND
PETER P. HARTMAN, Civil Action No. 97 11310 (PBS) 
(D. Massachusetts, filed June 11, 1997)

     The Securities and Exchange Commission ("Commission") today
announced the filing of a complaint against Patrick J. Leonard
("Leonard"), former president and chief executive officer, and
Peter P. Hartman ("Hartman"), former chief financial officer, of
Cambridge Biotech Corporation ("CBC"), a biotechnology company
headquartered in Worcester, Massachusetts.  Simultaneously with
the filing of the Commission's complaint, Leonard and Hartman
consented to the entry of orders of permanent injunction from
further violations of the antifraud, corporate reporting, and
books and records provisions of the federal securities laws. 
Leonard also agreed to pay a civil monetary penalty of $50,000,
while a civil monetary penalty against Hartman was not assessed
based on his demonstrated inability to pay.  The complaint
alleged that, between June 1991 and December 1992, Leonard and
Hartman structured a series of nine sales and license
transactions for which revenue should not have been recognized,
and caused CBC to improperly recognize over $6 million in revenue
on the transactions.  Leonard is a resident of Epping, New
Hampshire, and Hartman is a resident of Suwanee, Georgia.

     The complaint alleged that the transactions included
shipments of product with no expectation of payment, premature
recognition of license fee revenues, and use of corporate funds
to resolve outstanding receivables by creating the false
appearance that CBC had purchased unrelated goods and services,
when in fact CBC had simply "bought" its own product back.  The
complaint also alleged that, during the audit of CBC's 1991 and
1992 financial statements, Leonard and Hartman attempted to
deceive CBC's independent auditors by directing the completion of
the circular transactions, by obtaining false audit
confirmations, and by obtaining false documentation of agreements
having been reached in earlier periods.

     The complaint alleged that Leonard's and Hartman's actions
caused CBC to overstate revenue by $2.652 million (10.1%) and
report a net income before taxes of $497,851, instead of a net
loss before taxes of $1.836 million for the year ended December
31, 1991, and to overstate revenue by $3.571 million (10.3%) and
report a net loss before taxes of $11.404 million instead of a
net loss before taxes of $14.765 million for the year ended
December 31, 1992.  The fraudulent operating results were
included in CBC's annual reports filed with the Commission for
its fiscal years ended December 31, 1991 and December 31, 1992,
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in CBC's registration statement for its public offering in
October 1991, in CBC's shelf registration in December 1993, and
in most of CBC's quarterly reports filed with the Commission
during the period of June 1991 through December 1992.

     Leonard and Hartman neither admitted nor denied the
allegations in the complaint.  The complaint, which was filed in
the United States District Court for the District of
Massachusetts, alleged that Leonard and Hartman violated Sections
10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and
Rules 10b-5, 13b2-1 and 13b2-2 thereunder, and Section 17(a) of
the Securities Act of 1933.  

     The Commission's investigation of this matter was conducted
in cooperation with the Boston office of the United States
Attorney, which also today filed a criminal information charging
Hartman with securities fraud, and with aiding and abetting
securities fraud, for his actions in connection with certain of
the transactions in the Commission's complaint.

     In an earlier Commission action arising out of the same
facts, on October 17, 1996, CBC consented to the issuance of an
order by the Commission that it cease and desist from violations
of the antifraud, books and records, and corporate filing
provisions of the federal securities laws.