U.S. Securities & Exchange Commission Washington, D.C. Litigation Release No. 15870 / September 3, 1998 Accounting and Auditing Enforcement Release No. 1071 / September 3, 1998 SECURITIES AND EXCHANGE COMMISSION v. JUI-TENG LIN AND YUCHIN LIN, U.S. District Court for the District of Columbia (1:98CV02123) (September 3, 1998) The Securities & Exchange Commission today filed a Complaint in the U.S. District Court for the District of Columbia against Jui-teng Lin ("Dr. Lin"), the former President and Chief Executive Officer of LaserSight, Inc., and Yuchin Lin ("Ms. Lin"), his wife and Lasersight's former bookkeeper. The complaint alleges that the Lins, assisted by Ms. Lin's brother, Kuo-chang Wong ("Wong"), diverted LaserSight corporate funds to themselves through certain "consulting" and other arrangements, and concealed their interest in those transactions. It also alleges that the Lins and Wong orchestrated a sham offshore transaction as part of a scheme to sell unregistered LaserSight stock the Lins owned in purported reliance on Regulation S. Without admitting or denying the allegations in the Complaint, Dr. and Ms. Lin consented to the entry of final judgments of permanent injunction against them and agreed to disgorge their wrongful gains from their sales of LaserSight stock together with prejudgment interest, and to pay civil penalties of $100,000 and $50,000 respectively. In a related matter, the Commission issued a cease-and-desist order by consent against Wong finding that he was a cause of the Lins' violations of the antifraud and securities registration provisions. Specifically, the Commission's complaint alleges the following:  LaserSight, Inc. is an Orlando, Florida based manufacturer of optical materials, electronic components and laser systems used in medical applications. Its common stock is registered with the Commission and listed on the NASDAQ National Market System.  On three occasions between April and July 1992, Ms. Lin disbursed funds totaling $265,000 from LaserSight to Northgard Industries, purportedly for consulting fees. Northgard, a Taiwanese entity controlled by Wong, was in the lumber business. It never performed services for LaserSight. Rather, in each instance, Wong deposited the funds into his personal bank account in Taiwan, and then within weeks transferred them back to the Lins' personal bank account in Florida. The Lins used those funds to exercise LaserSight stock options.  In December 1992 Dr. Lin transferred $110,151 to Green Summit Corp., another Taiwanese entity controlled by Wong, purportedly to develop software for LaserSight. Wong deposited the funds in his personal bank account in Hong Kong, and Green Summit never developed any software. In January 1993, Wong transferred the funds to the Lins' personal account. Dr. Lin subsequently repaid LaserSight $100,000 after the contract with Green Summit was questioned.  On seven occasions in 1993, the Lins transferred a total of $984,000 directly from LaserSight's corporate bank account to their personal bank account. The Lins did not inform LaserSight's Board of Directors or get its prior approval for these loans, but repaid them with interest after LaserSight discovered them.  The Lins falsified LaserSight corporate records in the course of carrying out the Green Summit and Northgard diversions. Because those diversions and the unauthorized loans were not disclosed, LaserSight's quarterly reports for the second and third quarters of 1992, its 1992 annual report, its three quarterly reports in 1993 and its 1993 annual report were materially false. The loans were documented by promissory notes that purport to have been executed contemporaneously with the disbursements, but were in fact created after the disbursements.  Beginning in the spring of 1993 the Lins carried out an elaborate sham to enable them to sell restricted LaserSight shares they owned without registration. As part of that sham, they purported to sell 160,000 LaserSight shares to KCC Group, an Antiguan entity, pursuant to Regulation S. Dr. Lin had previously caused KCC Group to be established and installed Wong as its sole director and owner. Dr. Lin provided Wong with the moneys KCC Group used to "purchase" the shares. After the "sale," Dr. Lin made false representations to an attorney to secure an opinion letter authorizing the removal of the restrictive legend from KCC Group's shares. Thereafter, the Lins opened brokerage accounts in the name of KCC Group from which they directed the sale of the shares into the market.  Dr. Lin filed false ownership reports with the Commission disclosing that he had sold LaserSight stock to KCC Group when in fact he still retained beneficial ownership, and failed to disclose that he had sold the shares when he finally gave up beneficial ownership. Simultaneously with the filing of the Complaint, Dr. Lin consented, without admitting or denying the allegations in the Complaint, to the entry of a final judgment enjoining him from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), 13(b)(5), 13(d), and 16(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1, 13b2-2, 13d-2 and 16a-3 promulgated thereunder, ordering him to disgorge jointly with Ms. Lin $58,016 representing the gains from the sales of unregistered LaserSight securities as alleged in the Commission's Complaint including prejudgment interest thereon, and ordering him to pay a civil penalty of $100,000. Ms. Lin consented, without admitting or denying the allegations in the Complaint, to the entry of a final judgment enjoining her from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 promulgated thereunder, ordering her jointly with Dr. Lin to disgorge $58,016 in gains from the sales of unregistered LaserSight, Inc. securities as alleged in the Commission's Complaint including prejudgment interest thereon, and ordering her to pay a civil penalty of $50,000. In a settled cease-and-desist proceeding, the Commission found that K.C. Wong caused violations of Sections 5(a), 5(c) and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Without admitting or denying the findings therein, he has consented to the entry of an Order making findings and ordering him to cease and desist from further violations of these provisions. In the Matter of Kuo-chang Wong, Administrative Proceeding No. [].