SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16351 / November 10, 1999
ACCOUNTING AND AUDITING ENFORCEMENT
SECURITIES AND EXCHANGE COMMISSION v. RONALD J. HOTTOVY, JIMMY DUCKWORTH, AND JOSEPH I. MORRIS, Civil Action No. 98-S-1636 (D. Col.) (filed July 30 1998)
On November 10, 1999, the Commission announced the resolution of its enforcement action against Jimmy Duckworth, the former Executive Vice-President of Sales for Scientific Software-Intercomp, Inc., (SSI) formerly a Denver, Colorado corporation. The Commission's complaint alleged that: 1) beginning in 1992 or earlier and continuing until at least 1995, SSI materially overstated its revenue and earnings by backdating or misdating contracts, booking revenue without contracts, overaccruing project revenues, and providing confidential side letters modifying payment obligations; 2) as a result of these practices, SSI reported materially false and misleading financial information in its Annual Reports for fiscal 1993 and 1994, its Quarterly Reports the first three quarters of fiscal 1994 and the first quarter of fiscal 1995, and in its S-1 registration statement in June 1994; 3) Duckworth made or caused the making of materially false and misleading accounting entries in SSI's books and records and provided false information to the company's independent auditors in connection with the audit of SSI's financial statements; and 4) Duckworth knew or was reckless in not knowing that the SSI financial statements were materially false and misleading.
Without admitting or denying the allegations in the Commission's complaint, Duckworth consented to the entry of a permanent injunction prohibiting him from violating Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Securities Exchange Act, and rules 10b-5, 13b-2-1, and 13b2-2 thereunder, a five year officer-director bar, and payment of a total of $35,000 in penalties. On November 10, 1999, the Commission entered an order by consent pursuant to Rule 102(e) of the Commission's Rules of Practice barring Duckworth from practicing before the Commission as an accountant.
The Commission previously settled actions against SSI and four individuals. Securities and Exchange Commission v. Ronald J. Hottovy, Jimmy Duckworth, Joseph I. Morris, and Eugene A. Breitnenbach, Civil Action No. 98-S-1636 (D. Col.), Lit. Rel. No. 15824, July 30, 1998; In the Matter of Ivor R. Ellul and Joseph R. Summa, Admin. Proc. No. 3-9659; In the Matter of Barbara J. Cavallo, Admin. Proc. No. 3-0660.