UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16476 / March 20, 2000
Accounting and Auditing Enforcement
Securities and Exchange Commission v. David W. Williams and Pamela J. Sevy, Civil Action No. 00-B-596 (D. Colo.)
On March 20, 2000, the United States Securities and Exchange Commission filed a civil injunctive case against two former officers of Laser Technology, Inc. ("Laser Tech"), a public company based in Englewood, Colorado, for falsifying the company's accounting records and periodic reports filed with the Commission. At the same time, the Commission instituted cease-and-desist proceedings against Laser Tech and two directors for their roles in the violations. The Commission's complaint in the civil injunctive case alleges that former president and chief executive officer David W. Williams and former chief financial officer Pamela J. Sevy caused Laser Tech in 1993 to improperly record revenue for speed guns shipped to an Australian distributor. They then engaged in a series of steps for several years to conceal the improper accounting, including the creation and use of a secret bank account. Specifically, Williams, with Sevy's assistance, lent money to the Australian distributor, who used it to pay for the speed guns. Williams and Sevy then caused Laser Tech to repay the loans that Williams and another officer had previously taken out.
The concealment began to unravel in October 1998 when a Laser Tech employee reported the undisclosed bank account to Laser Tech's independent accountants. The independent accountants resigned in December 1998, an event that Laser Tech reported to the public and the Commission on a Form 8-K.
The complaint alleges that Williams and Sevy violated the antifraud provisions of the federal securities laws by engaging in the conduct described in the complaint. The complaint further alleges that Williams and Sevy falsified Laser Tech's accounting records and made false statements to Laser Tech's auditors, and that they aided and abetted Laser Tech in making false statements in its public filings and failing to maintain complete and accurate accounting records. The complaint seeks permanent injunctions against Williams and Sevy to prevent future violations of the securities laws, and the imposition of civil penalties against them. Simultaneously with the filing of the case, Williams and Sevy consented to entry of permanent injunctions without admitting or denying the allegations in the complaint, and agreed to pay civil penalties of $25,000 and $10,000 respectively. Williams and Sevy are specifically charged with violations of Sections 10(b) and 13(b)(5) of the Exchange Act and Exchange Act Rules 10b-5, 13b2-1, and 13b2-2; they are charged with aiding and abetting violations of Section 13(a) and 13(b)(2)(A) of the Exchange Act and Exchange Act Rules 13a-1, 13a-13, and 12b-20.
In the cease-and-desist proceedings the Commission brought similar charges against Laser Tech, and also alleged that two Laser Tech directors, H. DeWorth Williams (David Williams' brother) and Jeremy G. Dunne, caused the company to make false statements in public filings by not reporting personal transactions that they had with the company. DeWorth Williams allegedly reimbursed Laser Tech for monies that the company paid to David Williams. Dunne provided some of the funds that David Williams loaned to the Australian distributor, and then was reimbursed by Laser Tech. Laser Tech, DeWorth Williams, and Dunne settled the proceedings by consenting to cease-and-desist orders without admitting or denying the allegations. For more information on the cease-and-desist proceedings, see Exchange Act Release Numbers 34-42549, 34-42548, and 34-42547.