UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16738 / September 28, 2000
Accounting and Auditing Enforcement Release No. 1320 / September 28, 2000
SECURITIES AND EXCHANGE COMMISSION v. LEAH INDUSTRIES, INC., BIRTE BOOCK, and IRWIN BOOCK, U.S. Dist. Court, D. Colo. 00-B-1921
The Securities and Exchange Commission today charged Leah Industries, Inc. ("Leah"), its Chief Executive Officer, Birte Boock, and Irwin Boock, a controlling person of Leah, with violating the antifraud provisions of the federal securities laws. The Commission's complaint alleged that during 1998, Leah, a corporation publicly traded on the Over-the-Counter Bulletin Board, made various material misrepresentations regarding its relationships with prominent international accounting firms.
The Complaint alleges the following:
On December 10, 1998, Birte Boock and Irwin Boock directed Leah to issue a press release stating that Leah had engaged Deloitte & Touche ("D&T") to serve as its auditor. On December 23, 1998, Leah issued a follow-up press release reporting earnings for the first nine months of 1998. This release further stated that D&T concurred with Leah's reporting of earnings and with its decision to report a "conservative" financial picture for its investors. These representations were false. D&T never served as Leah's auditor.
Earlier in 1998, Birte Boock had made a similar misrepresentation regarding the accounting firm PriceWaterhouseCoopers. On August 20, 1998, Birte Boock informed investors during a conference call that the Moscow office of "Coopers'" was conducting an audit of Leah's books. She added that she expected Leah to be listed on the American Stock Exchange by the end of 1998, because by then, Leah would have the audit "in hand." These representations were also false. PriceWaterhouseCoopers never served as Leah's auditor.
While Leah was disseminating this materially false information, Irwin Boock sold 537,500 shares of Leah stock, and obtained approximately $319,050 in proceeds from these sales. Leah sold approximately 56,000 shares of its stock and obtained approximately $30,724 from these sales.
The Commission charged that Leah, Birte Boock, and Irwin Boock violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission is seeking permanent injunctions against all of the defendants. The Commission is also seeking disgorgement and prejudgment interest from Leah and Irwin Boock, and civil penalties against Irwin Boock and Birte Boock.
On March 12, 1999, the Commission suspended trading in Leah securities because of questions about the accuracy of information that Leah was disseminating.