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U.S. Securities and Exchange Commission


Litigation Release No. 17308 / January 14, 2002

Accounting and Auditing Enforcement Release No. 1492 / January 14, 2002

Securities and Exchange Commission v. R. Bruce Acacio, Civil Action No. 2:01CV-1010ST (USDC Utah)

On January 7, 2002, the Honorable Ted Stewart, U.S. District Judge, District of Utah, issued a Final Judgment of Permanent Injunction against defendant R. Bruce Acacio, the Chairman and Chief Executive Officer of California Software Corp. Acacio, who consented to the order without admitting or denying the Commission's allegations, was enjoined from: (1) violating the provisions of the federal securities laws which prohibit providing false and misleading information in the offer and sale of securities, falsifying the books and records of an issuer of securities and providing false information to auditors in connection with the audit of financial statements; and (2) aiding and abetting California Software's violations of the provisions of the federal securities laws which require issuers to file accurate annual and quarterly reports, maintain manually signed signature pages for reports filed with the Commission, and maintain books and records that accurately reflect a company's financial condition. Acacio was also ordered to pay a civil penalty of $30,000.

The complaint, filed December 18, 2001, alleged that from September 1999 through May 2000, California Software filed periodic reports containing audited and unaudited financial statements overstating the company's revenues, earnings, assets, and shareholders' equity, primarily as a result of an improper revenue recognition practice utilized by the company. The complaint further alleged that the overstatements of revenues and earnings were included in a private placement memorandum used in an offering of California Software stock that raised over $8.7 million, and that Acacio failed to sign and caused California Software to fail to maintain manually signed signature pages with respect to its filings with the Commission.

The complaint alleged that until September 2000, California Software had recognized revenue upon shipment of the software to potential customers, whether or not persuasive evidence existed of an arrangement to purchase the software by the potential customer. Finally, it was alleged that in October 2000, California Software restated its financial statements for the year ended December 31, 1999, and for the quarter ended March 31, 2000..

Defendant Acacio's actions were found in violation of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, and Rules 13b2-1 and 13b2-2 promulgated under the Securities Exchange Act of 1934; and Sections 13(a) and 13(b)(2) of the Exchange Act of 1934, and Rules 12b-11, 12b-20, 13a-1, and 13a-13 thereunder.


Modified: 01/14/2002