Mitchell C. Kahn et al.

Litigation Release No. 17547 / June 7, 2002

Securities and Exchange Commission v. Mitchell C. Kahn et al., Civil Action No. 99 C-6343 (Northern District of Illinois)

The Securities and Exchange Commission announced today that on May 30, 2002, Judge John A. Nordberg granted summary judgment against two former officers of First Merchants Acceptance Corporation on six counts of the Commission's complaint against them. Judge Nordberg found, among other things, that First Merchants' Chief Executive Officer, Mitchell C. Kahn, and one of the company's Vice Presidents, Paul Van Eyl, violated the antifraud provisions of the federal securities laws by misrepresenting First Merchants' loan account data in First Merchants' financial statements. In addition, Judge Nordberg found that Kahn's and Van Eyl's conduct violated several reporting provisions of the federal securities laws.

On September 27, 1999, the Commission filed a complaint in the Northern District of Illinois against Kahn, Van Eyl and another former First Merchants' employee, Thomas R. Ehmann, alleging violations of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder; Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-11 thereunder; Section 13(b)(2) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder; and Section 13(b)(5) of the Exchange Act. The allegations of the complaint arose in part from events that occurred at First Merchants Acceptance Corporation as early as May 1996. The Commission subsequently filed a motion for summary judgment seeking adjudication of its claims against defendants Kahn and Van Eyl. Before the Commission filed its motion defendant Ehmann consented to entry of an order of permanent injunction and other equitable relief against him. As a result, the Commission's motion did not seek adjudication of any claims against Ehmann.