LITIGATION RELEASE No. 17752 / September 26, 2002
ACCOUNTING AND AUDITING ENFORCEMENT RELEASE No. 1634 /
September 26, 2002
COMMISSION FILES FINANCIAL FRAUD ACTION AGAINST BARRY M. BUDILOV AND RAYMOND J. GREEN
Securities and Exchange Commission v. Barry M. Budilov and Raymond J. Green, Civil Action No. 02-7479 (E.D. Pa.)
The Securities and Exchange Commission ("Commission") today filed a complaint in the United States District Court for the Eastern District of Pennsylvania against Barry M. Budilov, of Lafayette Hill, Pennsylvania, and Raymond J. Green, of Springfield, Pennsylvania. Budilov is the former president, director, and chief executive officer of Ambassador Eyewear Group, Inc. ("Ambassador"), a now defunct eyeglass frame distributor whose stock was traded on the Chicago Stock Exchange. Green is the former treasurer and principal financial accounting officer of Ambassador. The Commission's complaint alleges that, from at least 1997 through at least December 1998, Budilov and Green engaged in a fraudulent scheme to artificially inflate Ambassador's assets, income and retained earnings. As a result of the scheme, Ambassador falsely claimed, in a registration statement, annual and quarterly reports filed with the Commission and in press releases, that it was profitable when, in fact, the company had incurred substantial losses. In addition, Ambassador overstated its assets by as much as 35 percent.
The Commission's complaint alleges that, as part of the scheme, Budilov and Green falsified Ambassador's books and records related to income, expense, accounts receivable, retained earnings, and inventory, and lied to Ambassador's auditors. The complaint further alleges that, after others began suspecting the fraud, Budilov attempted to conceal his involvement by destroying evidence, causing others to destroy evidence, and persuading others to accept responsibility for the fraud.
The complaint charges Budilov and Green with violations of Section 17(a) of the Securities Act of 1933, and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 13b2-1 and 13b2-2 thereunder. The complaint further charges both defendants with aiding and abetting Ambassador's violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. The complaint seeks permanent injunctions, disgorgement and civil penalties, and an officer and director bar against Budilov and Green.
