U.S. SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17815 / October 30, 2002
ACCOUNTING AND AUDITING ENFORCEMENT
RELEASE NO. 1655 / October 30, 2002
Securities and Exchange Commission v. Stephen R. Becker, Civil Action No. 02CV02126 (JDB) (D.D.C. filed Oct. 30, 2002)
SEC CHARGES FORMER REGIONAL CONTROLLER OF
EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC. WITH
RECORDING FICTITIOUS REVENUE ON THE COMPANY'S BOOKS
The Securities and Exchange Commission ("Commission") today filed a settled civil action in the U.S. District Court for the District of Columbia alleging that Stephen R. Becker ("Becker") violated the antifraud, periodic reporting, and corporate record keeping provisions of the federal securities laws by concealing project contract losses at EA Engineering, Science, and Technology, Inc. ("EA Engineering") during the company's fiscal year ended August 31, 1999. EA Engineering, which has its principal executive offices in Hunt Valley, Maryland, is primarily engaged in the business of energy, environmental, and health and safety consulting. In September 2001, the company was taken private pursuant to a management-led tender offer.
The Commission's Complaint alleges that Becker, a Regional Controller at EA Engineering at the time, hid the project contract losses by intentionally recording fictitious revenue (in the form of unbilled accounts receivable) on the company's books, thereby concealing the losses from EA Engineering managers who had emphasized the importance of the company making its projected earnings. The Commission alleged that, as a result of Becker's actions, the company overstated its unbilled accounts receivable at the end of its quarter ended May 31, 1999, by $1,408,800 and at the end of its fiscal year ended August 31, 1999, by $1,469,000 and understated its loss before income taxes by $93,000 for that fiscal year. Becker, without admitting or denying the allegations in the Complaint, consented to the entry of a final judgment permanently enjoining him from violations of Sections 10(b) and 13(b)(5) of the Securities Exchange act of 1934 ("Exchange Act") and Exchange Act Rules 10b-5 and 13b2-1, and from aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 13a-13 and ordering him to pay a civil money penalty of $20,000.
Becker also agreed, without admitting or denying the Commission's substantive findings therein, to settle a proposed administrative proceeding pursuant to Rule 102(e) of the Commission's Rules of Practice. The settled proceeding, to be based on, and instituted upon, entry of the injunction in the Commission's civil action, suspends Becker from appearing or practicing before the Commission as an accountant, with the right to apply for reinstatement after three years.
SEC Complaint in this matter