U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17824 / November 1, 2002
Accounting and Auditing Enforcement Release No. 1657
Securities and Exchange Commission v. Richard P. Smyth, Arnold E. Johns, Jr., Michael J. Becker and Alan T. Davis, Civil Action Number 1:01-CV-1344 (N.D. Ga.)
SEC Obtains Permanent Injunction and Other Relief Against Arnold E. Johns, Jr. A Former Director and President of Vista 2000, Inc.
The Securities and Exchange Commission ("Commission") announced today that on October 31, 2002, the Honorable Clarence Cooper of the United States District Court for the Northern District of Georgia, entered an order of permanent injunction and other relief against Arnold E. Johns, Jr. of Atlanta, Georgia for engaging in a wide-range of securities laws violations, including that misstatements were made by Vista 2000, Inc. ("Vista") in filings with the Commission. Johns was a director and president of Vista, a now defunct consumer products company formerly headquartered in Roswell, Georgia.
Judge Cooper's recent order permanently enjoined Johns from further violating the antifraud provisions, books and records provisions, internal accounting control and reporting provisions of the Securities Act of 1933 [Section 17(a)] and the Securities Exchange Act of 1934 [Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), 13(b)(5) and Rules 10b-5, 12b-20, 13-11, 13a-13 and 13b2-1 thereunder]. Johns consented to the entry of the order without admitting or denying the allegations of the Commission's amended complaint. Johns was ordered to pay disgorgement and prejudgment interest in amounts to be resolved upon motion of the Commission at a later date. The Commission previously sued Johns and three other men for various violations of the federal securities laws. The other defendants are Richard P. Smyth of Fernandina Beach, Florida, Alan T. Davis of Gainesville, Georgia and Michael J. Becker of Marietta, Georgia, all of whom have been previously enjoined by the Court.
The Commission's amended complaint alleged a wide-range of securities law violations committed by Johns during 1995 and 1996. The allegations included Johns': (1) failure to conform with generally accepted accounting principles ("GAAP") resulting in the overstatement in various filings made with the Commission of Vista's revenues, income, earnings per share, and assets during 1995 and 1996 (the misstated amounts ranged up to 83,592% and in most periods, resulted in Vista reporting income when it was, in fact, experiencing losses), (2) failure to disclose the misappropriation of $481,000 in 1996 by Vista's chairman of the board, and (3) engaging in illegal insider selling of Vista common stock during 1996. The Commission alleged in its amended complaint that the misstatements contained in Vista's financial statements, during Johns' tenure, were material and caused numerous reports on Forms 10-QSB and 8-K to be false and misleading.