Kevin J. Morrison, et al.

Litigation Release No. 17921 / January 8, 2003

SEC Obtains Default Judgment Against Defendant Mildred K. Miller in $5 Million Financial Fraud

Securities and Exchange Commission v. Kevin J. Morrison, et al. (United States District Court for the District of Massachusetts Civ. A. No. 02-11647-MLW)

The Securities and Exchange Commission announced that on December 22, 2002, a Final Judgment by Default was entered against defendant Mildred K. Miller of West Hartford, Connecticut, in a civil enforcement action the Commission brought in the United States District Court for the District of Massachusetts. The Final Judgment requires Miller to pay disgorgement of $4,927,170.84, including prejudgment interest, no later than February 6, 2003. In addition, the Final Judgment freezes Miller's assets pending full payment of the amounts owed.

In its Complaint, the Commission alleged that Miller improperly received more than $4.7 million in connection with a financial fraud perpetrated by Kevin J. Morrison, also of West Hartford, Connecticut. According to the Complaint, between 1997 and May 2002, Morrison, the former executive vice president of American Commercial Financial Corporation ("ACFC"), a wholly-owned subsidiary of Boston-based HPSC, Inc., improperly diverted more than $4.7 million of corporate assets to Miller, a purported ACFC factoring customer. Morrison attempted to conceal his embezzlement by regularly providing fictitious financial reports, which were incorporated in the parent company's Forms 10-K and Forms 10-Q filed with the Commission for the periods ended December 31, 1997 through March 31, 2002, causing HPSC to materially overstate its net income and earnings per share by between 4% and 112% during the affected filing periods.

The Commission's civil enforcement remains pending against Morrison, who is charged with violating Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13b2-1 thereunder.

For more information, see Litigation Release No. 17686 (August 16, 2002).