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Securities and Exchange Commission

Litigation Release No. 17979 / February 11, 2003

Accounting and Auditing Enforcement Release No. 1718

Three Former Senior Officers of COHR, Inc. Settle SEC Charges of Securities Fraud

Securities and Exchange Commission v. Umesh Malhotra, Paul Chopra, and David Manigault, Civil Action No. 1:03CV00211 (D.D.C.) (filed February 10, 2003)

On February 10, 2003, the Commission filed a settled Complaint in the United States District Court for the District of Columbia against three former senior officers of COHR, Inc. ("COHR"), alleging that they defrauded investors by improperly recognizing revenue in violation of generally accepted accounting principles and by engaging in other accounting tricks that fraudulently inflated COHR's revenue and pre-tax profit.

The Complaint alleges that the fraud was carried out between 1996 and 1998 by COHR's senior management at the time, Umesh Malhotra ("Malhotra"), its former Chief Financial Officer, Paul Chopra ("Chopra"), its former Chief Executive Officer, and David Manigault ("Manigault"), its former Chief Information Officer and Senior Vice President. The fraud included recording fictitious revenue, improper capitalization of expenses, improper reduction of reserves, and premature recognition of revenue. The purpose of the fraud was to portray COHR as a growing and successful company when in fact it was a struggling company that by 1998 was losing money.

The Complaint charges all three defendants with violations of Section 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rules 10b-5, 13b2-1 and 13b2-2. The Complaint also charges all three defendants with aiding and abetting COHR's violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 13a-13.

Simultaneously with the filing of the Commission's Complaint, without admitting or denying the Commission's allegations, all of the defendants consented to the entry of a final judgment permanently enjoining them from violating the federal securities laws. In addition, Malhotra agreed to pay a civil penalty of $32,500, to be permanently barred from serving as an officer or director of any public company, and to an order suspending him from the privilege of appearing or practicing before the Commission as an accountant. Manigault also agreed to pay a civil penalty of $25,000. Based upon his sworn representations in his Statement of Financial Condition, no penalties or disgorgement will be obtained from Chopra.



Modified: 02/13/2003