UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17984 / February 13, 2003
Accounting And Auditing Enforcement Release No. 1719
Securities and Exchange Commission v. G. Matthias Heinzelmann, III, Civil Action No. 4:02-CV-403-A (United States District Court for the Northern District of Texas, Fort Worth Division)
The Commission announced today the entry of a final judgment of permanent injunction against former Texas banker G. Matthias Heinzelmann, III. On February 6, 2003, The Honorable John H. McByrde, of the United States District for the Northern District of Texas, Fort Worth Division, entered a judgment against Heinzelmann, for what the Commission alleged was his role in hiding bank loan losses of $1,827,392 at Surety Bank in Fort Worth, Texas. Heinzelmann, who consented to the judgment, without admitting or denying the Commission's allegations, was the president and a director of Surety Bank's parent, Surety Capital Corporation of Fort Worth. As part of the judgment, he was ordered to pay a civil penalty of $40,000 and barred from serving as an officer or director of a public company.
The Commission alleged in its complaint that the hidden loan losses had a material impact on the parent company -- Surety Capital's financial statements that were included in its Forms 10-K and Forms10-Q from 1996 through 1999. Further, the Commission alleged that, because of the misstatements, Surety Capital failed to make and keep books, records and accounts that accurately reflected its transactions and dispositions of assets, and also failed to maintain an adequate system of internal financial controls.
The Court's judgment permanently enjoins Heinzelmann from violating 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, and aiding or abetting 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.
See also, Litigation Releases No. 17491 (April 25, 2002), No. 17788 (October 16, 2002), and No. 17589 (June 27, 2002).