UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 18025 / March 10, 2003
ACCOUNTING AND AUDITING ENFORCEMENT
RELEASE NO. 1736 / March 10, 2003
SECURITIES AND EXCHANGE COMMISSION v. A. ROBERT MANCUSO, RONALD R. LANCHONEY, AND SHAMIR A. ALLY, Case No. 03-1220 (E.D. Pa.)
On March 4, 2003, United States District Court Judge Michael M. Baylson entered final judgments against A. Robert Mancuso, Ronald R. Lanchoney, and Shamir A. Ally, enjoining them from future violations of the antifraud and recordkeeping provisions set forth in Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 13b2-1 thereunder, and from future aiding and abetting violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. The final judgment against Mancuso also enjoined him from future violations of Rule 13b2-2 under the Exchange Act. In addition, the final judgments prohibited Mancuso and Lanchoney from acting as an officer or director of a public company, and imposed civil penalties of $50,000 against Mancuso, $10,000 against Lanchoney, and $10,000 against Ally. The defendants consented to the entry of the orders without admitting or denying the Commission's allegations in the action.
The Commission's complaint alleged that the defendants were involved in the dissemination of false financial information by Acrodyne Communications, Inc. ("Acrodyne") in press releases and Commission filings in 1998, 1999 and 2000. The Commission alleged that Mancuso (Acrodyne's former CEO and president), Lanchoney (Acrodyne's former CFO), and Ally (Acrodyne's former controller) were aware of numerous and significant problems with Acrodyne's accounting controls, but failed to assure that Acrodyne's financial transactions were accurately recorded. The Commission claimed that, as a result of the actions of Mancuso, Lanchoney and Ally, Acrodyne engaged in inaccurate and improper cost accounting and revenue recognition. The Commission also alleged that, starting in the second quarter of 1999 and continuing through the first quarter of 2000, Ally directed that unsupported journal entries be made to the cost of sales and inventory accounts to bring Acrodyne's financial statements in line with the gross margin percentage he had estimated for period. The Commission claimed that Mancuso approved these fraudulent adjustments for the first quarter of 2000. Finally, the Commission claimed that Mancuso recklessly provided false information to Acrodyne's auditors relating to Acrodyne's guarantee of a customer's debt. In a related matter, on March 6, 2003, the Commission ordered Acrodyne to cease-and-desist from future violations of the antifraud, periodic reporting, and books and records provisions of the Exchange Act.