Securities and Exchange Commission
Litigation Release No. 18127 / May 8, 2003
Accounting and Auditing Enforcement
Release No. 1778 / May 8, 2003
Damato Pleads Guilty to Criminal Securities Fraud
Securities and Exchange Commission v. Eagle Building Technologies, Inc. and Anthony Damato, NO. (D.D.C. 1:02CV00397).
United States v. Anthony M. Damato, (S.D. FLA. 02-20456CR).
The Securities and Exchange Commission announced today that on April 29, 2003 Anthony M. Damato, the former president and chief executive officer of Eagle Building Technologies, Inc., of Boca Raton, Florida, pleaded guilty in a criminal case to one count of securities fraud in the Southern District of Florida before United States District Judge Jose E. Martinez.
In pleading Damato admitted, among other things, that from June 2000 to February 2002 he falsified the company records and press releases of Eagle Building, the stock of which is publicly traded under the symbol "EGBT." Specifically, Damato created fraudulent bank account statements and purchase orders and diverted privately invested funds to Eagle Building to create the false appearance of substantial revenue to Eagle Building from sales and operations in India. He also caused false quarterly and annual reports to be filed with the Securities and Exchange Commission. Damato also caused misleading press releases to be issued about testing and capabilities of a surveillance system by Biosterile Technologies, Inc., a company represented by Eagle Building. The sentencing hearing has been scheduled for July 11, 2003 with a maximum sentence of ten years imprisonment, a money penalty of up to $1,000,000 and mandatory restitution.
In a separate civil lawsuit previously brought by the Securities and Exchange Commission on March 1, 2002, Damato was enjoined by the United States District Court for the District of Columbia on October 22, 2002 from violating the federal securities laws in connection with the same false quarterly and annual reports misstating revenues earned by Eagle Building, and misleading press releases. Damato was enjoined from violating the anti-fraud, periodic reporting and internal record-keeping provisions of Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13b2-1, and 13b2-2, and aiding and abetting Eagle Building's violations of Section 13(a) and 13(b)(2) of the Exchange Act and Rules 13a-1 and 13a-13. The district court barred Damato from serving as an officer or director of a public company and ordered him to disgorge trading profits from sales of Eagle Building stock in the amount of $56,263 plus prejudgment interest of $5,637, and to cancel 367,742 shares of stock, part of which Damato received as compensation for acting as an officer and director of the company. Damato consented to the civil injunction without admitting or denying the allegations in the Commission's complaint. See Litigation Releases No. 17389, 17803, 18054.
The district court also enjoined Eagle Building on May 20, 2002, from violating the anti-fraud, periodic reporting and internal record keeping provisions of the federal securities laws based on the consent of the company in which it neither admitted nor denied the allegations of the complaint. See Litigation Release No. 17803.