Litigation Release No. 18180 / June 6, 2003

Accounting and Auditing Enforcement Release No. 1799 / June 6, 2003

United States v. Arthur A. Goodwin (United States District Court for the District of Massachusetts, C.A. No. 03-CR-10197-RGS)

United States v. William J. Burke (United States District Court for the District of Massachusetts, C.A. No. 03-CR-10199-GAO)

On June 5, 2003, a federal grand jury in Boston, Massachusetts indicted Arthur A. Goodwin of Plano, Texas on eight counts of securities and wire fraud for his role in falsifying his company's financial results. Goodwin was the former senior vice president of sales at Interspeed, Inc., a now defunct North Andover, Massachusetts Internet hardware developer. According to the indictment, Goodwin entered into secret side letter agreements with customers that provided the customers the right to return the goods purportedly sold to them; altered a sales contract for what would have been the company's largest sale in its history; and took other steps to hide the fraudulent nature of sales transactions he arranged. Goodwin's actions, the indictment alleges, resulted in Interspeed overstating its revenue by approximately $9 million, or 60% of the company's reported revenue for the first thee quarters of its fiscal year ended September 30, 2000. Goodwin faces up to 20 years imprisonment on each securities fraud count, imposition of a fine and an order of restitution to defrauded investors.

In a parallel criminal information filed June 5, 2003, William J. Burke, Interspeed's former chief financial officer, was charged with knowingly withholding information from Interspeed's outside auditors during the auditors' July 2000 review of Interspeed's quarterly financial statements. Burke is not charged with knowing of Goodwin's secret side letters, but is charged with concealing information from the auditors and structuring a payment from a third party to make it appear that the product was being paid for by the original customer. Burke has agreed to plead guilty to one count of falsification of Interspeed's books, records and accounts. He faces up to 10 years imprisonment, a fine and an order of restitution.

The Securities and Exchange Commission previously filed a civil injunctive action for financial fraud against Goodwin, Burke and another former officer of Interspeed, Inc., based on the conduct charged in the indictment. The Commission's litigation is ongoing. In that action, the Commission seeks, among other things, an order permanently barring Goodwin and Burke from acting as officers or directors of any public company.

For further information see Litigation Release No. 17758.