U.S. Securities and Exchange Commission
Litigation Release No. 18731 / June 1, 2004
Accounting and Auditing Enforcement Release No. 2026 / June 1, 2004
SECURITIES AND EXCHANGE COMMISSION v. Eric Tyra, Scott Wynne, Peter Berman, and Scott Carey, Civil Action No. CV-04-P-1052-S (N.D. Al.).
On May 21, 2004, the Securities and Exchange Commission filed a Complaint in the U.S. District Court for the Northern District of Alabama against Eric Tyra, Scott Wynne, and Peter Berman of Birmingham, Alabama, and Scott Carey of Tarpon Springs, Florida, in connection with the 1998 financial statements of Just for Feet, Inc., a large shoe and sports apparel retailer formerly headquartered in Birmingham, Alabama. Tyra was an Executive Vice-President and Chief Financial Officer for the company; Wynne was a Vice-President of Operations and subsequently the President of the company's Superstore Division; Berman was the company's Controller. Carey was Strategic Account Manager for the Southeastern United States for Nike, Inc., a shoe and sportswear company that was a major supplier for Just for Feet.
The Complaint alleges that from 1997 through 1999 defendants Tyra, Wynne and Berman engaged in a number of schemes which were undertaken in an effort to fraudulently bolster revenue reporting for the company, including improper accounting for advertising expenses and inventory. The Complaint also alleges that in the spring of 1999, Tyra, Wynne, and Berman, aided and abetted by Carey, were instrumental in the acquisition and presentation to outside auditors of fraudulent confirmations used to allegedly confirm the validity of unearned receivables Just for Feet had recognized from its vendors. The complaint further alleges that the overstatement of income and assets resulting from the misconduct was reflected on Just for Feet's financial statements included in its Form 10-K filed for fiscal year 1998, Forms 10-Q filed for the first and second quarters of fiscal year 1999, and in its registration statements on Forms S-8 and S-4 filed in May and June of 1999, respectively.
The Complaint seeks a permanent injunction enjoining Tyra, Wynne, Berman and Carey from further violations or aiding and abetting violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20 and 13a-1 thereunder, and enjoining Tyra, Wynne, and Berman from further violations of Section 13(b)(5) of the Exchange Act and from aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 13 a-13, 13b2-1 and 13b2-2 thereunder. In addition, the Complaint seeks disgorgement and prejudgment interest thereon against Tyra, Wynne and Berman, and civil penalties against Tyra, Wynne, Berman and Carey. The Complaint further seeks an order permanently prohibiting Tyra, Wynne and Berman from acting as officers or directors of any issuer that has a class of securities registered with the Commission.
The Commission acknowledges the assistance of the United States Department of Justice, the Office of the U.S. Attorney for the Northern District of Alabama and the Alabama Securities Commission in this matter. The Commission's investigation is continuing.