U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18995 / December 8, 2004
Accounting and Auditing Enforcement
Release No. 2150 / December 8, 2004
Securities and Exchange Commission v. Richard Rambahal, et al., Case Number 04-3086-cv-RED (U.S.D.C. W.D. MO., filed March 4, 2004)
SEC OBTAINS FINAL JUDGMENT AGAINST RICHARD RAMBAHAL AND PAUL H. KOFTON IN FINANCIAL FRAUD AT DT INDUSTRIES, INC.
The Securities and Exchange Commission (Commission) announced that on December 2, 2004, the Honorable Richard E. Dorr, Judge in the United States District Court for the Western District of Missouri, entered final judgments against Defendant Richard Rambahal (Rambahal) and Paul H. Kofton (Kofton), which (1) permanently enjoins Rambahal and Kofton from violating 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 for aiding and abetting DT Industries Inc.'s (DTI) 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; (2) orders Rambahal to pay disgorgement of $19,400 plus pre-judgment interest thereon in the amount of $9,720 for a total of $29,120; and (3) orders Kofton to pay disgorgement of $7,600 plus prejudgment interest thereon in the amount of $2,270, and also pay a $35,000 civil penalty, for a total payment of $44,870. Rambahal and Kofton consented to the entry of the final judgments without admitting or denying the allegations contained in the Commission's complaint.
The Commission's Complaint alleged that Rambahal, Kofton and others engaged in separate fraudulent schemes at three of DTI's subsidiaries to artificially inflate DTI's financial position. Specifically, the Commission's Complaint alleged that at various times between 1996 and 2000, Rambahal and Kofton knowingly or recklessly failed to properly recognize costs associated with various projects in order to reach their subsidiary's projected earnings targets set by DTI. The Commission's Complaint also alleged that Rambahal and Kofton attempted to conceal their schemes in various ways, including the creation of false supporting documentation. According to the Commission's Complaint, Rambahal's and Kofton's conduct resulted in material misstatements to DTI's financial statements that it filed with the Commission.
This case is still pending against Defendant Michael Lesniewski.
For additional information, see Litigation Release No. 18608 (March 5, 2004).