U.S. SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 19253 / June 7, 2005
ACCOUNTING AND AUDITING RELEASE NO. 2256 / June 7, 2005
FORMER GENERAL COUNSEL OF INSO, CORP. CONVICTED OF PERJURY IN TESTIMONY BEFORE THE SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION v. BRUCE HILL, ET AL., (United States District Court for the District of Massachusetts, Civil Action No. 02-11244 (EFH), filed June 21, 2002)
UNITED STATES v. GRAHAM MARSHALL and BRUCE HILL, (United States District Court for the District of Massachusetts, Criminal Action No. 03-10344 (DPW), filed November 12, 2003)
The Securities and Exchange Commission ("Commission") announced that on June 6, 2005 a federal jury convicted, Bruce Hill, of Belmont, Massachusetts, of committing perjury in his investigative testimony before the Commission, which was investigating whether fraud was committed in connection with the reporting of revenues by the former Inso Corporation, Inc. (later known as eBT International, Inc.), a now defunct software company headquartered in Boston, Massachusetts. Hill, age 41, the former General Counsel of Inso Corporation, was convicted by a jury sitting before U.S. District Judge Douglas P. Woodlock on charges brought by the United States Attorney for the District of Massachusetts. The jury was deadlocked as to the five remaining counts against Hill: one count of securities fraud, two counts of wire fraud, one count of false statements to accountants and a second perjury count. The Court declared a mistrial as to those counts.
Evidence was presented at the month-long criminal trial that at the end of September 1998, Inso Corporation arranged a sham transaction whereby a Malaysian software distributor signed a purchase order for roughly $3 million upon assurances that Inso would actually sell the software to another customer within a few days or weeks. At the end of 1998, Hill, who was the Vice President, Secretary, and General Counsel of Inso, played a pivotal role in arranging a series of deals that were designed to create the appearance that the Malaysian software distributor had paid Inso $3 million for software products that Inso had reported as sold during the third quarter of 1998. In sworn testimony during a Commission investigation, Hill disavowed any knowledge about the preparation of a fraudulent certificate which purported to reflect approval by Inso’s Board of Directors of the issuance of approximately $4 million in letters of credit that were used to create the appearance that Inso received $3 million in payment for the reported third quarter sale. The United States presented evidence at the criminal trial that, contrary to his sworn investigative testimony, Hill had personally directed the preparation of the certificate and approved its signing.
Judge Woodlock has not yet scheduled a date for sentencing. For his perjury conviction, Hill faces a maximum penalty of 5 years imprisonment to be followed by 3 years of supervised release and a $250,000 fine.
Hill is the third individual to face criminal charges arising from revenue overstatement at the former Inso Corporation. On September 30, 2003, Richard Vatcher, Inso's former Vice-President in charge of worldwide sales pled guilty to violations of the securities laws. Charges are still pending against Hill’s co-defendant Graham Marshall, Inso's former Vice President and Manager of the Electronic Publishing Division. Marshall, age 58, of Aslackby, Sleaford Lincolnshire, United Kingdom, is subject to ongoing extradition proceedings.
On June 21, 2002, the Commission filed related civil enforcement actions against Hill and certain other senior officers of Inso. The Commission’s action against Hill remains pending.
For more information see Litigation Release No. 18753 (June 17, 2004), Litigation Release No. 18699 (May 7, 2004), Litigation Release No. 18467 (November 17, 2003), Litigation Release No. 18394 (October 4, 2003) and Litigation Release No. 17578 (June 21, 2002).