U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19402 / September 29, 2005
Accounting and Auditing Enforcement
Release No. 2322 / September 29, 2005
SEC v. Saad, et al., 05 CV 3308 (JSR)(SDNY)
FOUR FORMER EXECUTIVES OF IMPATH INC., INCLUDING ITS FORMER CHIEF FINANCIAL OFFICER, CONSENT TO PERMANENT INJUNCTIVE RELIEF
The Commission announced today that four former executives of IMPATH Inc. ("Impath") have now consented to permanent injunctive and other relief sought by the Commission in its pending federal court action against those and other defendants and in a related administrative proceeding. Impath was a public company that provided laboratory services used in the treatment of cancer. Impath filed for bankruptcy protection in September 2003 and is currently in liquidation. The SEC's complaint alleges that from 1999 until 2003, the defendants engaged in fraudulent accounting practices and committed other violations of the federal securities laws. As a result of the accounting fraud, Impath falsely reported multimillion dollar profits when it had actually suffered huge losses. To meet financial projections and boost Impath's stock price, the defendants made, or directed others to make, phony accounting entries that artificially increased revenue and improperly reduced operating expenses.
Since the Commission filed its complaint in March 2005, the Honorable Jed S. Rakoff, United States District Judge for the Southern District of New York, has entered partial final consent judgments imposing a range of injunctive relief against the following defendants:
- David J. Cammarata, Impath's former chief financial officer, was permanently enjoined on July 25, 2005 from acting as an officer or director of a public company and from violations of the relevant antifraud, corporate reporting, books and records, internal control and proxy solicitation provisions of the federal securities laws. Specifically, Cammarata is enjoined from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b), 13(a), 13(b)(2), 13(b)(5) and 14(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5, 13b2-1, 13b2-2, 12b-20, 13a-1, 13a-13, 14a-3 and 14a-9. In addition, on September 21, 2005, the Commission also instituted and simultaneously settled an administrative proceeding pursuant to Rule 102(e) of the Commission's Rules of Practice against Cammarata, a certified public accountant licensed to practice in the state of New Jersey. The administrative proceeding was based on the entry of the partial final consent judgment against Cammarata. In the administrative proceeding, Cammarata consented, without admitting or denying the Commission's findings, to an order suspending him from appearing or practicing before the Commission as an accountant.
- Peter Torres, Impath's former vice president for corporate finance, was permanently enjoined on May 18, 2005 from acting as an officer or director of a public company and from violating Section 17(a) of the Securities Act, Sections 10(b), 13(a), 13(b)(2) and 13(b)(5) of the Exchange Act, and Rules 10b-5, 13b2-1, 13b2-2, 12b-20, 13a-1 and 13a-13.
- Karin Gardner, Impath's former controller, and Kenneth Jugan, its former national billing director, were permanently enjoined on May 18, 2005 from violating Sections 10(b), 13(a), 13(b)(2) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1, 12b-20, 13a-1 and 13a-13.
Each of these defendants consented to the foregoing relief without admitting or denying the allegations of the Commission's complaint. The Commission's claims for disgorgement and civil penalties against them remain pending. In March 2005, all four of these defendants pled guilty to criminal charges brought by the United States Attorney's Office for the Southern District of New York ("USAO") based on the same conduct alleged in the Commission's complaint.
The Commission's claims against the other two defendants remaining in the case -- Anuradha D. Saad, Impath's former chief executive office, and Richard P. Adelson, Impath's former president and chief operating officer -- are also pending. In March 2005, another defendant, Robert McKie, settled the Commission's claims through the entry of a final consent judgment in which, without admitting or denying the allegations in the Complaint, McKie agreed to be permanently enjoined against future violations of the relevant antifraud, reporting, books and records and internal controls provisions of the federal securities laws; disgorge $100,000 in performance bonuses he received as result of the conduct alleged in the Complaint, plus prejudgment interest; and pay a civil penalty in the amount of $150,000.
The Commission acknowledges the assistance and cooperation of the USAO and the Federal Bureau of Investigation in this matter.
For additional information see: AAER Rel. No. 2316 (September 21, 2005), Litigation Release No. 19159 (March 29, 2005)