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January 07, 2004

SEC Hammers Company's Customers
for Securities-Fraud Participation

The SEC has again gone after customers of a company for allegedly helping to perpetrate the company's securities fraud by "round-tripping," i.e., creating fictitious transactions that were reported as revenue. As part of the settlement, the customers' principals, as well as the company insiders who were involved, were barred from serving as an officer or director of a publicly-held company.

The SEC announced today that it had reached a settlement with the former controller, former operations manager, and several former customers and vendors of Suprema Specialties, Inc., a now-defunct cheese manufacturer based in Paterson, N.J. customers in question. According to the SEC press release:

The SEC's complaint alleges that defendants Quattrone [Ed: Robert Quattrone -- if it had been Frank Quattrone, surely we would have heard more about it before now] and Vieira, using the private companies they controlled, knowingly entered into numerous circular round-tripping transactions with Suprema from at least 1998 through early 2002, and that defendant Fransen similarly entered into such transactions with Suprema from at least 2000 through early 2002.

The complaint further alleges that, during the respective time periods, Quattrone, Vieira, and Fransen each signed false audit confirms that were provided to Suprema's independent auditors, and each received kick-backs for their participation in the scheme.

According to the complaint, the round-tripping transactions involving Quattrone, Vieira, Fransen, and their companies collectively resulted in overstatements of Suprema's reported revenues by approximately 5.75%, 7.41%, 14.25%, 19.51%, and 19.48% in fiscal years 1998, 1999, 2000, 2001, and the first quarter of 2002, respectively.

(Paragraphing added for readability)

(Link via Securities Litigation Watch.)

January 7, 2004 in Accounting, Litigation, Sales, Securities law, SEC regs / actions | Permalink | Comments (0) | TrackBack

Junk FAXing brings $5.4M Fine

On Monday the Federal Communications Commission (FCC) announced that it was fining Fax.com, Inc. nearly $5.4 million "for faxing unsolicited advertisements to consumers in violation of the Telephone Consumer Protection Act (TCPA) and the Commission’s rules. . . . This is the largest single fine ever imposed by the Commission for violation of the TCPA."

The FCC said that it imposed the maximum permissible forfeiture of $11,000 for each of 489 separate violations on grounds that “Fax.com’s primary business activity itself constitutes a massive on-going violation” of the TCPA.

See the FCC's press release for more details.

January 7, 2004 in Litigation, Marketing | Permalink | Comments (0) | TrackBack