CPA TO PAY $400,000 TO GOVERNMENT FOR WORK DONE WHILE SUSPENDED

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 
SEC Awarded $400,000 in Disgorgement from Certified Public Accountant for His Violations of Commission Suspension Order

The Securities and Exchange Commission today announced a court ruling that requires certified public accountant Michael H. Taber to pay the government $400,000 in compensation he received while suspended from appearing or practicing before the Commission as an accountant.

According to the SEC's application filed in U.S. District Court for the Southern District of New York, Taber violated a 2004 Commission Order suspending him. The 2004 Order was based on a fraud injunction obtained against Taber, in SEC v. Del Global Techs. Corp., 04 CV 4092 (S.D.N.Y. filed June 1, 2004), for his participation in a fraudulent scheme as the chief financial officer of a New York-based company. While suspended, Taber repeatedly drafted, compiled, and edited information and data that was incorporated into requisite periodic reports that public companies filed with the SEC.

On October 3, 2013, the district court entered an order enforcing compliance by Taber with the 2004 Commission Order and directing the parties to submit their positions regarding disgorgement. On December 5, 2013, U.S. District Judge Katherine B. Forrest entered an order awarding the Commission $400,000 in disgorgement from Taber, who is licensed as a certified public accountant in New York and is currently a Florida resident.

CPA CHARGED BY SEC WITH VIOLATING SUSPENSION ORDER

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION
SEC Charges Certified Public Accountant with Violating Commission Suspension Order

Seeks Disgorgement of Illicit Compensation Received During Suspending Period

The Securities and Exchange Commission today announced that it filed a complaint in U.S. District Court for the District of Utah against certified public accountant R. Gordon Jones. Securities and Exchange Commission v. R. Gordon Jones, C.P.A., 1:13-cv-00163-BSJ (D. Utah). Jones is a resident of Farmington, Utah, and has been licensed as a certified public accountant by the State of Utah since June 1980.

The Commission alleged in its complaint that Jones violated a May 4, 2001 Commission Order issued under Rule 102(e)(1)(ii) and (iii) of the Commission's Rules of Practice (the "2001 Order") that suspended Jones from appearing or practicing before the Commission as an accountant. In The Matter of R. Gordon Jones, CPA and Mark F. Jensen, CPA, Securities Exchange Act of 1934 Rel. No. 44265, Accounting and Auditing Enforcement Rel. No. 1390, Administrative Proceeding File No. 3-10210 (May 4, 2001). According to the complaint, beginning in 2001 through the present, Jones provided accounting and financial statement preparation work for public companies. The complaint alleges that Jones, through his company J&J Consultants, LLC, has, among other things, created, compiled, and edited financial statements, information and data incorporated into Forms 10-K, 10-Q and 8-K; drafted and edited footnotes to financial statements; drafted and edited Management Discussion and Analysis sections relating to financial information of public filings; drafted and edited responses to Commission comment letters relating to financial information on public filings; and provided issuers with accounting advice that was subsequently reflected in financial statements filed with the Commission. The complaint further alleges that Jones supervised the financial statement preparation work for public company clients performed by J&J employees, and was intrinsically involved in and had the final sign off on the work of the other J&J employees. Through these actions, Jones violated the 2001 Order.

The SEC's complaint seeks a district court order enforcing its 2001 Order suspending Jones from appearing or practicing before the Commission as an accountant, and asks that the court order Jones to pay disgorgement, representing illicit compensation gained as a result of his engaging in work that was proscribed by the 2001 Order, together with prejudgment interest.

The Commission's investigation was conducted by Kimberly Greer, Ian Karpel, and Donna Walker in the Denver Regional Office. The Commission's litigation will be led by Polly Atkinson.

CPA PLEADS GUILTY TO LYING TO SEC STAFF

The following excerpt is from an e-mail sent out by the SEC:

“Washington, D.C., Jan. 12, 2012 – The Securities and Exchange Commission today announced that a former audit partner at accounting and consulting firm BDO USA LLP has pled guilty to criminal charges for lying to SEC enforcement staff during investigative testimony.

Ronald C. Machen Jr., the U.S. Attorney for the District of Columbia, filed the criminal charges against certified public accountant Bryan N. Polozola, who lives in Richardson, Texas.

According to the criminal information filed in U.S. District Court for the District of Columbia, the SEC issued subpoenas last year to BDO and Polozola, who was responsible for auditing several hedge funds managed by an investment adviser that the SEC is investigating. The criminal information states that the audit is a central issue in the SEC inquiry, and investigators took testimony from Polozola to obtain information about his role in the audit process and assess his credibility. Polozola was the subject of a 2005 NASD (now FINRA) proceeding alleging that he took $49,350 in funds from a former employer for his personal use. Polozola neither admitted nor denied NASD’s allegations in consenting to a bar from associating with any NASD firm.
The criminal information alleges that during questioning in September 2011, Polozola falsely testified to SEC staff that he was not aware of a $49,350 payment made on his behalf to his former employer. In fact, Polozola was aware that his attorney had repaid the $49,350 to the former employer as reimbursement of the funds he had allegedly taken for his personal use. The payment was made at Polozola’s direction and with Polozola’s funds.

“Truth in testimony is the first principle of a fair and effective enforcement program,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “This guilty plea is a stark reminder that those who lie in SEC investigations will face an SEC committed to working closely with the criminal authorities to ensure that they are held accountable.”
Polozola pled guilty to a one-count information charging him with making a false statement to government officials in violation of 18 U.S.C. § 1001.

The SEC thanks the U.S. Attorney’s Office for the District of Columbia for its efforts in prosecuting the case.”

SEC ALLEGED CPA INSIDE TRADER WILL GIVES BACK GAINS PLUS TO PAY FINE

The following excerpt is from the SEC website: November 18, 2011 “The Securities and Exchange Commission announced today that it has filed and, subject to Court approval, simultaneously settled charges against Mark A. Konyndyk, CPA, for insider trading in advance of a tender offer. The Commission’s complaint alleges that Konyndyk, a former manager in the Transaction Advisory Services Group of Ernst & Young (“E&Y”), learned through his work at E&Y that Activision, Inc. was the target of highly confidential acquisition talks, code-named “Project Sego,” in which Vivendi S.A. was the potential acquirer. In particular, Konyndyk performed due-diligence work on Project Sego for E&Y’s client, Vivendi, billing 36 hours to the engagement. Both before and shortly after his departure from E&Y’s employ on November 2, 2007, including just days before the December 2, 2007, public announcement of the Vivendi-Activision merger, Konyndyk bought Activision out-of-the-money call options with near-term expirations. He sold the options shortly after the public announcement, earning gross profits of $9,725. Without admitting or denying the allegations, Konyndyk has agreed to settle the Commission’s allegations against him, and the complaint and settlement papers were submitted simultaneously to the Court for its consideration. In particular, Konyndyk signed a consent that provides—subject to approval by the Court—for the entry of a final judgment permanently enjoining him against future violations of the Section 14(e) of the Securities Exchange Act of 1934 and Rule 14e-3 thereunder. The final judgment to which Konyndyk consented would further order that he is liable for disgorgement of $9,725 (comprising all the profits flowing from his own illegal trading) plus $1,789.28 in prejudgment interest thereon as well as a $9,725 civil penalty, but allow him one year to pay the foregoing sums. Additionally, Konyndyk consented, in related administrative proceedings, to the entry of a Commission order that would suspend him, pursuant to Commission Rule of Practice 102(e), from appearing or practicing before the Commission as an accountant, with a right to seek reinstatement after two years. If approved by the Court, this settlement would fully resolve this case. The Commission acknowledges the assistance of the Options Regulatory Surveillance Authority.”

SEC CHARGES CPA AND HIS CONSULTING FIRM WITH PARTICIPATING IN A PONZI SCHEME

The designation CPA (Certified Public Accountant) was once a venerated designation that meant that the bookwork handled by such a designate was accurate and that such work was according to established accounting standards. In the following case the SEC alleges that a CPA and his consulting firm helped to steer clients into a Ponzi scheme and mismanaged statements that kept the scheme ongoing. The case is an excerpt from the SEC website:

"SEC Charges John N. Irwin and Jacklin Associates, Inc. with Participating in Ponzi Scheme Orchestrated by Joseph S. Forte and Joseph S. Forte, LP
The Securities and Exchange Commission announced today that on July 11, 2011, it filed a settled civil action in the United States District Court in Philadelphia against John N. Irwin (“Irwin”), a certified public accountant, and his consulting firm, Jacklin Associates, Inc. (“Jacklin”). The Commission alleges that, from at least February 1995 through December 2008, Irwin and Jacklin participated in a multi-million dollar Ponzi scheme orchestrated and run by Joseph S. Forte (“Forte”) through his limited partnership Joseph S. Forte, LP (“Forte LP”). In December 2008, Forte confessed to federal authorities that, for over a decade, he had been operating a Ponzi scheme in which he fraudulently obtained approximately $50 million from roughly 80 investors through the sale of securities in the form of limited partnership interests in Forte LP. Subsequent investigation of Forte’s confession has revealed over 100 investors who collectively invested over $75 million. Forte and Forte LP solicited investors by making misrepresentations regarding, among other things, use of invested funds, investment returns, and investor account balances. On January 7, 2009, the Commission and the United States Commodities Futures Trading Commission filed civil actions against Forte and Forte LP and successfully sought emergency relief that, among other things, froze their assets and enjoined further illegal conduct. SEC v. Forte, et al., 09-CV-0063 (E.D. Pa.); CFTC v. Forte, 09-CV-0064 (E.D. Pa.). In parallel criminal proceedings, Forte pled guilty to charges of wire fraud, mail fraud, bank fraud and money laundering and was sentenced to 15 years in prison. U.S. v. Forte, 09-CR-304 (E.D. Pa.).

The Commission’s complaint against Irwin and Jacklin alleges that they participated in Forte’s scheme by soliciting investors for Forte LP. In doing so, Irwin relied exclusively on Forte’s misrepresentations about Forte LP’s stellar performance and, without performing any due diligence, passed along to investors through Jacklin materially false and misleading information about, among other things, Forte LP’s current value and growth, historical performance, rapid-trading strategy, and retention of an accountant. Irwin, through Jacklin, also performed back office and bookkeeping functions for Forte LP, including creating and issuing to investors false quarterly statements and tax documents prepared based on the false information provided by Forte. In communicating the fraudulent information to investors, Irwin disregarded red flags that should have alerted him that the information that he was passing on was false. Over the course of the fraud, Irwin, through Jacklin, received ill-gotten gains exceeding $5 million in purported fees and trading profits.

Irwin and Jacklin agreed to settle the Commission’s charges, without admitting or denying the allegations in the Commission’s complaint. Under the settlement, which is subject to the court’s approval, Irwin and Jacklin consented to a judgment permanently enjoining them from violating Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933. The judgment also orders the defendants to pay disgorgement plus prejudgment interest, and permits the Commission to ask the court to impose civil penalties, the amounts of which will be determined at a later date. As part of the settlement, Irwin agreed to the entry of an order suspending him from appearing or practicing before the Commission as an accountant. "