This is a photo of the National Register of Historic Places listing with reference number 7000063
Monday, January 14, 2013
TWO FORMER CORPOATE OFFICERS OF VOLT INFOMATION SCIENCES, INC., CHARGED WITH SECURITIES FRAUD
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
SEC Charges Volt Information Sciences, Inc. and Two Former Officers with Securities Fraud
The Securities and Exchange Commission yesterday filed civil injunctive complaints in the U.S. District Court for the Southern District of New York in connection with improper accounting at Volt Information Sciences, Inc. ("Volt" or the "Company"), a company located in New York, New York.
In its complaint against Jack J. Egan, Jr. Volt’s former Chief Financial Officer, the Commission alleges that Egan participated in a scheme to materially overstate revenue. For Volt’s fourth quarter and fiscal year ended October 28, 2007, Egan signed and filed financial statements reporting $7.55 million of revenue that had not been earned and was not recognizable under U.S. Generally Accepted Accounting Principles. The $7.55 million of improper revenue caused Volt’s net income for its fourth quarter and fiscal year ended October 28, 2007, to be materially overstated. The complaint further alleges that the scheme relied on fabricated paperwork purporting to be a contract selling software to a customer. Egan knew that any sale of the software was impossible because Volt intended to lease the same software to the same customer the following year. Nevertheless, Egan authorized that the $7.55 million in improper revenue be included in the Company’s consolidated income statement for 2007, which were included in Volt’s: (1) 2007 Form 10-K filed with the Commission on January 11, 2008, as amended by Form 10-K/A filed with the Commission on February 25, 2008; and (2) earnings release on Form 8-K furnished to the Commission on December 20, 2007. Egan signed the fraudulent 2007 Form 10-K and subsequent SEC filings that included the same overstatement of revenue. In addition, the complaint alleges that Egan mislead Volt’s external auditors and he signed one or more certifications required by Section 302 of the Sarbanes Oxley Act that were false and misleading.
The Commission’s complaint charges Egan with violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"); Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act"); and Exchange Act Rules 10b-5, 13b2-1, 13b2-2, and 13a-14. The complaint further charges Egan with aiding and abetting violations by the Company. The Commission seeks that Egan be permanently enjoined, be ordered to pay a civil money penalty, and be prohibited from acting as an officer or director.
In addition to the complaint against Egan, the Commission filed a settled civil action against Volt and Debra L. Hobbs ("Hobbs"), the former chief financial officer of the Volt subsidiary where the fraud originated. Without admitting or denying the complaint's allegations, Volt agreed to be enjoined from violating Section 17(a) of the Securities Act , and Sections 10(b),13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 10b-5, 12b-20, 13a-1, and 13a-11. The Company cooperated during the Commission’s investigation and has undertaken significant remediation efforts.
SEC Charges Volt Information Sciences, Inc. and Two Former Officers with Securities Fraud
The Securities and Exchange Commission yesterday filed civil injunctive complaints in the U.S. District Court for the Southern District of New York in connection with improper accounting at Volt Information Sciences, Inc. ("Volt" or the "Company"), a company located in New York, New York.
In its complaint against Jack J. Egan, Jr. Volt’s former Chief Financial Officer, the Commission alleges that Egan participated in a scheme to materially overstate revenue. For Volt’s fourth quarter and fiscal year ended October 28, 2007, Egan signed and filed financial statements reporting $7.55 million of revenue that had not been earned and was not recognizable under U.S. Generally Accepted Accounting Principles. The $7.55 million of improper revenue caused Volt’s net income for its fourth quarter and fiscal year ended October 28, 2007, to be materially overstated. The complaint further alleges that the scheme relied on fabricated paperwork purporting to be a contract selling software to a customer. Egan knew that any sale of the software was impossible because Volt intended to lease the same software to the same customer the following year. Nevertheless, Egan authorized that the $7.55 million in improper revenue be included in the Company’s consolidated income statement for 2007, which were included in Volt’s: (1) 2007 Form 10-K filed with the Commission on January 11, 2008, as amended by Form 10-K/A filed with the Commission on February 25, 2008; and (2) earnings release on Form 8-K furnished to the Commission on December 20, 2007. Egan signed the fraudulent 2007 Form 10-K and subsequent SEC filings that included the same overstatement of revenue. In addition, the complaint alleges that Egan mislead Volt’s external auditors and he signed one or more certifications required by Section 302 of the Sarbanes Oxley Act that were false and misleading.
The Commission’s complaint charges Egan with violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"); Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act"); and Exchange Act Rules 10b-5, 13b2-1, 13b2-2, and 13a-14. The complaint further charges Egan with aiding and abetting violations by the Company. The Commission seeks that Egan be permanently enjoined, be ordered to pay a civil money penalty, and be prohibited from acting as an officer or director.
In addition to the complaint against Egan, the Commission filed a settled civil action against Volt and Debra L. Hobbs ("Hobbs"), the former chief financial officer of the Volt subsidiary where the fraud originated. Without admitting or denying the complaint's allegations, Volt agreed to be enjoined from violating Section 17(a) of the Securities Act , and Sections 10(b),13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 10b-5, 12b-20, 13a-1, and 13a-11. The Company cooperated during the Commission’s investigation and has undertaken significant remediation efforts.
Sunday, January 13, 2013
ALLEGED NEW GOLD EXTRACTION PROCESS EXTRACTED FUNDS FROM INVESTORS
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today filed fraud charges against a California-based mining company and its CEO who induced hundreds of investors to pour $16 million into a fruitless gold mining venture.
The SEC alleges that Nekekim Corporation and Kenneth Carlton defrauded investors with representations that a special "complex ore" found at Nekekim's mine site in Nevada contained gold deposits worth at least $1.7 billion. Carlton highlighted test results produced by two small labs that used unconventional methods to test the ore for gold, but he withheld from investors other tests conducted by different firms that suggested the Nekekim mine site held little if any gold. The small labs' reliability also had been called into doubt by geologists and a government study. Yet as Nekekim failed to produce any mining revenue, Carlton gave shareholders false hope that the company was close to perfecting the custom method it supposedly needed to extract gold from its special ore.
Carlton agreed to settle the SEC's charges.
According to the SEC's complaint filed in federal court in Fresno, Calif., Nekekim succeeded in attracting investors from 2001 to 2011 in such U.S. states as California, Florida, and New Jersey as well as foreign countries including Canada, Australia, and Singapore. Carlton falsely represented to investors that a "physicist" who in reality had no scientific training helped develop a confidential gold extraction technique licensed by Nekekim. Carlton also promoted a series of other supposedly promising extraction methods in frequent reports to shareholders. In one newsletter, he touted: "A NEW GOLD RECOVERY PROCESS IS SUCCESSFUL." As each of these methods actually failed, Carlton's reports grossly overstated Nekekim's progress toward profitability while prompting shareholders to invest more money in the company.
Carlton, who lives in Clovis, Calif., agreed to a judgment requiring him to pay a $50,000 penalty and prohibiting him from selling securities for Nekekim or managing the company. He also will be prohibited from further violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Nekekim, based in Madera, Calif., agreed to a judgment prohibiting the same violations and requiring disclosure of these sanctions in any offering of securities for the next three years. Carlton and Nekekim neither admitted nor denied the SEC's allegations.
This case was investigated by Thomas Eme and Tracy Davis of the SEC's San Francisco office.
The Securities and Exchange Commission today filed fraud charges against a California-based mining company and its CEO who induced hundreds of investors to pour $16 million into a fruitless gold mining venture.
The SEC alleges that Nekekim Corporation and Kenneth Carlton defrauded investors with representations that a special "complex ore" found at Nekekim's mine site in Nevada contained gold deposits worth at least $1.7 billion. Carlton highlighted test results produced by two small labs that used unconventional methods to test the ore for gold, but he withheld from investors other tests conducted by different firms that suggested the Nekekim mine site held little if any gold. The small labs' reliability also had been called into doubt by geologists and a government study. Yet as Nekekim failed to produce any mining revenue, Carlton gave shareholders false hope that the company was close to perfecting the custom method it supposedly needed to extract gold from its special ore.
Carlton agreed to settle the SEC's charges.
According to the SEC's complaint filed in federal court in Fresno, Calif., Nekekim succeeded in attracting investors from 2001 to 2011 in such U.S. states as California, Florida, and New Jersey as well as foreign countries including Canada, Australia, and Singapore. Carlton falsely represented to investors that a "physicist" who in reality had no scientific training helped develop a confidential gold extraction technique licensed by Nekekim. Carlton also promoted a series of other supposedly promising extraction methods in frequent reports to shareholders. In one newsletter, he touted: "A NEW GOLD RECOVERY PROCESS IS SUCCESSFUL." As each of these methods actually failed, Carlton's reports grossly overstated Nekekim's progress toward profitability while prompting shareholders to invest more money in the company.
Carlton, who lives in Clovis, Calif., agreed to a judgment requiring him to pay a $50,000 penalty and prohibiting him from selling securities for Nekekim or managing the company. He also will be prohibited from further violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Nekekim, based in Madera, Calif., agreed to a judgment prohibiting the same violations and requiring disclosure of these sanctions in any offering of securities for the next three years. Carlton and Nekekim neither admitted nor denied the SEC's allegations.
This case was investigated by Thomas Eme and Tracy Davis of the SEC's San Francisco office.
MATERIAL MISTATEMENTS DURING FINANCIAL CRISIS
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
SEC Charges Three Former Senior Officers of Commonwealth Bank With Understating Losses and Material Misstatements During Financial Crisis
The Securities and Exchange Commission today charged three former bank executives in Virginia for understating millions of dollars in losses and masking the true health of the bank's loan portfolio at the height of the financial crisis.
The SEC alleges that Edward J. Woodard, Jr., who was the CEO, President and Chairman of the Board at Norfolk, Virginia-based Bank of the Commonwealth and its publicly-traded parent, Commonwealth Bankshares, along with Chief Financial Officer and Secretary Cynthia A. Sabol, a CPA, and Executive Vice President and Commercial Loan Officer Stephen G. Fields understated the bank's loan-related losses as well as losses on real estate repossessed by the bank (other real estate owned or OREO).
The SEC's complaint alleges that, from in or about November 2008 through August 2010, the consistent message in Commonwealth's SEC filings and public statements was that its portfolio of loans, which comprised approximately 94% and 81% of the company's total assets in 2008 and 2009, respectively, was conservatively managed according to strict underwriting standards aimed at keeping Commonwealth's reserved losses low during a time of unprecedented economic turmoil. In reality, internal practice deviated so much from what the investing public was told that, from November 2008 through August 2010, Commonwealth understated its ALLL by approximately 17% to 25% with a corresponding understatement to its reported loss before income taxes for fiscal year 2008 of approximately 64%; understated its OREO in two quarters by approximately 19% to 20%, which resulted in a corresponding understatement of Commonwealth's reported loss before income taxes in the first quarter of 2010 of approximately 35%; and underreported its total non-performing loans throughout the entire period by at least 30%.
The SEC's complaint further alleges that Woodard, as CEO, knew of the true state of Commonwealth's loan portfolio, was involved in the activity to hide the deterioration of many of the loans at issue and was responsible for the misleading public statements and in particular those in earnings releases. Sabol, as CFO, knew of the activity to mask the problems with the company's loan portfolio and the corresponding effect these masking practices had on the bank's financial statements and disclosures, yet signed the disclosures and certified to the investing public that they were accurate. Fields oversaw the bank's largest portfolio of construction and development loans and was involved in the masking practices.
The SEC's complaint charges Woodard and Sabol with violating Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rules 10b-5, 13a-14, 13b2-1 and 13b2-2 thereunder, and aiding and abetting violations of Exchange Act Section 13(a) and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder. The SEC's complaint charges Fields with violating Exchange Act Section 13(b)(5) and aiding and abetting violations of Exchange Act Sections 10(b) and 13(a), and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13 thereunder.
SEC Charges Three Former Senior Officers of Commonwealth Bank With Understating Losses and Material Misstatements During Financial Crisis
The Securities and Exchange Commission today charged three former bank executives in Virginia for understating millions of dollars in losses and masking the true health of the bank's loan portfolio at the height of the financial crisis.
The SEC alleges that Edward J. Woodard, Jr., who was the CEO, President and Chairman of the Board at Norfolk, Virginia-based Bank of the Commonwealth and its publicly-traded parent, Commonwealth Bankshares, along with Chief Financial Officer and Secretary Cynthia A. Sabol, a CPA, and Executive Vice President and Commercial Loan Officer Stephen G. Fields understated the bank's loan-related losses as well as losses on real estate repossessed by the bank (other real estate owned or OREO).
The SEC's complaint alleges that, from in or about November 2008 through August 2010, the consistent message in Commonwealth's SEC filings and public statements was that its portfolio of loans, which comprised approximately 94% and 81% of the company's total assets in 2008 and 2009, respectively, was conservatively managed according to strict underwriting standards aimed at keeping Commonwealth's reserved losses low during a time of unprecedented economic turmoil. In reality, internal practice deviated so much from what the investing public was told that, from November 2008 through August 2010, Commonwealth understated its ALLL by approximately 17% to 25% with a corresponding understatement to its reported loss before income taxes for fiscal year 2008 of approximately 64%; understated its OREO in two quarters by approximately 19% to 20%, which resulted in a corresponding understatement of Commonwealth's reported loss before income taxes in the first quarter of 2010 of approximately 35%; and underreported its total non-performing loans throughout the entire period by at least 30%.
The SEC's complaint further alleges that Woodard, as CEO, knew of the true state of Commonwealth's loan portfolio, was involved in the activity to hide the deterioration of many of the loans at issue and was responsible for the misleading public statements and in particular those in earnings releases. Sabol, as CFO, knew of the activity to mask the problems with the company's loan portfolio and the corresponding effect these masking practices had on the bank's financial statements and disclosures, yet signed the disclosures and certified to the investing public that they were accurate. Fields oversaw the bank's largest portfolio of construction and development loans and was involved in the masking practices.
The SEC's complaint charges Woodard and Sabol with violating Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rules 10b-5, 13a-14, 13b2-1 and 13b2-2 thereunder, and aiding and abetting violations of Exchange Act Section 13(a) and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder. The SEC's complaint charges Fields with violating Exchange Act Section 13(b)(5) and aiding and abetting violations of Exchange Act Sections 10(b) and 13(a), and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13 thereunder.
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