Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Monday, March 3, 2008

Jury Finds Former Applix CFO Committed Fraud

The SEC announced that on February 15, 2008 a jury found Walter T. Hilger, former Chief Financial Officer of Applix, Inc, an Internet software company, liable for fraudulent conduct, including the falsification of books and records, in a civil injunctive action involving improper revenue recognition by Applix. The jury found former Applix CEO Alan C. Goldsworthy not liable for any securities law violations. The verdict followed a four week trial in Boston, Massachusetts.

The SEC's complaint alleged that Goldsworthy, Hilger and former Applix Director of World-Wide Operations Mark E. Sullivan participated in two fraudulent revenue recognition schemes, causing Applix to report inflated revenue and understated net loss figures for the year ended December 31, 2001 and for the quarter ended June 30, 2002.

The Court had previously entered a final judgment by consent against Sullivan on January 9, 2008. The final judgment enjoins Sullivan from future violations of federal securities laws and orders Sullivan to pay a $25,000 civil money penalty. Sullivan consented to the judgment without admitting or denying the allegations in the Commission's complaint.

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