Friday, September 5, 2008
On September 3, 2008, the SEC settled charges that two former officers of Natural Health Trends Corp. ("NHT") committed securities fraud and other violations arising from undisclosed related party transactions from 2001 through 2005. The defendants are Mark D. Woodburn, of Southlake, Texas, NHT's former president, director and CFO, and Terry LaCore, of Flower Mound, Texas, the former president of NHT's chief subsidiary and an NHT director. According to the complaint, from 2001 through August 2005, NHT's top distributor paid Woodburn and LaCore, directly and indirectly, approximately $2.5 million in undisclosed payments. The complaint also alleges that, in February 2004, Woodburn caused NHT to loan $256,200 to a Woodburn family-controlled company, and later took steps to conceal related party nature of the loan when it was discovered by NHT's new accounting management in the fall of 2004. As a result of Woodburn and LaCore's activities, the complaint continues, NHT failed to disclose, or inadequately disclosed, the related party transactions in periodic filings, registration statements, and proxy statements.
Woodburn and LaCore agreed to settle the SEC's charges without admitting or denying the allegations of the complaint. Each agreed to a permanent injunction and to a five-year officer and director bar. Woodburn agreed to pay a $60,000 civil penalty, and LaCore agreed to pay a $50,000 civil penalty.