Friday, December 16, 2005

CEO and CFO Settle SEC Fraud Charges

The SEC settled a securities fraud action against Edward Heil and Bret Jenkins, the CEO and CFO of eSafetyWorld, Inc. (now known as EZ Auctions and Shipping Inc.), for conduct that included false statements about a "revolutionary" containment device for anthrax released during the anthrax scare in 2001.  According to the SEC Litigation Release (here):

  • During the mailed-anthrax scare, Heil drafted and issued eSafety's October 19, 2001 false press release about a supposed revolutionary anthrax-containment device. The press release caused a one-day price increase of 413% and a volume increase of 57,085%.
  • Heil devised, and Heil and Jenkins implemented, eSafety's revenue recognition policy for consulting services which was contrary to GAAP. They also failed to restate eSafety's first through third quarter 2001 reports, improperly deferred costs in eSafety's 2001 Form 10-KSB thereby understating net loss, and aided and abetted eSafety's electronic filing violations.
  • In 2001, in order to manipulate the stock of eSafety, Heil directed the purchase and sale of eSafety stock and transferred $473,288 in eSafety funds to an entity that he controlled and another entity.
  • Heil executed a false loan agreement and provided eSafety's auditors with a false loan confirmation to conceal the use of monies in the manipulation.

Heil and Jenkins agreed to pay civil penalties of $60,000 and $50,000, respectively, and to a ten-year bar from serving as an officer and director of a public company.  The Commission also filed a civil enforcement action against Raymond Burghard for aiding and abetting the fraud, but not settlement of that action was announced. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/12/ceo_and_cfo_set.html

Civil Enforcement, Securities | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef00d835239bd853ef

Listed below are links to weblogs that reference CEO and CFO Settle SEC Fraud Charges:

Comments

Post a comment