Securities Law Prof Blog

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

Saturday, May 30, 2009

SEC Settles FCPA Charges Against Former ACL Technologies President

On May 29, 2009, the SEC settled charges against Thomas Wurzel, the former President of ACL Technologies, Inc. (ACL), formerly a subsidiary of United Industrial Corporation (UIC), which provided aerospace and defense systems. The Commission’s complaint alleges that Wurzel authorized illicit payments to an Egyptian-based agent while he knew or consciously disregarded the high probability that the agent would offer, provide, or promise at least a portion of such payments to Egyptian Air Force officials for the purpose of influencing these officials to award business to UIC related to a military aircraft depot in Cairo, Egypt. The Commission charged Wurzel with violations of the anti-bribery, books and records and internal controls provisions of the Foreign Corrupt Practices Act (FCPA), and with aiding and abetting UIC’s violations of the anti-bribery and books and records provisions of the FCPA.

The Commission’s complaint alleges that in late 2001 to 2002, Wurzel authorized three forms of illicit payments to the agent: (1) payments to the agent ostensibly for labor subcontracting work; (2) a $100,000 advance payment to the agent in June 2002 for “equipment and materials;” and (3) a $50,000 payment to the agent in November 2002 for “marketing services.” Furthermore, Wurzel later directed his subordinates to create false invoices to conceal the fact that the $100,000 “advance payment” in June 2002 was never repaid. As a result, UIC, through ACL, was awarded a contract with gross revenues and net profits of approximately $5.3 million and $267,000, respectively.

Without admitting or denying the allegations in the complaint, Wurzel has consented to the entry of a final judgment permanently enjoining him from future violations of Sections 30A and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rule 13b2-1 and from aiding and abetting violations of Exchange Act Sections 30A and 13(b)(2)(A) and ordering him to pay a $35,000 civil penalty.

In a related action, the Commission also instituted, on May 29, 2009, a settled administrative proceeding against UIC. The Commission’s Cease-and-Desist Order finds that beginning in late 2001, and continuing through 2002, UIC violated Sections 30A, 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. Without admitting or denying the Commission’s findings, UIC agreed to a Commission order requiring it to cease and desist from committing or causing violations and any future violations of the foregoing provisions and ordered UIC to pay $337,679.42 in disgorgement and prejudgment interest. See Exchange Act Release No. 34-60005 (May 29, 2009); Accounting and Auditing Enforcement Release No. 2981.

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