Securities and Exchange Commission v. First Amended Complaint, et al.
raw: Lr20508 Lhc Pi
Lr20508 Lhc Pi, No. 3:06-CV-06384-MHP (Mar. 24, 2008)
summary
Lori H. Cornmesser agreed to a permanent injunction without admitting or denying allegations of accounting fraud, including falsifying books and records and aiding auditor interference, and was ordered to disgorge $23,179 in profits and interest but faced no civil penalty.
paragraph
Lori H. Cornmesser was permanently enjoined by the U.S. District Court for the Northern District of California from violating Sections 13(b)(5) and 13(b)(2)(A) of the Securities Exchange Act and Rules 13b2-1 and 13b2-2, for knowingly circumventing internal controls, falsifying accounting records, and aiding in the misrepresentation of financial statements to auditors. She was ordered to disgorge $17,054 in ill-gotten gains and pay $6,125 in prejudgment interest, totaling $23,179, to be paid to the SEC within ten business days, with no civil penalty imposed. The court retained jurisdiction to enforce the injunction, and Cornmesser waived all rights to appeal and admitted jurisdiction without admitting guilt.
narrative
Lori H. Cornmesser, a former executive, entered into a consent decree with the Securities and Exchange Commission, agreeing to a permanent injunction without admitting or denying the allegations of securities fraud. The court found she violated Section 13(b)(5) and Rule 13b2-1 by knowingly circumventing internal accounting controls and falsifying books and records, and aided and abetted violations of Rule 13b2-2 and Section 13(b)(2)(A) by interfering with auditors and enabling materially misleading financial reporting. As a result, she was ordered to disgorge $17,054 in profits gained from the misconduct, plus $6,125 in prejudgment interest, for a total payment of $23,179 to be made within ten business days to the SEC for transfer to the U.S. Treasury. The court declined to impose a civil penalty, citing the nature of her conduct and cooperation. Cornmesser waived all rights to appeal, consented to the court’s jurisdiction, and agreed to be permanently restrained from future violations of the specified securities laws. The injunction applies to her agents, employees, and anyone acting in concert with her who receives notice. The case, filed in 2006 and resolved in 2008 under Case No. C 06-6384, was part of a broader SEC enforcement action against multiple defendants at a public company.
Classified accounting-fraud(confidence 95%). EDGAR detection: forms 10-K/10-Q/8-K/NT 10-K· recall 80% / precision 48%. detection rule →
Statutes
15 U.S.C. § 78m(b)28 U.S.C. § 196117 C.F.R. § 240.13b2-117 C.F.R. § 240.13b2-2Section 13(b)(5) of the Securities Exchange ActSection 13(b)(5) of the Securities Exchange Act
Parties
Securities and Exchange Commissionfirst amended complaintgeneral appearance
Keywords
lhc
Extracted insights
Entities 4
- person first amended complaint
- person general appearance
- agency Securities and Exchange Commission
- organization Securities and Exchange Commission
Triples 10
- Securities and Exchange Commission filed First Amended Complaint
- Lori H. Cornmesser entered general appearance
- Lori H. Cornmesser consented to the Court’s jurisdiction over her personally
- Lori H. Cornmesser consented to the entry of the Order of Permanent Injunction
- Lori H. Cornmesser waived findings of fact and conclusions of law
- Lori H. Cornmesser waived any right to appeal from the Order of Permanent Injunction
- Lori H. Cornmesser and her agents, servants, employees, attorneys, and all persons in active concert or participation with them are permanently restrained and enjoined from violating Section 13(b)(5) of the Securities Exchange Act of 1934
- Lori H. Cornmesser and her agents, servants, employees, attorneys, and all persons in active concert or participation with them are permanently restrained and enjoined from aiding and abetting violations of Exchange Act Rule 13b2-2
- Lori H. Cornmesser and her agents, servants, employees, attorneys, and all persons in active concert or participation with them are permanently restrained and enjoined from knowingly circumventing or failing to implement a system of internal accounting controls
- Lori H. Cornmesser and her agents, servants, employees, attorneys, and all persons in active concert or participation with them are permanently restrained and enjoined from directly or indirectly falsifying any book, record or account
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Extracted body text (140c)
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__________________________________________
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Case 3:06-cv-06384-CRB Document 92-6 Filed 03/24/2008 Page 1 of 4
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION
SECURITIES AND EXCHANGE Case No. C 06-6384 CRB
COMMISSION,
Plaintiff,
v.
ROMULUS S. PEREIRA,
ROBERT B. STANTON,
L. JOHN KERN,
ANDREW D. FELDMAN,
WILLIAM F. McFARLAND,
LORI H. CORNMESSER,
Defendants.
ORDER OF PERMANENT INJUNCTION
AND OTHER RELIEF AGAINST LORI H. CORNMESSER
The Court finds that Plaintiff, Securities and Exchange Commission (“Commission”), has
filed a First Amended Complaint; and Defendant Lori H. Cornmesser has entered a general
appearance, consented to the Court’s jurisdiction over her personally and over the subject matter
of this action, consented to the entry of this Order of Permanent Injunction and Other Relief
against Lori H. Cornmesser (referred to as “Order of Permanent Injunction”) without admitting
or denying the allegations of the First Amended Complaint (except as to jurisdiction), waived
findings of fact and conclusions of law, and waived any right to appeal from this Order of
Permanent Injunction.
I.
IT IS ORDERED, ADJUDGED, AND DECREED that Lori H. Cornmesser and her
agents, servants, employees, attorneys, and all persons in active concert or participation with
them who receive actual notice of this Order of Permanent Injunction by personal service or
Cornmesser Permanent Injunction Case No. C 06-6384
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Case 3:06-cv-06384-CRB Document 92-6 Filed 03/24/2008 Page 2 of 4
otherwise are permanently restrained and enjoined from violating, directly or indirectly, Section
13(b)(5) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78m(b)(5)] and
Rule 13b2-1 [17 C.F.R. § 240.13b2-1] by:
(a) knowingly circumventing or knowingly failing to implement a system of internal
accounting controls, or knowingly falsifying any book, record or account
described in Section 13(b)(2) of the Exchange Act [15 U.S.C. § 78m(b)(2)]; or
(b) directly or indirectly falsifying or causing to be falsified any book, record or
account subject to Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. §
78m(b)(2)(A)].
II.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Lori H. Cornmesser
and her agents, servants, employees, attorneys, and all persons in active concert or participation
with them who receive actual notice of this Order of Permanent Injunction by personal service or
otherwise are permanently restrained and enjoined from aiding and abetting violations of
Exchange Act Rule 13b2-2 [17 C.F.R. § 240.13b2-2] by knowingly providing substantial
assistance to an officer or director that:
(a) directly or indirectly is making or causing to be made a materially false or misleading
statement, or omitting to state or causing another person to omit to state any material
fact, to an accountant in connection with any audit, review or examination of the
financial statements of an issuer or company, or the preparation or filing of any
document or report required to be filed with the Commission; or
(b) directly or indirectly taking any action to coerce, manipulate, mislead, or fraudulently
influence any independent public or certified public accountant engaged in the
performance of an audit or review of financial statements of an issuer that are
required to be filed with the Commission where that person knew or should have
known that such action, if successful, could result in rendering the issuer’s financial
statements materially misleading.
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Cornmesser Permanent Injunction Case No. C 06-6384
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Case 3:06-cv-06384-CRB Document 92-6 Filed 03/24/2008 Page 3 of 4
III.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Lori H. Cornmesser
and her agents, servants, employees, attorneys, and all persons in active concert or participation
with them who receive actual notice of this Order of Permanent Injunction by personal service or
otherwise are permanently restrained and enjoined from aiding and abetting any violation of
Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. § 78m(b)(2)(A)] by knowingly providing
substantial assistance to an issuer that fails to make and keep books, records, and accounts,
which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the issuer.
IV.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Lori H. Cornmesser is
liable for disgorgement of $17,054 (seventeen thousand and fifty-four dollars), representing
profits gained as a result of the conduct alleged in the Complaint, together with prejudgment
interest thereon in the amount of $6,125 (six thousand one hundred twenty-five dollars), for a
total of $23,179 (twenty-three thousand one hundred seventy-nine dollars). The Court is not
ordering Ms. Cornmesser to pay a civil penalty. Lori H. Cornmesser shall satisfy her obligation
by paying a total of $23,179 (twenty-three thousand one hundred seventy-nine dollars) within ten
(10) business days after the date of entry of this Order of Permanent Injunction by certified
check, bank cashier’s check, or United States postal money order payable to the Securities and
Exchange Commission. The payment shall be delivered or mailed to the Office of Financial
Management, Securities and Exchange Commission, Operations Center, 6432 General Green
Way, Mail Stop 0-3, Alexandria, Virginia 22312, together with a cover letter identifying Lori H.
Cornmesser as a defendant in this action, setting forth the title and civil action number of this
action and the name of this Court, and specifying that payment is made pursuant to this Order of
Permanent Injunction. Lori H. Cornmesser shall simultaneously transmit photocopies of such
payment and the transmittal letter to the Securities and Exchange Commission’s attorney in this
action. The Securities and Exchange Commission shall remit the funds paid pursuant to this
paragraph to the United States Treasury.
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Case 3:06-cv-06384-CRB Document 92-6 Filed 03/24/2008 Page 4 of 4
V.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Lori H. Cornmesser
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shall pay post-judgment interest on any delinquent amounts pursuant to 28 U.S.C. § 1961.
VI.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent of Lori
H. Cornmesser is incorporated herein with the same force and effect as if fully set forth herein,
and that Lori H. Cornmesser shall comply with all of the undertakings and agreements set forth
therein.
VII.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain
jurisdiction of this matter for the purposes of enforcing the terms of this Order for Permanent
Injunction and Other Relief.
VIII
There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil
Procedure, the Clerk is ordered to enter a final judgment forth with and without further notice.
Dated: ____________________, 2008
Charles R. Breyer
UNITED STATES DISTRICT JUDGE
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IT IS SO ORDERED
Judge Charles R. Breyer
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Cornmesser Permanent Injunction Case No. C 06-6384