SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16308 / September 28, 1999
ACCOUNTING AND AUDITING ENFORCEMENT
RELEASE NO. 1185
SECURITIES AND EXCHANGE COMMISSION v. DAVID E. STEVENSON AND MARK A.
STEVENSON, Civil Action No. 99-CV-1470 DWF/AJB (D. Minn.)
IN THE MATTER OF PAUL THOMAS FINK, C.P.A,
Administrative Proceeding File No. 3-10045
SEC FILES FRAUD CHARGES AGAINST
FOUNDER OF PHOTRAN CORP. AND OTHERS
On September 27, 1999, the Securities and Exchange Commission filed a
complaint in the United States District Court for the District of
Minnesota against David E. Stevenson, the founder and former
president, CEO and chairman of the board of directors of Photran Corp.
Before it filed for Chapter 7 bankruptcy protection on May 3, 1999,
Photran was headquartered in Lakeville, Minnesota and manufactured
high-performance, film-coated glass. The Commission alleges that David
Stevenson violated the antifraud, books and records, and internal
accounting control provisions of the federal securities laws. The
complaint also alleges that David Stevenson's brother, Mark Stevenson,
aided and abetted David Stevenson's violations of the antifraud
provisions.
The Commission alleges that, beginning in December 1995, David
Stevenson devised a fraudulent scheme to overstate Photran's revenues
and earnings by recording fictitious sales and prematurely recognizing
revenue. This scheme allowed Photran to report a profit for the first
time in its existence and just prior to its initial public offering.
Specifically, the complaint alleges that in December 1995, David and
Mark Stevenson used Photran's own funds as the purported payment for a
fictitious glass sale. Using a network of sham companies created by
his brother, David Stevenson caused over a million dollars to be wired
from Photran accounts purportedly to purchase equipment. In reality,
only $18,000 was spent to purchase a used piece of equipment while
$951,000 was wired back from the sham company accounts to Photran as
payment for glass that was never sold. According to the complaint,
Mark Stevenson also converted over $55,000 of Photran's funds for his
personal benefit.
The complaint further alleges that David Stevenson fabricated invoices
and shipping documents to support additional fictitious sales during
1996. He also directed Photran employees to record unshipped and
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION v. DAVID E. STEVENSON AND MARK A. STEVENSON, Civil Action
SEC FILES FRAUD CHARGES AGAINST FOUNDER OF PHOTRAN CORP.
Before it filed for Chapter 7 bankruptcy protection on May 3, 1999, Photran was headquartered
The Commission alleges that David Stevenson violated the antifraud, books and records, and
The complaint also alleges that David Stevenson's brother, Mark Stevenson, aided and abetted
The Commission alleges that, beginning in December 1995, David Stevenson devised a fraudulent
Specifically, the complaint alleges that in December 1995, David and Mark Stevenson used
Using a network of sham companies created by his brother, David Stevenson caused over a
According to the complaint, this conduct caused Photran to report a profit in its initial
David Stevenson also agreed to an order prohibiting him from serving as an officer and
In addition, David Stevenson agreed to settle an anticipated administrative proceeding
Mark Stevenson also settled the Commission's charges, agreeing to a judgment which
On September 28, 1999, the Commission also instituted public administrative proceedings
In addition, the Order also alleges that on at least one occasion, Fink personally
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