UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 15425 / July 29, 1997
ACCOUNTING AND AUDITING ENFORCEMENT
RELEASE NO. 942 / July 29, 1997
SEC v. MITCHELL A. HAMMER AND JOSEPH LETZELTER, JR., Civil Action No.
97-
6892-CIV-ZLOCH (S.D. Fla. filed July 25, 1997)
On July 25, 1997, the Commission filed a civil injunctive action
against two former employees of Sheffield Industries, Inc., a
bankrupt
manufacturing company which had been based in Miami, Florida. The
Commission's complaint alleges that between June 1991 and January
1993
Mitchell A. Hammer (Hammer), Sheffield's former CEO, and Joseph
Letzelter,
Jr. (Letzelter), Sheffield's former controller, perpetrated a massive
fraud
on Sheffield's investors by maintaining two sets of books and by
filing
materially false financial reports with the Commission on Sheffield's
behalf. The complaint seeks permanent injunctive relief and officer
and
director bars against both defendants.
The complaint alleges that six of Sheffield's SEC filings, which
Hammer signed, overstated accounts receivable and inventory by as much
as
40%, and falsely stated that Sheffield had complied with a critical
loan
covenant from a principal lender when, in fact, it was in default
thereunder. Hammer, with Letzelter's assistance, orchestrated the
scheme
by causing Sheffield to keep two sets of books and records: a secret
set
which accurately reflected the company's deteriorating financial
condition,
and a public set which fraudulently overstated the company's
financial
condition. Thus, the complaint alleges that Sheffield, through
SNIPPETS:
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
On July 25, 1997, the Commission filed a civil injunctive action against two former employees
Mitchell A. Hammer, Sheffield's former CEO, and Joseph Letzelter, Jr.
, Sheffield's former controller, perpetrated a massive fraud on Sheffield's investors by
The complaint seeks permanent injunctive relief and officer and director bars against both
The complaint alleges that six of Sheffield's SEC filings, which Hammer signed, overstated
Hammer, with Letzelter's assistance, orchestrated the scheme by causing Sheffield to keep two
Thus, the complaint alleges that Sheffield, through Hammer, Letzelter and others, failed to
to be approximately $36 million, with anticipated net profits of approximately $.75 per share
Sheffield was not named in the complaint because it had recently liquidated under Chapter 7
(Exchange Act)
and Rules 10b-5 and 13b2-1 thereunder, and as a control person, of Sections 13and 13of the
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