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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
PACE AMERICAN COMMISSION SURETY BONDS ALLEGES SECURITIES COMPLAINT EXCHANGE COMMISSION VIOLATIONS FINANCIAL STATEMENTS ACCOUNTS BOOKS DISCLOSE TRANSACTIONS CAUSED PACE AMERICAN DEBT AUDITOR PUBLICLY-HELD INSURANCE COMMON STOCK REPORTS PAYMENTS SURETY BOND AGENCY ASSERTS EQUITY INVESTORS LOSS RESERVES CONNECTION AUDIT EXPENSES |
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 15129 \ October 21, 1996
Accounting and Auditing Enforcement
Release No. 845 / October 21, 1996
Securities and Exchange Commission v. Don Haywood Pace
(Civ. No. 96-2416) (USDC/DC)
On October 21, 1996, the Securities and Exchange Commission
filed a civil lawsuit against Don Haywood Pace in the United
States District Court for the District of Columbia alleging
violations of the antifraud, proxy, books and records and
beneficial ownership provisions of the federal securities laws.
The Commission is seeking an injunction from future violations, a
bar from serving as an officer or director of a publicly-held
company, disgorgement of ill-gotten gains and civil penalties.
Don Pace is former chief executive officer and director of Pace
American Group, Inc., a holding company that wrote surety bonds
and insurance products through wholly-owned subsidiaries. Don
Pace co-founded Pace American in 1988 and helped to take it
public in 1992 through an offering of common stock which raised
over $18 million.
The Commission s complaint alleges that Don Pace committed
antifraud violations by failing to disclose in Pace American s
annual reports, proxy materials and registration statements filed
with the Commission that he received over $480,000 in related
party transactions. The transactions allegedly involved his
undisclosed receipt between 1990 and 1994 of over $450,000 in
commission payments made by Pace American to Commercial Surety
Bond Agency, a Pace American surety bond agency owned by Ralph
Eidem, and of a portion of payments which Pace American surety
bond holders made to shell corporations which he helped to
establish and had an undisclosed interest.
The Commission s complaint also asserts that Don Pace
committed financial fraud by causing Pace American to issue
consolidated financial statements which failed to disclose that
he caused Pace American to convert an equity interest made by
certain investors into a debt which Don Pace obligated Pace
American to repay. Don Pace also caused Pace American to
understate the company's loss reserves on surety bonds
outstanding at year-end 1992.
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