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SEC ADMINISTRATIVE PROCEEDING
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EXTRACTED KEY WORDS
COMMISSION ENFORCEMENT ALLEGES BUTCHER FINANCIAL STATEMENTS EXCHANGE ADMINISTRATIVE PROCEEDING AUDITOR CASH STOCK SECURITIES ACCOUNTING AUDITING WASHINGTON SOFTWARE PROGRAM ABILITY SUBSTANTIAL CASH PAYMENTS WORTH MOREOVER SEPARATE TRANSACTION ACCORDING AUDIT DESPITE ASSET APPLICABLE AUDITING STANDARDS ACCEPTED ACCOUNTING PRINCIPLES ADMINISTRATIVE LAW JUDGE ALLEGATIONS REMEDIAL ACTIONS SANCTIONS |
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 43359 / September 27, 2000
ACCOUNTING AND AUDITING ENFORCEMENT
Release No 1315 / September 27, 2000
ADMINISTRATIVE PROCEEDING
File No. 3-10313
SEC CHARGES SEATTLE SOFTWARE FIRM WITH FRAUD, FILES RULE 102(e)
PROCEEDINGS AGAINST AUDITOR.
The Commission announced today that it has instituted cease-and-desist
proceedings against YourBankOnline.com, of Mountlake Terrace,
Washington ("YourBankOnline" or the "Company"), and its president,
Pakie Plastino. The Commission also instituted administrative
proceedings under Rule 102(e) against YourBankOnline's outside
auditor, William L. Butcher, of Everett, Washington.
The Division of Enforcement alleges that in a March 1999 press
release, YourBankOnline - then known as Consolidated Data, Inc. -
claimed to have purchased the rights to an Internet banking software
program for $10 million in cash and stock. This press release, which
was followed by additional Company statements touting the software
program, caused YourBankOnline's stock price to jump from less than $1
to $32 over a two-week period.
The Division of Enforcement alleges that the March 1999 press release
greatly overstated the value of the software and misrepresented
YourBankOnline's financial strength. YourBankOnline, which had less
than $200 in cash at the time, had no ability to make any substantial
cash payments to acquire the software. In addition, the Company stock
that YourBankOnline exchanged for the software was worth far less than
$10 million. Moreover, the $10 million value was unreasonable in light
of the fact that the same software had been purchased for
approximately $400,000 in a separate transaction just a few months
earlier.
The Division of Enforcement alleges that YourBankOnline also
fraudulently inflated the value of the software in financial
statements filed with the Commission in August 1999. Further,
according to the Order, Butcher, the Company' outside auditor, engaged
in improper professional conduct in his audit of those financial
statements. Butcher failed to take reasonable steps to determine the
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