SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 17156 / September 27, 2001

Accounting and Auditing Enforcement Release No. 1458

SEC v. Holden, Skooglund, Padda, and Beal (U.S.D.C. N.D. Illinois, Civil
Action No. 01-C-7463, filed September 27, 2001)

   The Commission announced the filing on September 27, 2001 of a
   complaint charging four executives of a Chicago-area company with a
   multi-million dollar accounting fraud. The defendants are Stephen L.
   Holden, of Deerfield, Illinois, Scott P. Skooglund, of Woodridge,
   Illinois, Kuldarshan S. Padda, of Chicago, Illinois, and Stephan C.
   Beal, of Norwell, Massachusetts. All four were formerly executives of
   Sabratek Corporation, a Skokie, Illinois developer and seller of
   remote healthcare equipment, including infusion pumps and flush
   syringes and related equipment and software used in both hospital and
   home healthcare situations.

   The Commission's complaint alleges that the defendants engaged in a
   scheme to overstate Sabratek's sales and results of operation in its
   Form 10-K for the year 1998 and Forms 10-Q for the first three
   quarters of 1998 and the first quarter of 1999. During those years,
   Padda was Sabratek's chief executive officer and chairman of the
   board; Holden was at first Sabratek's chief financial officer,
   controller, and treasurer and then later its president and treasurer;
   Beal was Sabratek's vice president of sales; and Skooglund was
   Sabratek's vice president of finance and chief accounting officer.

   According to the Commission's complaint, Sabratek's pump and flush
   syringe businesses were the company's two primary sources of sales.
   Prior to 1998, Sabratek capitalized on strong demand for pumps from
   large institutional customers to increase its sales. In 1998, however,
   Sabratek faced first slowing demand for its pumps and later an FDA
   demand that the company stop selling its flush syringes. The
   Commission alleges that despite these adverse developments, Padda and
   Holden told analysts that Sabratek's sales would continue to grow in
   1998. Based on Padda and Holden's representations, analysts projected
   that Sabratek's net sales would grow by as much as $23 million in
   1998.

   The Commission charges that to meet these forecasts, from the first
   quarter of 1998 through the first quarter of 1999, the defendants
   recognized numerous large, end-of-the-quarter transactions that did
   not qualify as sales under Generally Accepted Accounting Principles
   ("GAAP"). In some instances, the defendants allegedly created
   fictitious sales of pumps that had not been ordered by customers, but