SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
LITIGATION RELEASE NO. 17951 / January 27, 2003
ACCOUNTING AND AUDITING ENFORCEMENT RELEASE NO. 1704 / January 27,
2003
SECURITIES AND EXCHANGE COMMISSION v. SOLUCORP INDUSTRIES LTD., ET
AL., 99 Civ. 11965 (S.D.N.Y.) (WCC)
FORMER AUDITOR OF SOLUCORP INDUSTRIES LTD.'S
FINANCIAL STATEMENTS IS ENJOINED
Former Auditor Barred From Appearing or Practicing
Before the Commission For Two Years
On January 16, 2003, the Commission obtained a final judgment against
Glenn R. Ohlhauser, a Canadian Chartered Accountant and former
engagement partner on audits of the financial statements of Solucorp
Industries Ltd., a Yukon Territory corporation headquartered in West
Nyack, New York that engages in environmental remediation. The United
States District Court for the Southern District of New York entered
the final judgment against Ohlhauser. The judgment permanently enjoins
Ohlhauser from violating Section 10A of the Securities Exchange Act of
1934 by, among other things, failing to take the steps required by
that section on detecting or otherwise becoming aware of information,
during the course of auditing a public company, that an illegal act
has or may have occurred. Without admitting or denying the
Commission's allegations against him, Ohlhauser consented to the entry
of the final judgment.
The Commission's complaint in this case, which was filed in December
1999 and amended in October 2000 and September 2001, charged Ohlhauser
with failing to take appropriate action on discovering possible
illegal conduct during an audit of Solucorp's December 31, 1997
financial statements. The Complaint, which also names Solucorp and
certain of its current and former officers and directors as
defendants, alleges that Solucorp's management backdated a license
agreement in order to cover-up Solucorp's improper recognition during
the quarter ended September 30, 1997 of $500,000 in license fees, or
40% of its revenues, and to materially overstate revenues for the
six-month reporting period ended December 31, 1997. ( ) The Complaint
further alleges that, on being presented during the audit with the
final license agreement, Ohlhauser reasonably concluded that the
agreement appeared to have been backdated for improper accounting
purposes. He allegedly failed, however, to take the appropriate steps
under Section 10A to determine, in accordance with generally accepted
auditing standards, the likelihood that an illegal act had occurred,
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION v. SOLUCORP INDUSTRIES LTD., ET AL., 99 Civ.
FINANCIAL STATEMENTS IS ENJOINED
Former Auditor Barred From Appearing or Practicing
On January 16, 2003, the Commission obtained a final judgment against Glenn R. Ohlhauser, a
The United States District Court for the Southern District of New York entered the final
The judgment permanently enjoins Ohlhauser from violating Section 10A of the Securities
The Commission's complaint in this case, which was filed in December 1999 and amended in
The Complaint, which also names Solucorp and certain of its current and former officers and
The Complaint further alleges that, on being presented during the audit with the final
He allegedly failed, however, to take the appropriate steps under Section 10A to determine,
The illegal acts at issue here included the commission of fraud by Solucorp's president, who
In a related proceeding, the Commission today issued an administrative order pursuant to Rule
This is based on Ohlhauser's failure to exercise professional skepticism and to gather
Ohlhauser, who admits to the Commission's finding that a final judgment was entered against
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