U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 18104 / April 24, 2003

Accounting and Auditing Enforcement Release No. 1763 / April 24, 2003

SEC Sues Former Top Officers, Directors and Auditors of Chancellor
Corporation for Financial Fraud

(United States District Court for the District of Massachusetts C.A. No.
03-10762 MEL)

   The Securities and Exchange Commission today charged Chancellor
   Corporation, a Boston MA transportation equipment company, four of the
   company's former senior officers, a former outside director, the
   company's audit firm and the audit firm's engagement partner with
   securities fraud. The action, filed in federal court in Boston,
   alleges that from 1998 through 2001, Brian Adley, Chancellor's former
   Chairman, CEO and controlling shareholder, orchestrated a scheme to
   inflate Chancellor's reported assets, revenue and profits using
   fabricated documents and fraudulent accounting. Former officers of the
   company named as defendants in the civil suit were Chancellor's former
   President and Chief Operating Officer, Franklyn E. Churchill, its
   former acting Chief Financial Officer and consultant, David C. Volpe,
   and Jonathan Ezrin, who variously served as the company's Principal
   Accounting Officer, Corporate Treasurer and Controller. Also named as
   defendants were a former director of the company, Rudolph Peselman,
   BKR Metcalf Davis, an Atlanta GA accounting firm that served as
   Chancellor's auditors from 1999 to 2001, and Gregory Davis, a partner
   and CPA at the firm. Simultaneously with the filing of the
   Commission's civil action, Chancellor Corporation, Volpe and Ezrin
   entered settlements with the Commission. The Commission also
   instituted and simultaneously settled administrative cease and desist
   proceedings against Michael Marchese, a second outside director of
   Chancellor, and against David Decker, a member of the audit team who
   performed the year-end audit for Chancellor's 1998 results, and
   Theodore Fricke, who served as the concurring partner for the audit.

   The Commission charges that Adley caused Chancellor to file false
   financial statements in 1999 and 2000 by directing the wholesale
   fabrication of corporate documents, by instructing that the fabricated
   documents be given to the company's auditors, and by coordinating the
   filing of false financial statements with the Commission. Former
   officers Churchill, Volpe and Ezrin allegedly participated in the
   scheme by assisting with the preparation of, and in some instances
   signing, false, fabricated or misleading financial documents.
   According to the suit, Peselman, a member of the Board of Director's
   Audit Committee from June 1999 to October 2001, violated antifraud