 |
 |
|
|
|
|
|
|
|
| | | |
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1
.
SEC LITIGATION RELEASE
|
EXTRACTED KEY WORDS
JUDGEMENT SECURITIES JUDGMENT PERMANENTLY ENJOINS JOHNSON FINANCIAL STATEMENTS EXCHANGE ACCOUNTING COURT MERL HOLDINGS DISTRICT JERSEY VIOLATING ANTI-FRAUD PROVISIONS FEDERAL SECURITIES LAWS COMPLAINT FRAUDULENT SCHEME IRREGULARITIES ACT REGISTRATION STATEMENTS FINANCIAL HEALTH ISSUING FALSE PRESS FINANCIAL CONDITION AVOIDING LOSSES SELLING MERL STOCK POSSESSION MATERIAL NONPUBLIC INFORMATION SECURITIES LAWS PURSUANT THEREUNDER PENDING |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 18085 / April 14, 2003
Accounting and Auditing Enforcement
Release No. 1758 / April 14, 2003
, Civil Action No. 02-5490 (D.N.J.)(GEB)
COURT ENTERS FINAL JUDGMENT AGAINST MERL HOLDINGS INC.COM
On April 3, 2003, the Honorable Garrett E. Brown, Jr. of the U.S.
District Court for the District of New Jersey entered a final judgment
of permanent injunction ("Final Judgment") against New Jersey-based
MERL Holdings Inc.com ("MERL"). The Final Judgment permanently enjoins
MERL from violating the anti-fraud provisions of the federal
securities laws. MERL, without admitting or denying the allegations
against it contained in the Commission's complaint, consented to the
entry of the Final Judgment. According to the complaint, which was
filed on November 18, 2002, MERL and its chairman, president and CEO,
Ed Johnson, orchestrated a fraudulent scheme in which (1) MERL
artificially inflated the value of certain assets recorded in its
financial statements; (2) MERL improperly consolidated a purported
subsidiary in its 1997 and 1998 financial statements; (3) MERL filed
two registration statements which contained Management's Discussion
and Analysis sections that materially mischaracterized the financial
health of the company; (4) MERL compounded its financial
irregularities by issuing false press releases, which materially
misrepresented the financial condition of the company; and (5) Johnson
benefited from his fraudulent scheme by avoiding losses or becoming
unjustly enriched by selling MERL stock while in possession of
material nonpublic information concerning these accounting
irregularities.
The Court's Final Judgment permanently enjoins MERL from violating the
anti-fraud provisions of the federal securities laws pursuant to
Section 17(a) of the Securities Act of 1933 (15 U.S.C. §77q(a));
Section 10(b) of the Securities Exchange Act of 1934 (15 U.S.C.
§78j(b)) and Rule 10b-5 thereunder (17 C.F.R. §240.10b-5).
The Commission's case against Johnson is pending. See (November 18,
2002).
_________________________________________________________________
Modified 04/14/2003
SNIPPETS:
|
|
|
| | | |
|
|
