U.S. SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 18081 / April 10, 2003
ACCOUNTING AUDITING ENFORCEMENT RELEASE NO. 1757 / April 10, 2003
SEC v. JOSHUA C. CANTOR, Civil Action No. 03 CV 2488 (LMM) (S.D.N.Y.
April 10, 2003)
SEC FILES SETTLED FINANCIAL FRAUD
AND FOREIGN CORRUPT PRACTICES ACT ACTION AGAINST
JOSHUA C. CANTOR, FORMER OFFICER OF AMERICAN BANKNOTE CORPORATION AND
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
The Securities and Exchange Commission today filed a settled civil
injunctive action in the United States District Court for the Southern
District of New York against Joshua C. Cantor, a former president and
director of American Bank Note Holographics, Inc. ("ABNH"), and a
former executive vice president of ABNH's parent, American Banknote
Corporation ("ABN").
The Complaint against Cantor alleges that, from fiscal year 1996
through fiscal year 1998, Cantor participated in a systematic
fraudulent scheme to inflate the revenues and net income of ABN and
ABNH, in order to meet earnings forecasts and to condition the market
for an initial public offering of stock by ABNH. During the period of
the alleged fraud, ABN was a publicly held holding company located in
New York, New York, which, through its subsidiaries, provided, among
other things, stored-value telephone cards, magnetic-strip transaction
cards, printed business forms, and checks. ABNH, located in Elmsford,
New York, was, during the same period, engaged in the origination,
production, and marketing of mass-produced secure holograms. ABNH was
a wholly owned subsidiary of ABN until its initial public offering in
July 1998.
The Complaint alleges that
* During the third and fourth quarters of fiscal year 1996, Cantor
caused ABNH improperly to recognize revenue totaling approximately
$645,000 on consignment sales. In addition, on or about January
30, 1997, Cantor caused ABNH to accrue approximately $635,000 in
revenue for fiscal year 1996 on two fraudulent "bill and hold"
sales and caused ABNH to accrue $800,000 in fraudulent revenue for
research and development ("R&D") work.
* To convince ABN's auditors that the 1996 fiscal year end "bill and
hold" and R&D transactions were proper, Cantor secured false audit
confirmations from the customers.
* In fiscal year 1997, Cantor caused ABNH improperly to recognize
revenue of over $1.8 million on consignment sales and to recognize
SNIPPETS:
U.S. SECURITIES AND EXCHANGE COMMISSION
SEC v. JOSHUA C. CANTOR, Civil Action No. 03 CV 2488 (S.D.N.Y.
AND FOREIGN CORRUPT PRACTICES ACT ACTION AGAINST JOSHUA C. CANTOR, FORMER OFFICER OF AMERICAN
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
The Securities and Exchange Commission today filed a settled civil injunctive action in the
The Complaint against Cantor alleges that, from fiscal year 1996 through fiscal year 1998,
During the period of the alleged fraud, ABN was a publicly held holding company located in
The Complaint alleges that * During the third and fourth quarters of fiscal year 1996, Cantor
In addition, on or about January 30, 1997, Cantor caused ABNH to accrue approximately
* To convince ABN's auditors that the 1996 fiscal year end "bill and hold" and R&D
* In fiscal year 1997, Cantor caused ABNH improperly to recognize revenue of over $1.8
* In addition, in December 1997, Cantor caused ABNH to fraudulently recognize approximately
Cantor, without admitting or denying the allegations in the Commission's Complaint, consented
of 1934, and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1, and 13b2-2.
Cantor consented to a ten year prohibition from acting as an officer or director of a public
The Commission had earlier named Cantor as a defendant in a civil injunctive action,, that
The Commission's investigation that led to this action was conducted in cooperation with the
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