Post by Sapphire Capital on Jul 18, 2008 5:51:32 GMT 4
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20647 / July 17, 2008
Accounting and Auditing Enforcement Release No. 2846 / July 17, 2008
SEC v. Kenneth W. Hawk, Michael J. Delargy, and Thomas R. De Jong, Civil Action No. 3:05-CV-0172-LRH-VPC (D. Nev. March 24, 2005)
Former iGo Corporation Officers Are Enjoined and Agree to Pay Civil Penalties
Between June 9, 2008 and July 15, 2008, the United States District Court for the District of Nevada entered final judgments in a financial fraud action brought by the Securities and Exchange Commission against Kenneth W. Hawk, the founder and former Chief Executive Officer, President, and Chairman of iGo Corporation; Michael J. Delargy, iGo's former Chief Financial Officer and Chief Operating Officer; and Thomas R. de Jong, iGo's former Senior Vice President of Sales, respectively. Hawk, Delargy, and de Jong each consented to a final judgment without admitting or denying the allegations in the Commission's complaint. These settlements conclude the Commission's enforcement action regarding iGo.
The court permanently enjoined the three former iGo executives from violating the antifraud, books and records, and false statements to auditors provisions of the federal securities laws. The final judgments bar Hawk and de Jong from acting as officers and directors of any public company for five years and bar Delargy from acting as an officer or director for three years. In addition, Hawk will pay a $75,000 civil penalty, de Jong will pay a $55,000 civil penalty, and Delargy will pay a $50,000 civil penalty. As part of the settlement, Delargy also consented to the issuance of an administrative order suspending him from appearing or practicing before the Commission as an accountant, with a right to apply for reinstatement after three years.
iGo, a former Reno, Nevada manufacturer and distributor of parts and accessories for mobile technology, was acquired by Mobility Electronics, Inc. on September 4, 2002, and no longer is a public company. The Commission's March 24, 2005, complaint alleged that Hawk, Delargy, and de Jong knowingly or recklessly caused iGo to engage in fraudulent sales practices that resulted in the company materially overstating its revenue, and understating its losses, in fiscal years 1999 and 2000.
The Commission's complaint alleges:
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Hawk and Delargy knowingly or recklessly caused iGo to materially overstate its fourth quarter 1999 revenue by approximately $912,100, or 12.9%.
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Hawk, Delargy, and de Jong knowingly or recklessly caused iGo to materially overstate its third quarter 2000 revenue by approximately $688,000 or 6.6%.
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Hawk, Delargy, and de Jong knowingly or recklessly caused iGo to improperly recognize approximately $1.18 million in revenue in the fourth quarter of 2000 and, as a result, iGo overstated its fourth quarter 2000 revenue in an earnings release by approximately 9.8%.
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Hawk, Delargy, and de Jong knowingly circumvented or knowingly failed to implement a system of internal accounting controls; knowingly falsified iGo's books and records; made or caused to be made materially false or misleading statements or omissions of material fact to iGo's independent auditor; and aided and abetted iGo's violations of the reporting, internal controls, and books and records provisions of the Securities Exchange Act of 1934 (the "Exchange Act").
Specifically, in addition to the officer and director bars and the civil penalties, the judgments entered by the court enjoin Hawk, Delargy, and de Jong from violating Sections 10(b) and 13(b)(5) of the Exchange Act and Exchange Act Rules 10b-5, 13b2-1 and 13b2-2, as well as from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1 and 13a-13. Hawk's judgment also enjoins him from controlling any person who violates Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 10b-5, 12b-20, 13a-1 and 13a-13.
In related proceedings, on July 17, 2008, the Commission instituted settled administrative proceedings against Delargy, suspending him from appearing as an accountant before the Commission, with a right to apply for reinstatement after three years.