To: Bruce Hoyt who wrote (2766)
From: AustinPowersIII Saturday, Jun 24, 2000 2:35 PM ET
Reply # of 2777
DCI Telecommunications, CEO Murphy Accused of Accounting Fraud
New York, June 23 (Bloomberg) -- DCI Telecommunications Inc. ``cooked its books'' in an effort to deceive investors, the U.S. Securities and Exchange Commission claims in a lawsuit against the company, its chief executive and its chief financial officer.
The SEC contends the Stratford, Connecticut-based company grossly overvalued a purported $15 million contract and used improper accounting methods in reporting seven acquisitions.
The suit filed today asks the U.S. District Court in New York to order CEO Joseph J. Murphy, 61, and CFO Russell Hintz, 55, to disgorge their illegal profits and to bar Murphy from serving as an officer or director of a publicly traded company.
DCI duped investors into believing it was a ``vibrant, high- growth telecommunications company when, in truth, it consisted of several poorly performing'' subsidiaries, including a travel agency, two small computer businesses and two prepaid phone card companies, the SEC says.
A telephone call to the company was not immediately returned. DCI stock rose 1/8 to 5/16 in afternoon trading. It traded at 3 9/16 in March 1999.
DCI's primary business since going public in 1994 has been acquiring small, privately held companies in stock-for-stock transactions.
According to the suit, Murphy and Hintz, both accountants, failed to use generally accepted accounting principles when reporting the company's major acquisitions. As a result, the pair were able to overstate DCI's value in financial statements and fraudulently raise $9 million in private placements.
The SEC says DCI also issued a series of false press releases that hyped its stock, including one in July 1998 that claimed ``record breaking quarterly sales.''
The suit also names Murphy's wife, Grace Murphy, as a defendant, claiming she used more than $500,000 in corporate funds to pay for personal expenses. |
