"Part 11" of 8K
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HUTTOE TRIES TO PREVENT DISCOVERY OF HIS ILLEGAL SCHEME
HUTTOE LIES TO SOE'S INDEPENDENT AUDITORS,
PRESENTING THEM WITH FALSE AND MISLEADING DOCUMENTS
41. On July 2, 1996, SOE engaged the accounting firm of Weinberg,
Pershes & Co. (WPC) to conduct an audit of SOE's financial statements for its
fiscal year ended February 28, 1996.
42. During the audit, Huttoe, knowingly or recklessly, provided
the auditors with materially false and misleading documents and information,
including false S-8 registration statements, and withheld requested material
information.
a. The S-8 registration statements falsely represented
that the stock recipients were consultants of SOE, and had performed services
for the company, when in fact, they were not consultants, and had provided no
services sufficient to qualify the registration as an S-8.
b. The S-8 registration statements falsely represent
that they had been filed with the Commission, when in fact they had not.
c. SOE and Huttoe failed to respond to the auditors'
letters requesting further information regarding SOE's apparent violations of
laws in connection with the distribution of SOE stock.
HUTTOE PREPARES FORGED AND FRAUDULENT DOCUMENTS
AND FILES THEM WITH THE COMMISSION
43. On or about September 20, 1996, SOE's independent auditors,
WPC, began questioning SOE and Huttoe, pursuant to Section 10A of the Exchange
Act [15 U.S.C. Section 78j-1], about SOE's possibly illegal activities in
connection with the massive
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distribution of the shares purportedly registered on Forms S-8.
44. In response, Huttoe expanded his cover-up scheme to create the
impression that the previously issued stock was properly registered on Forms
S-8.
45. Over the weekend of September 21 and 22, 1996, Huttoe, along
with the Corporate Secretary working under his direction, fabricated a series
of "consulting agreements" for filing as exhibits to a new series of Forms S-8
to be filed with the Commission.
46. The "consulting agreements" described fictitious services
purportedly provided to SOE by Huttoe's nominees and SOE investors and bore
fictitious agreement dates. In fact, no such services were provided.
47. Some of these "consulting agreements" contained fictitious
"lock up" terms, pursuant to which the recipients agreed not to sell the
securities purportedly granted pursuant to the agreement until a fixed period
of time had elapsed. In certain cases, the securities purportedly subject to
the "lock up" had already been disposed of by the time the agreement was
created.
48. Huttoe procured forged signatures for the purported
consultants on the "consulting agreements."
49. Huttoe directed that the bogus agreements, bearing the forged
signatures, be made exhibits to 16 Registration Statements on Form S-8, knowing
that they were to be filed with the United States Securities and Exchange
Commission, as they were, on or about September 24, 1996.
50. Those Registration Statements purported to register a total of |
