SEC SETTLES FRAUD CASE AGAINST MICHAEL BAER
The Commission today announced that on December 15 the United States
District Court for the District of Oregon permanently enjoined Michael
T. Baer from committing securities fraud, barred him from serving as an
officer or director of a public company, and ordered him to disgorge
$1.4 million in ill-gotten gains, including prejudgment interest, but
waived payment of all such disgorgement and prejudgment interest, and
did not impose a civil penalty, based on his demonstrated financial
condition. SEC v. Michael T. Baer, CV 99-1361 BR (D. Ore. December 15,
2000)
In its complaint, filed September 27, 1999, the Commission alleged,
among other things, that Baer, as president, chief executive officer and
chairman of Itex from July 1990 until his resignation in August 1996,
knowingly or recklessly participated in the material overstatement of
Itex's assets, revenues and earnings in its financial statements, and
failed to disclose numerous barter deals between Itex and various
related parties. The complaint also alleged that Baer knowingly
circumvented and failed to implement internal accounting controls and
made materially false and misleading statements and omissions to Itex's
auditors. In addition, the complaint alleged that Baer failed to
properly report his beneficial ownership of more than 5% of Itex's
common stock. The complaint alleged that Baer's conduct was part of a
larger scheme in which defendant Terry Neal, Itex's founder and control
person, orchestrated and implemented a broad-ranging fraudulent scheme
to make materially false and misleading disclosures about the company's
business and to conceal numerous suspect and in many cases sham barter
deals between Itex and various mysterious offshore entities related to
or controlled by Neal.
Baer consented, without admitting or denying the Commission's
allegations, to the entry of a final judgment permanently enjoining him
from violating the antifraud, internal accounting controls,
recordkeeping, and securities reporting provisions of the federal
securities laws (Section 17(a) of the Securities Act, Sections 10(b),
13(b)(5), and 13(d) of the Exchange Act and Rules 10b-5, 13b2-1, 13b2-2,
13d-1, and 13d-3 thereunder) and barring him from serving as an officer
or director of a public company. The judgment also orders Baer to pay
$1.4 million in disgorgement and prejudgment interest, but waives
payment of such disgorgement and prejudgment interest, and does not
assess a civil penalty, based on his financial condition.
With the entry of this judgment, all six defendants in this proceeding
have settled with the Commission.
For further information, see LR-16305 (announcing complaint), LR-16430
(settlement with Joseph Morris), LR-16437 (settlement with Itex), LR-
16536 (settlements with Graham Norris and Cynthia Pfaltzgraff); and LR-
16708 (settlement with Terry Neal). All of these releases are
available at the Commission's website at
sec.gov. [SEC v. Itex Corporation, Terry
L. Neal, Michael T. Baer, Graham H. Norris, Cynthia Pfaltzgraff and
Joseph M. Morris, CV 99-1361, BR, D. Ore.] (LR-16841; AAE Rel. 1357)
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