Advertisement
YOU ARE HERE: LAT HomeCollectionsExecutives

Markets

Ex-Aura Executives Reach Deal With SEC

June 12, 2002|E. SCOTT RECKARD | TIMES STAFF WRITER

Settling charges they overstated sales by tens of millions of dollars, former top executives of Aura Systems Inc. have agreed to pay fines and be barred from running public companies, the Securities and Exchange Commission said Tuesday.

Concluding an accounting fraud investigation begun in 1999, an SEC lawsuit in Los Angeles federal court accused El Segundo-based Aura of reporting $26.5 million in fictitious sales in 1997 and 1998, and booking $2.5 million in contract revenue in 1997 that it earned and booked in earlier periods.

The SEC also alleged that NewCom Inc. of Westlake Village, majority owned by Aura, falsified its balance sheet by at least $43.2 million in 1998 and 1999 by booking fictitious sales, prematurely recognizing revenue and overstating receivables and inventory.

In a 16-year history, Aura has sold products including loudspeakers, vibrating vests for video games and emergency generators powered by pickup trucks.

But the company remained unprofitable despite raising $120 million in the public markets. It lost $54.5 million on sales of $11.4 million over the last three years.

"This was a truly egregious case," said Cheryl Scarboro, the SEC's assistant director of enforcement, referring to the accusations of fabricating revenue.

The defendants settled the charges without admitting or denying guilt.

Former Aura Chief Executive Zvi "Harry" Kurtzman was barred for life from being an officer or director of a public company and fined $75,000. Citing a cease and desist order it reached in 1996 with Kurtzman, the SEC said it had pursued him as a "recidivist" violator of anti-fraud laws. His attorney, Susan Swingle, declined to comment.

Former Aura and NewCom Chief Financial Officer Steven C. Veen was fined $50,000, and was barred for five years from serving as an officer or director of a public company, or practicing as an accountant before the SEC. His lawyer didn't return a phone call.

Aura Systems, NewCom, Veen and Kurtzman also agreed to permanent injunctions against future acts of securities fraud, as did former NewCom President Sultan Khan and Executive Vice President Asif Khan. The Khans' lawyer didn't return a call.

The SEC also issued cease and desist orders against Korea Data Systems Inc. of Garden Grove and its officers John Hui and Ben Wong, who were accused of allowing Aura to report falsely that it had bought and resold KDS computer monitors. KDS was fined $25,000; its attorney declined to comment.

Former Aura President Gerald S. Papazian, who wasn't a defendant in the lawsuit, separately agreed to pay a $25,000 fine and not to violate securities laws. His attorney couldn't be reached for comment.

Shares of Aura rose a penny to 15 cents a share in OTC Bulletin Board trading.

Advertisement
Los Angeles Times Articles
|
|
|