U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22095 / September 16, 2011
Accounting and Auditing Enforcement Release No. 3321 / September 16, 2011
Securities and Exchange Commission v. Escala Group, Inc., Gregory Manning, and Larry Lee Crawford, CPA, Civil Action No. 09 CV 2646 (S.D.N.Y., September 9, 2011)
SEC Settles Disclosure and Accounting Fraud Charges Against Escala Group, Inc.’s Former CFO, Larry Lee Crawford, CPA.
The Securities and Exchange Commission announced that on September 9, 2011, the Honorable Denise Cote of the United States District Court for the Southern District of New York entered a Final Judgment against the former CFO of Escala Group, Inc., Larry Lee Crawford (“Crawford”), 63, who was charged with former CEO and founder of Escala Group, Inc., Gregory Manning (“Manning”), along with Escala Group, Inc. (“Escala”), with disclosure and accounting fraud violations concerning related party transactions between Escala and its parent company, Afinsa Bienes Tangibles, S.A. (“Afinsa”).
The Final Judgment, to which Crawford consented without admitting or denying the allegations in the complaint, permanently restrains and enjoins Crawford from: (i) violation of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]; (ii) violation of Section 13(b)(5) of the Exchange Act [15 U.S.C. §§ 78m(b)(5)] and Exchange Act Rules 13b2-1 and 13b2-2 [17 C.F.R. §§ 240.13b2-1 and 13b2-2]; (iii) aiding and abetting Escala Group Inc’s violation of Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) [15 U.S.C. §§ 78m(a), 78m(b)(2)(A), and 78m(b)(2)(B),] and Rules 12b-20, 13a-1, 13a-13 [17 C.F.R. §§ 240.12b-20, 13a-1, and 13a-13]; (iv) violation of Exchange Act Rule 13a-14 [17 C.F.R. § 240.13a-14]. It also orders Crawford to pay $164,584 in disgorgement, prejudgment interest and penalties, and bars Crawford from serving as an officer or director of a public company for 3 years.
Escala, now known as Spectrum Group International, Inc., was a network of companies in the collectibles market specializing in stamps. Afinsa was a privately held Spanish company that sold investments in portfolios of stamps in Europe. The Commission’s complaint, filed on March 23, 2009, and amended on August 28, 2009, alleged that Crawford, among other things, violated the antifraud and reporting provisions of the federal securities laws by failing to disclose a certain related party and the revenues associated with the related party; falsely representing that Escala sold Afinsa several large stamp archives at prices determined by reference to independent stamp catalogues; and improperly booking the sale of antiques to Afinsa.