Free Motion to Compel - District Court of Delaware - Delaware

Case 1:04-cv-01494-JJF Document 99-17 Filed 12/15/2006 Page 1 of 3
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U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19932 / December 4, 2005
Accounting and Auditing Enforcement Release No. 2520 / December
4,20os i
SEC v. Bart A. Thielbar, David A. Monaghan, Keith W. Beachier, Jana
L. Quam Arid Cary B. Griswold, (United States District Court for the
District of South Dakota, Civil Action No. 06-4253)
SEC Charges Five Former Employees of a Northwestern Corporation
Subsidiary with False Financial Reporting
The Securities and Exchange Commission today filed a complaint against
five individuals for misstating the financial results of Northwestern
Communications Solutions ("NCS"), a former division of Northwestern
Corporations utility subsidiary. The Commission's complaint, filed in the
United States District Court for the District of South Dakota, alleges that
these misstatements caused Northwestern to report materially false
financial results in Commission filings and press releases relating to the
fourth quarter of 2001 and the first two quarters of 2002. In its complaint,
the Commission named Bart A. Thielbar, the former head of NCS, Keith W.
Beachler, a former vice president of NCS, and Cary B. Griswold, a former
NCS accountant; as well as David A. Monaghan and Jana L. Quam, the
former vice president of finance and controller, respectively, for
Northwestern‘s utility subsidiary.
During the time period referenced in the Commlssion's complaint, NCS was
headquartered in Sioux Falls, South Dakota, and sold and installed
telecommunications equipment. The Commlssion's complaint alleges that,
during the fourth quarter of 2001 and the first two quarters of 2002, NCS
improperly recognized approximately $3.2 million of revenue by recording
revenue on nonexistent contracts and by recording revenue before work
had been performed on existing contracts. The Commlssion's complaint also
alleges that, for the fourth quarter of 2001, NCS improperly reclassified
approximately $1 million in unsubstantiated assets to a goodwill account to
avoid a year—end charge against income. The complaint further alleges that,
during the third quarter of 2002, Thielbar and Monaghan attempted to
cover up the improper accounting after it was exposed by internal auditors,
mischaracterizing the nature and extent of the improprieties in reports to
Northwestern's audit committee and outside auditors.
The Commlssion's complaint charges Thielbar, Monaghan and Beachler with
violations of Section 10(lo) of the Securities and Exchange Act of 1934
("Exchange Act") and Rule 10l:>—5 thereunder, and Section 17(a) of the
Securities Act of 1933. The complaint further charges all defendants with
violations of Section 13(b)(5) of the Exchange Act and Rule 13b2—1
http://sec.gov/litigation/litreieases/2006/lr19932.htm 12/5/2006

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thereunder, and with aiding and abetting l\lorthVl/estern‘s violations of
Sections 13(a), 13(b)(2)(/—\) and 13(b)(2)(B) of the Exchange Act and Rules
12b~20, 13a—1, and 13a—11 thereunder. It further charges Thielbar,
Beachler and Griswold with violating Exchange Act Rule 13a—13. The
Commission's complaint seeks permanent injunctions, disgorgement with
prejudgment interest, and civil penalties. The Commission also seeks an
officer and director bar against Thielbar.
Monaghan, Beachler, Quam and Griswold, without admitting or denying the
allegations in the Commissions complaint, each consented to the entry of a
final judgment permanently enjoining them from violating or aiding and
abetting violations of the provisions they allegedly violated. Monaghan
consented to pay a $25,000 civil penalty, and Griswold consented to pay a
$10,000 civil penalty. The Commission waived the imposition of a civil
penalty against Beachler based upon his sworn financial statements.
Quam‘s consent does not include a penalty.
http :// www. sec. go v//itigation//itre/eases/2006//r1 9932.htm
Home I Previous Page Modified: 12/04/2006
http://seo.gov/1itigation/litreleases/2006/lx19932.htm 12/5/2006