U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20478 / March 5, 2008

Securities and Exchange Commission v. Timothy N. Jenson and TDH Enterprises, LLC, Case No. SACV 08-0241 CJC (MLGx) (C.D. Cal.)

SEC Charges Former Merisel, Inc. Executive for Self-Dealing Company Assets

The Securities and Exchange Commission filed charges on March 4, 2008, against Timothy N. Jenson, formerly Merisel Inc.'s chief executive and chief financial officer and a director. The Commission's complaint, filed in federal district court in Santa Ana, alleges that Jenson, age 48 and a resident of Los Alamitos, Calif., made numerous material misstatements and omissions in Merisel's SEC filings and in company press releases as part of a scheme to loot company assets in two separate but similar self-dealing transactions. Also named in the complaint is TDH Enterprises, LLC, the Jenson-controlled company used to carry out one of the transactions. At the time of Jenson's misconduct, Merisel was based in El Segundo, Calif. and engaged in the software licensing business.

As alleged in the complaint, one transaction involved Jenson's sale of certain Merisel software licensing assets and real property to D&H Services, LLC, an undisclosed related party that he controlled, at over $2.6 million below the assets' value. The complaint further alleges that Jenson engaged in another undisclosed related party transaction when he sold RKM Partners, an inoperative Merisel subsidiary, to defendant TDH Enterprises for just $1,000 although the subsidiary held over $952,000 in assets.

The Commission's complaint further alleges that Jenson misrepresented or failed to disclose the related party nature of those transactions in Merisel's Form 10-Q, an earnings press release, various Forms 8-K, and a proxy statement. Jenson also failed to account properly for the $2.6 million loss resulting from the asset sale to D&H Services in a Merisel earnings press release and in a Form 8-K that announced Merisel's earnings.

The complaint alleges that, as a result of his conduct, Jenson committed securities fraud and that, in carrying out and covering up his fraud, Jenson falsified Merisel's books and records, circumvented its internal controls, signed a false certification as to the accuracy of Merisel's Form 10-Q, made false and misleading statements and omissions to Merisel's auditors, and solicited proxies by means of a misleading proxy statement. The complaint further alleges that Jenson aided and abetted Merisel's violations of the reporting requirements, record keeping, and internal control requirements of the securities laws. The complaint also alleges that TDH aided and abetted Jenson's antifraud and proxy violations, as well as Merisel's reporting violations.

Jenson and TDH Enterprises, without admitting or denying the Commission's allegations, consented to the entry of Final Judgments that will enjoin them permanently from violating the antifraud and other provisions of the federal securities laws. Jenson also consented to the entry of a Final Judgment that will bar him from serving as an officer or director of a public company and order him to pay a $275,000 civil penalty.

The complaint alleges that, as a result of his conduct, Jenson committed securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also alleges that in carrying out and covering up his fraud, Jenson falsified Merisel books and records and circumvented internal controls in violation of Exchange Act Section 13(b)(5) and Rule 13b2-1, signed a false certification as to the accuracy of Merisel's Form 10-Q in violation of Exchange Act Rule 13a-14, made false and misleading statements and omissions to Merisel's auditors in violation of Exchange Act Rule 13b2-2, and solicited proxies by means of a proxy statement containing material misrepresentations and omissions in violation of Exchange Act Section 14(a) and Rule 14a-9. The complaint further alleges that Jenson aided and abetted Merisel's violations of the reporting requirements of Exchange Act Section 13(a) and Rules 12b-20, 13a-11, and 13a-13, of the record keeping requirements of Exchange Act Section 13(b)(2)(A), and of the internal control requirements of Exchange Act Section 13(b)(2)(B). The complaint also alleges that TDH aided and abetted Jenson's violations of Exchange Act Sections 10(b) and 14(a) and Rules 10b-5 and 14a-9 and Merisel's violations of Exchange Act Section 13(a) and Rules 12b-20 and 13a-13 thereunder.

SEC Complaint in this matter