UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 37041 / March 29, 1996 ACCOUNTING AND AUDITING ENFORCEMENT Release No. 770 / March 29, 1996 ADMINISTRATIVE PROCEEDING File No. 3-8979 ------------------------------ : In the Matter of : ORDER INSTITUTING PROCEEDINGS : AND OPINION AND ORDER PURSUANT BERNARD H. LEVY, C.P.A. : TO RULE 102(e) OF THE : COMMISSION'S RULES OF PRACTICE : : ------------------------------ I The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and they hereby are, instituted pursuant to Rule 102(e)(3)(i)(a) of the Commission's Rules of Practice, 17 C.F.R.  201.102(e)(3)(i)(A), -[1]- against Bernard H. Levy ("Levy"). ---------FOOTNOTES---------- -[1]- Rule 102(e)(3) of the Commission's Rules of Practice, 17 C.F.R.  201.102(e)(3), provides, in pertinent part: The Commission, with due regard to the public interest ... may ... suspend from appearing or practicing before it any ... accountant ... who ... has been by name ... [p]ermanently enjoined by any court of competent jurisdiction, by reason of his or her misconduct in an action brought by the Commission, from violation or aiding and abetting the violation of any provision of the Federal securities laws or of the rules and regulations thereunder ... A person who has consented to the entry of a permanent injunction ... without admitting the facts set forth in the complaint shall be presumed for all purposes under this paragraph (e)(3) to have been enjoined by reason of the misconduct alleged in the complaint. ==========================================START OF PAGE 2====== II In anticipation of the institution of this administrative proceeding, Levy has submitted an Offer of Settlement which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and prior to a hearing pursuant to the Commission's Rules of Practice, 17 C.F.R.  201.100 et seq., and without admitting or denying any findings set forth herein, except as to jurisdiction, and facts set forth in paragraph III.C. below, which he admits, Levy consents to the issuance of this Order Instituting Proceedings And Opinion And Order Pursuant To Rule 102(e) Of The Commission's Rule Of Practice ("Order") and to the entry of findings and imposition of the remedial sanctions as set forth below. III FINDINGS A. Levy is a certified public accountant who has been licensed to practice by the State of New York since 1969. Levy is a sole practitioner who maintains an office in New York, New York. Levy audited Cascade International, Inc's. ("Cascade") financial statements for fiscal years ended 1988 through 1991, and issued unqualified audit reports on those financial statements which were contained in Cascade's Forms 10-K for the same periods. Levy's unqualified audit report concerning his audit of Cascade's fiscal year ended 1989 financial statements was also contained in a Cascade registration statement on Form S- 1. Cascade was Levy's only public company audit client. B. Cascade was a Delaware corporation with principal offices in Boca Raton, Florida. Cascade's securities were registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 ("Exchange Act"). Cascade was required to file reports with the Commission pursuant to Section 13(a) of the Exchange Act. Cascade was engaged in the business of retailing proprietary cosmetics, women's apparel and accessories through cosmetic counters, boutiques and stores. Cascade's common stock was traded on the over-the-counter market and was listed on NASDAQ. C. On March 14, 1995, a Final Judgment of Permanent Injunction and Other Relief was entered against Respondent Levy in the United States District Court for the Southern District of Florida, permanently enjoining Respondent Levy from further violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5, thereunder. Securities and Exchange Commission v. Incendy, et al., USDC, S.D. Fl., Civil Action No. 95-8149-CIV-RYSKAMP. D. The Commission's complaint, filed in the matter described in paragraph C, above, alleges, among other things, that Levy audited Cascade's financial statements for fiscal years ended 1988 through 1991 and issued independent unqualified audit reports on these financial statements. These unqualified audit reports were contained in Cascade's Forms 10-K for years 1988 through 1991 filed with the Commission. Levy's unqualified audit report with respect to Cascade's financial statements for fiscal year ended 1989 was also contained in a registration statement on Form S-1 Cascade filed with the Commission. The Complaint alleges that in each of these unqualified audit reports, Levy falsely represented that he had conducted an audit of Cascade's financial statements in accordance with Generally Accepted Auditing Standards ("GAAS"), and that the financial statements were presented in accordance with Generally Accepted Accounting Principles ("GAAP"). Levy knew, or was reckless in not knowing that these representations were false. Among other things, Cascade during all relevant periods (i) materially overstated its cosmetics and fashion boutiques operations; (ii) materially overstated its total revenues; and (iii) materially overstated its total assets. As alleged in the Complaint, Levy did not conduct his audits of these financial statements in accordance with GAAS because, among other things, he: (i) failed to adequately plan the audits; (ii) failed to obtain sufficient competent evidential matter through inspection, observation, inquiries, and confirmations to afford a reasonable basis for his opinions regarding Cascade's financial statements; (iii) failed to properly examine transactions with related parties; (iv) failed to exercise due professional care in the performance of his audits of Cascade's financial statements and the preparation of his unqualified audit reports concerning these financial statements; and (v) lacked independence in connection with his audits of Cascade's financial statements. IV Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer of Settlement submitted by Levy, and accordingly, IT IS HEREBY ORDERED, effective immediately, that Levy be, and hereby is, denied the privilege of appearing or practicing before the Commission. By the Commission. ==========================================START OF PAGE 3====== Jonathan G. Katz Secretary ==========================================START OF PAGE 4======