U.S. Securities and Exchange Commission

Litigation Release No. 17927 / January 13, 2003

SEC v. Grabske, Case No. C-01-3355 CRB (N.D. Cal.).

William Grabske, Former CEO of Indus International, Enjoined in Financial Fraud Case

On December 20, 2002, federal judge Charles R. Breyer, sitting in San Francisco, issued a judgment against William Grabske, former chief executive officer of Indus International Corporation. The court enjoined Grabske, a resident of Tiberon, California, from future violations of the antifraud provisions of the securities laws, prohibited him from serving as a director or officer of any public company, and ordered him to pay a $50,000 penalty. The civil judgment followed a criminal sentencing on December 19, 2002, where the court ordered Grabske to serve 27 months in prison, followed by three years supervised release and a $12,500 fine.

A federal jury convicted Grabske on charges of securities fraud, conspiracy to commit securities fraud, and mail and wire fraud. The evidence at trial established that Mr. Grabske engaged in a scheme to overstate Indus' revenue and earnings in the third quarter of 1999 by misreporting revenues from two software sales transactions. Grabske directed other Indus employees to write "side letters" to the two customers, giving each a right to cancel their contracts, and to conceal those side letters from Indus' accounting personnel.

The Commission brought a civil action against Grabske for misrepresenting Indus' financial results in the company's quarterly filings, causing the company to make false accounting entries, and making false statements to the company's chief financial officer and its outside auditors. The court granted summary judgment for the Commission following Grabske's criminal conviction.

The Commission's action also named Robert Pocsik and Ralph Widmaier as defendants. Pocsik, formerly chief administrative officer at Indus, died while the proceedings were pending. Widmaier, formerly a vice president of sales at Indus, consented to the entry of a judgment in which he was enjoined from future violations of the antifraud provisions, ordered to disgorge $41,000 in trading profits and interest, and ordered to pay a $15,000 penalty.

The Commission thanks the Federal Bureau of Investigation and United States Attorney for their assistance in the matter.

The Commission's action against Grabske alleged violations of Sections 10(b), 13(a) and 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-13, 13b-2-1, 13b-2-2.

http://www.sec.gov/litigation/litreleases/lr17927.htm