U. S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 18136 / May 14, 2003

Accounting and Auditing Enforcement Release No. 1781 / May 14, 2003

SECURITIES AND EXCHANGE COMMISSION v. GARY L. MONROE, WILLIAM J. RAUWERDINK, JOHN R. MESSINGER and ROBERT T. BASSMAN, U.S. District Court for the Eastern District of Michigan, Civil Action No. 03-71840 (E.D. Mich. May 13, 2003)

SEC CHARGES FORMER OFFICERS OF LASON, INC. WITH FINANCIAL FRAUD

Commission Action Seeks Injunction, Disgorgement, Money Penalties, Officer and Director Bars

The Securities and Exchange Commission announced today that it filed accounting fraud charges in federal district court in the Eastern District of Michigan against Gary L. Monroe, William J. Rauwerdink, John R. Messinger, and Robert T. Bassman, the former CEO, CFO, COO and Controller, respectively, of Lason, Inc., a document management company based in Troy, Michigan.

The Commission's complaint alleges that during 1998 and 1999, Lason overstated its earnings in order to meet or exceed Wall Street expectations, culminating in the third quarter of 1999, when Lason's earnings were overstated by approximately 65%. When Lason revealed in December 1999 that it would not meet its earnings expectations, Lason's market capitalization fell by 53% or $234 million. Lason declared bankruptcy in December 2001 and is now owned by its creditors.

According to the complaint:

• In a scheme called "tailwind," Monroe and Rauwerdink instructed companies that were acquired by Lason to delay recognizing revenue until after the acquisition was completed and to pre-pay certain expenses before the acquisition, thereby artificially increasing Lason's earnings during the first, third and fourth quarters of 1998.

• Monroe, Rauwerdink and Bassman improperly booked a forgiven loan as revenue for Lason in the fourth quarter of 1998.

• Lason improperly claimed an invalid invoice as a legitimate receivable in the fourth quarter of 1998. When Lason's auditors questioned the legitimacy of the receivable, Monroe, Messinger and Bassman developed a scheme to obtain a check that improperly appeared to make payment on the receivable.

• Lason made numerous fraudulent accounting entries in 1999, culminating in fraudulent Work in Process entries in the third quarter of 1999 that artificially boosted Lason's earnings by 65%.

• The defendants profited from the scheme through their salaries as well as bonuses, stock options and executive loans that were affected by Lason's artificially inflated stock price.

The Commission alleges that the defendants violated or aided and abetted violations of the antifraud, reporting, books-and-records, and internal controls provisions of the federal securities laws. Specifically, the Commission has charged Monroe, Rauwerdink Messinger and Bassman with violations of sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13b2-1 and 13b2-2 thereunder. The Commission has also charged Monroe, Rauwerdink, Messinger and Bassman with aiding and abetting violations of sections 13(a), 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. In addition, the Commission has charged Monroe, Rauwerdink and Bassman with violations of section 17(a) of the Securities Act of 1933, and with aiding and abetting violations of section 13(b)(2)(B) of the Exchange Act.

For these violations, the Commission is seeking permanent injunctions against the defendants, civil money penalties, disgorgement of all ill-gotten gains and losses avoided by the defendants plus prejudgment interest thereon. The Commission is also seeking an order prohibiting the defendants from acting as officers or directors of a public company.

In a related action today, a federal grand jury indicted Monroe, Rauwerdink and Messinger for conspiracy to commit mail and wire fraud and make false statements to the Commission. Monroe and Rauwerdink were also charged with making false statements to the Commission.

The Commission wishes to thank the U.S. Attorney's Office for the Eastern District of Michigan and the Federal Bureau of Investigation for their assistance in this matter.