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         UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 15187 / December 16, 1996
 
Accounting and Auditing Enforcement 
Release No. 865 / December 16, 1996 

United States v. Bernard F. Bradstreet, et al.
(D. Mass., No. 95-CR-10228-RGS)

     The Commission announced that, on December 12, 1996, the
Honorable Richard G. Stearns of the District of Massachusetts
sentenced Defendants Bernard F. Bradstreet ("Bradstreet") and
Thomas E. Campbell ("Campbell") to federal prison terms of
thirty-three and eighteen months, respectively.  In addition,
Bradstreet was ordered to pay restitution of $2.3 million, and
Bradstreet and Campbell were each sentenced to two years
probation upon release from prison and to pay a special
assessment of $250.  Bradstreet and Campbell, former members of
senior management of Kurzweil Applied Intelligence, Inc.
("Kurzweil"), were found guilty by a jury in May 1996 of five
counts of conspiracy, securities fraud and falsification of
corporate books and records in violation of Sections 10(b) and
13(b)(5) of the Exchange Act and Rule 10b-5 thereunder and 18
U.S.C.  2 and 371.

     On July 26, 1995, simultaneously with the U.S. Attorney's
announcement of the indictment of Bradstreet and Campbell, the
Commission filed a complaint in the U. S. District Court for the
District of Massachusetts seeking to permanently enjoin
Bradstreet, Campbell, and two other former Kurzweil executives,
David R. Earl ("Earl") and Debra J. Murray ("Murray") from
violating the antifraud provisions of the federal securities laws
and those provisions relating to the falsification of an issuer's
books and records and the making of false statements to auditors
(SEC v. Bradstreet, et al., No. 95-11647-DPW) (the "Complaint"). 
In addition, the Complaint sought an order from the court
permanently barring the defendants from serving as officers or
directors of any public company, requiring defendants Bradstreet
and Campbell to disgorge the sums of $90,000 and $12,000,
respectively, representing losses avoided from their unlawful
sales of Kurzweil securities and, in addition, requiring
Defendant Bradstreet to disgorge the sum of $80,000, representing
an unlawful bonus, plus prejudgment interest.  The Complaint also
sought an order requiring that all defendants pay appropriate
civil money penalties.

     The Complaint alleged that, from at least January 1992
through May 1994, the defendants engaged in a fraudulent revenue
recognition scheme which inflated Kurzweil's revenues and
earnings as reported by the company in financial statements filed
with the Commission and disseminated publicly.  The Complaint
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further alleged that Bradstreet, Kurzweil's former President and
Co-Chief Executive Officer, and Campbell, Kurzweil's former Vice
President of Sales, each offered and sold equity securities in
Kurzweil's initial public offering, knowing that the company's
financial statements were materially false and that, in 1993,
Bradstreet received an $80,000 bonus advance based on the then
expected financial results of operations for the fiscal year
ended January 31, 1994.  The Complaint alleged that the scheme
affected the registration statement and periodic reports filed by
Kurzweil containing financial statements for its fiscal year
ended January 31, 1993 and the first three quarters of fiscal
year 1994.  

     On September 24, 1996, Defendants Bradstreet, Campbell and
Murray settled the Commission's civil action by consenting,
without admitting or denying the allegations of the Complaint, to
the entry of a final judgment.  The final judgment enjoins each
of them from future violations of the antifraud provisions of the
federal securities laws and those provisions relating to the
falsification of an issuer's books and records and the making of
false statements to auditors.  The final judgment also bars each
of them from serving as an officer or director of any public
company, waives disgorgement by Bradstreet and Campbell, and does
not assess penalties against Bradstreet, Campbell and Murray,
based on their demonstrated inability to pay.  The Commission's
litigation is continuing as to Defendant Earl. 

     For further information, see Litigation Release Nos. 14571,
14992 and 15069 and Exchange Act Release Nos. 36021 and 36022.