U.S. Securities and Exchange Commission

Litigation Release No. 19255 / June 8, 2005

Accounting and Auditing Enforcement Release No. 2257 / June 8, 2005

SECURITIES AND EXCHANGE COMMISSION v. LOUIS E. RIVELLI, RODNEY B. JOHNSON, STEPHEN G. BURKE, TERESA W. AYERS, CRAIG L. STEVENSON, ROBERT T. HOFFMAN, CIV. NO. 05-CV-1039 (RPM) (UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO). June 7, 2005

The Commission filed civil fraud charges today against six individuals formerly associated with Fischer Imaging Corporation (“Fischer”): chief executive officer (“CEO”) and president Louis E. Rivelli; chief financial officers (“CFOs”) Rodney B. Johnson and Stephen G. Burke; chair of the audit committee Teresa W. Ayers; and senior sales executives Craig L. Stevenson and Robert T. Hoffman. Fischer is a medical equipment company based in Denver, Colorado. The Commission’s complaint, filed in the United States District Court for the District of Colorado, alleges that these six individuals were responsible for Fischer’s reporting of materially false financial results in Commission filings, press releases, and other public statements for periods from January 2000 through September 2002.

According to the complaint, each of the named defendants was responsible for Fischer’s improper recognition of revenue on sales of equipment that Fischer had not delivered to customers, but instead had shipped to third party warehouses where Fischer controlled the equipment, paid to store it, and insured it. Additionally, Rivelli, Johnson, Stevenson, and Hoffman were involved in formulating or reviewing contingent sales terms, which were documented in side letters, with knowledge that Fischer improperly recognized revenue before the contingencies were resolved. The complaint further alleges that Rivelli, Johnson, and Burke were responsible for Fischer’s material misstatements of its inventory account and its gross profits based on various other improper accounting practices. The complaint alleges that each of the defendants provided false or misleading documents or information to Fischer’s accountants or auditors in an attempt to conceal Fischer’s improper accounting practices.

Based on this conduct, the Commission claims that each of the defendants violated or aided and abetted violations of some or all of the following provisions of the federal securities laws: Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2), and 13(b)(5) of the Securities Exchange Act of 1934, and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13a-14, 13b2-1, and 13b2-2 thereunder. The complaint seeks final judgments enjoining the defendants from future violations of these provisions, and ordering each of them to disgorge ill-gotten gains and pay civil money penalties. The Commission also seeks an order barring Rivelli, Johnson, Burke and Ayers from serving as an officer or director of a public company.

On November 15, 2004, with Fischer’s consent, the Commission ordered Fischer to cease-and-desist from violating the antifraud, reporting, and recordkeeping provisions of the federal securities laws based on the same accounting misstatements. The Commission’s investigation is continuing.

SEC Complaint in this matter

http://www.sec.gov/litigation/litreleases/lr19255.htm