SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

Litigation Release No. 17458 / April 4, 2002

Accounting and Auditing Release No. 1540 / April 4, 2002

Securities and Exchange Commission v. Miko Leung (a/k/a Leung Ming Kang) and Sit Wa Leung, Civil Action No. 98-0233 (TFH) (D. D.C.) (March 26, 2002)

UNITED STATES DISTRICT COURT ENTERS $33 MILLION DEFAULT JUDGMENT AGAINST DEFENDANTS MIKO LEUNG AND SIT WA LEUNG

On March 26, 2002, the United States District Court for the District of Columbia entered final judgments by default against defendants Miko and Sit Wa Leung. The Honorable Thomas F. Hogan, United States District Court Judge, ordered Miko and Sit Wa Leung to pay, jointly and severally, $16.24 million disgorgement plus prejudgment interest of $17.235 million. In addition, Judge Hogan ordered each defendant to pay a $100,000 civil money penalty, permanently enjoined each of them from future violations of the antifraud and other provisions of the federal securities laws, and barred both defendants from acting as officers or directors of public companies.

The Commission filed its complaint on January 29, 1998, alleging that-between 1990 and 1993-Miko Leung, the former chairman and president of MTC Electronic Technologies, Inc.-whose common stock traded on Nasdaq-and his brother Sit Wa Leung, the former secretary and a board member of MTC, engaged in a false disclosure and accounting fraud scheme that culminated in a "pump and dump" stock manipulation. The Commission's complaint further alleged that the Leung brothers unjustly enriched themselves by more than $16 million by selling MTC stock, including approximately 1.5 million shares they had stolen from MTC.

The defendants eluded service of process for three years and, on February 6, 2001, the court granted the Commission's motion to serve them by publication notice in Hong Kong. After the Commission served the defendants, they failed to answer the complaint.

The court found that by virtue of their failure to defend, the defendants are deemed to have admitted the allegations in the Commission's complaint, and found that they violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. The court also found that, in addition to his violations of the antifraud provisions of the federal securities laws, defendant Miko Leung violated Exchange Act Section 13(b)(5) and Exchange Act Rules 13b2-1 and 13b2-2.

See also Litigation Release No. 15631 (January 29, 1998).