U.S. Securities and Exchange Commission

Litigation Release No. 18575 / February 13, 2004

Securities and Exchange Commission v. Jonathan G. Epstein, Civil Action No. 2:04-CV-0218 (NDAL)

On February 10, 2004, the Honorable Karon O. Bowdre, U. S. District Judge for the Northern District of Alabama, entered a Final Judgment as to defendant Jonathan G. Epstein (Epstein) , restraining and enjoining him from further violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act), and from aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 10b-5, 12b-20 and 13a-1 thereunder. Epstein consented to the entry of the judgment without admitting or denying any of the allegations of the Commission’s Complaint. Further, the court ordered Epstein to pay a civil penalty of $35,000.

The Complaint alleged that Epstein, former President and Chief Executive Officer of Fila U.S.A. (Fila), an outside vendor of Just for Feet, Inc. (JFFI), assisted in perpetrating a financial reporting fraud involving the financial statements of JFFI, a former national retailer of athletic and outdoor footwear. Epstein signed an audit confirmation letter stating falsely that Fila owed JFFI $1.38 million in advertising “co-op receivables” which JFFI had improperly recorded. This overstatement of income was reflected on JFFI’s financial statements included in its Form 10-K filed for fiscal year 1998 and in its registration statements on Forms S-8 and S-4 filed in May and June of 1999, respectively.

See also: L.R. 18571 (February 6, 2004)

http://www.sec.gov/litigation/litreleases/lr18575.htm