U.S. Securities and Exchange Commission

LITIGATION RELEASE NO. 18871 / September 8, 2004

ACCOUNTING AND AUDITING ENFORCEMENT RELEASE NO. 2094 / September 8, 2004

SEC v. JOHN GORMAN and PATRICK GENTILE, Civil Action No. 1:04CV01552

PATRICK GENTILE AND JOHN GORMAN, CURRENT AND FORMER OFFICERS OF AMERICAN BANKNOTE CORPORATION, TO PAY CIVIL PENALTY TO SETTLE FRAUD CHARGES

The Commission announced the filing of a civil penalty action against Patrick Gentile, American Banknote Corporation's ("ABN") current Chief Financial Officer ("CFO") and former corporate controller, and John Gorman, ABN's former CFO. The Commission's Complaint alleged that Gentile and Gorman overstated ABN's fiscal year 1996 revenue and net income by causing American Bank Note Holographics ("ABNH"), a then wholly-owned subsidiary of ABN, to improperly record revenue on two "bill and hold" transactions which they knew, or should have known, had not been entered into on or before December 31, 1996 and did not comply with generally accepted accounting principles. According to the Complaint, Gentile and Gorman knew, or should have known, that ABN reported this overstated revenue and income on the financial statements that were included in ABN's Annual Report on Form 10-K for its fiscal years ended December 31, 1996, and December 31, 1997.

The Complaint further alleged that Gentile and Gorman made statements in the offer or sale of securities which they knew, or should have known, were materially false or misleading. According to the Complaint, Gentile and Gorman participated in the preparation and review of ABNH's registration statement filed with the Commission in connection with its July 1998 initial public offering, and they knew that the registration statement included financial statements for ABNH for its fiscal years 1996 and 1997. The Complaint alleged that Gorman and Gentile knew, or should have known, that the registration statement contained materially false and misleading financial information for ABNH's fiscal year 1996 because the financial statements in that filing reported revenue and net income for the two improperly recorded "bill and hold" transactions.

Without admitting or denying the allegations in the Commission's Complaint, Gentile and Gorman each consented to pay a civil penalty of $25,000. In addition, on September 8, 2004, the Commission also instituted and simultaneously settled an administrative cease-and-desist proceeding against Gentile and Gorman based on the same conduct. (In the Matter of John Gorman and Patrick Gentile Administrative Proceeding File No. 3-11635) ("Order"). Gentile and Gorman agreed to settle this proceeding without admitting or denying the findings in the Order. The Order requires Gentile and Gorman to cease and desist from committing and/or causing any violation, and any future violation, of the antifraud, periodic reporting, record keeping, and internal controls provisions of the federal securities laws, Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 ("Securities Act") and Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rules 12b-20 and 13a-1.

For additional information see Litigation Releases 17068A, 18081 and 18283.

The Commission's investigation that led to this action was conducted in cooperation with the United States Attorney's Office for the Southern District of New York.

http://www.sec.gov/litigation/litreleases/lr18871.htm