In re Henry L. Creel Co.
summary
Henry L. Creel Co., Inc. and its CPA partner Henry L. Creel willfully violated Section 102(a) of the Sarbanes-Oxley Act by issuing an unregistered audit report for AuGRID Corporation in March 2004, leading to SEC-imposed cease-and-desist orders and censure, with both barred from practicing before the SEC unless they register with the PCAOB.
paragraph
The SEC found that Henry L. Creel Co., Inc. and Henry L. Creel, CPA, willfully violated Section 102(a) of the Sarbanes-Oxley Act by issuing an audit report for AuGRID Corporation’s 2003 fiscal year in March 2004 while unregistered with the PCAOB, a requirement effective since October 22, 2003. Although the firm received no fees for the audit, which was included in AuGRID’s Form 10-KSB filed with the SEC, Creel, as the engagement partner, was found to have caused the violation. Without admitting or denying the allegations, the respondents consented to a settlement that included censure of the firm, cease-and-desist orders against both parties, and a prohibition on practicing before the SEC unless PCAOB registration is obtained and verified.
narrative
Henry L. Creel Co., Inc. and its CPA partner, Henry L. Creel, were found by the SEC to have willfully violated Section 102(a) of the Sarbanes-Oxley Act by issuing an audit report for AuGRID Corporation’s 2003 fiscal year in March 2004 while unregistered with the Public Company Accounting Oversight Board (PCAOB), a requirement that became effective on October 22, 2003. The audit report was included in AuGRID’s Form 10-KSB filed with the SEC, even though the firm collected no fees for the engagement. Creel, as the engagement partner, actively participated in the preparation and issuance of the unlawful report, thereby causing the violation. The respondents consented to a settlement without admitting or denying the findings, except as to jurisdiction and subject matter. As part of the settlement, the SEC censured Henry L. Creel Co., Inc., imposed cease-and-desist orders on both respondents, and barred them from appearing or practicing before the SEC unless they obtain and submit proof of PCAOB registration. The SEC emphasized that the violation was willful, regardless of the absence of compensation, underscoring the mandatory nature of PCAOB registration for audits of public issuers under Sarbanes-Oxley. Both parties are prohibited from future violations of Section 102(a) and must comply with all registration requirements to resume any practice before the Commission.
Classified accounting-fraud(confidence 100%). EDGAR detection: forms 10-K/10-Q/8-K/NT 10-K· recall 80% / precision 48%. detection rule →
Statutes
SECTIONS 4C AND 21C OF THE SECURITIES EXCHANGE ACTSECTIONS 4C AND 21C OF THE SECURITIES EXCHANGE ACT
Parties
Securities and Exchange CommissionHenry L. Creel Co., Inc.Henry L. CreelCPA
Keywords
commissionhenry creelcreelfirmaugridsecurities exchangehenryexchangeaudit reportauditsecuritiesrespondentspublicorderproceedings
Extracted insights
Dollar amounts 2
- $477K $477,000 $100K–$1M
- $111K $111,000 $100K–$1M
Entities 4
- company augrid corporation
- person henry l. creel
- company henry l. creel co., inc.
- agency Securities and Exchange Commission
Triples 8
- Henry L. Creel Co., Inc. is Ohio corporation and public accounting firm headquartered in Shaker Heights, Ohio
- Henry L. Creel Co., Inc. audited AuGRID Corporation's financial statements for 2003 fiscal year ended December 31, 2003
- AuGRID Corporation dismissed Henry L. Creel Co., Inc. as independent auditor on January 27, 2005
- Henry L. Creel is certified public accountant licensed in Ohio since 1972
- Henry L. Creel was engagement partner for Firm's audit of AuGRID's financial statements for 2003 fiscal year ended December 31, 2003
- SEC instituted cease-and-desist proceedings against Henry L. Creel Co., Inc. and Henry L. Creel pursuant to Section 21C of Securities Exchange Act of 1934
- SEC instituted public administrative proceedings against Henry L. Creel Co., Inc. pursuant to Section 4C of Securities Exchange Act of 1934
- AuGRID is Nevada corporation with headquarters in Houston, Texas
Text layers
Extracted body text (9,040c)
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 56413 / September 13, 2007
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 2693 / September 13, 2007
ADMINISTRATIVE PROCEEDING
File No. 3-12774
In the Matter of
Henry L. Creel Co., Inc. and
Henry L. Creel, CPA,
Respondents.
ORDER INSTITUTING PUBLIC
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO
SECTIONS 4C AND 21C OF THE
SECURITIES EXCHANGE ACT OF 1934
AND RULE 102(e) OF THE
COMMISSION’S RULES OF PRACTICE,
MAKING FINDINGS, AND IMPOSING
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER
I.
The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted against Henry L. Creel Co., Inc. and Henry L.
Creel, CPA (collectively “Respondents”) pursuant to Section 21C of the Securities Exchange Act
of 1934 (“Exchange Act”), and that public administrative proceedings be, and hereby are, instituted
against Henry L. Creel Co., Inc. pursuant to Section 4C
1
of the Exchange Act and Rule
102(e)(1)(iii) of the Commission’s Rules of Practice.
2
1
Section 4C provides, in relevant part, that:
The Commission may censure any person, or deny, temporarily or permanently, to any person the
privilege of appearing or practicing before the Commission in any way, if that person is found . . .
to have willfully violated, or willfully aided and abetted the violation of, any provision of the
securities laws or the rules and regulations thereunder.
2
Rule 102(e)(1)(iii) provides, in relevant part, that:
The Commission may censure a person or deny, temporarily or permanently, the privilege of
appearing or practicing before it in any way to any person who is found . . . to have willfully
violated, or willfully aided and abetted the violation of any provision of the Federal securities laws
or the rules and regulations thereunder.
II.
In anticipation of the institution of these proceedings, Respondents have submitted an Offer
of Settlement (“Offer”), which the Commission has determined to accept. Solely for the purpose
of these proceedings and any other proceedings brought by or on behalf of the Commission, or to
which the Commission is a party, and without admitting or denying the findings herein, except as
to the Commission’s jurisdiction over them and the subject matter of these proceedings, which are
admitted, Respondents consent to the entry of this Order Instituting Public Administrative and
Cease-and-Desist Proceedings Pursuant to Sections 4C and 21C of the Securities Exchange Act of
1934 and Rule 102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing
Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.
III.
On the basis of this Order and Respondents’ Offer, the Commission finds
3
that:
A. RESPONDENTS
1. Henry L. Creel Co., Inc. (the “Firm”) is an Ohio corporation and a public
accounting firm headquartered in Shaker Heights, Ohio. The Firm audited AuGRID Corporation’s
(“AuGRID”) financial statements for the company’s 2003 fiscal year ended December 31, 2003.
AuGRID dismissed the Firm as its independent auditor on January 27, 2005.
2. Henry L. Creel, CPA, (“Creel”), 64, of Shaker Heights, Ohio, is a certified public
accountant licensed in the state of Ohio since 1972. Creel was the engagement partner in
connection with the Firm’s audit of AuGRID’s financial statements for the company’s 2003 fiscal
year ended December 31, 2003.
B. FACTS
1. AuGRID is a Nevada corporation with its headquarters in Houston, Texas. During
the relevant period, AuGRID’s common stock was registered with the Commission pursuant to
Section 12(g) of the Exchange Act and traded on the Pink Sheets under the symbol AGHD. For its
fiscal year ended December 31, 2003, AuGRID reported revenues of $111,000 and total assets of
$477,000.
2. AuGRID has at all relevant times been an issuer as defined by the Sarbanes-Oxley
Act of 2002 (the “Act”).
3. The Firm audited AuGRID’s 2003 financial statements included in AuGRID’s
annual report for fiscal year 2003 on Form 10-KSB, filed with the Commission on April 14, 2004.
As part of that audit, the Firm prepared and issued an audit report dated March 1, 2004 (the
“AuGRID audit report”), which the company included in its 2003 Form 10-KSB. The Firm did
not collect any fees for the audit work.
The findings herein are made pursuant to Respondents’ Offer of Settlement and are not binding on any
other person or entity in this or any other proceeding.
2
3
4. At the time the Firm issued the AuGRID audit report, it was not registered with the
Public Company Accounting Oversight Board (the “Board”), as required by Section 102(a) of the
Act.
5. Creel was the engagement partner on the Firm’s audit of AuGRID’s 2003 financial
statements. Creel participated in the preparation and issuance of the AuGRID audit report.
C. VIOLATIONS
1. Section 102(a) of the Act provides that “it shall be unlawful for any person that is
not a registered public accounting firm to prepare or issue, or to participate in the preparation or
issuance of, any audit report with respect to any issuer.”
4
2. The provisions of Section 102(a) of the Act became effective on October 22, 2003.
5
3. Based on the conduct described above, the Firm willfully
6
violated Section 102(a)
of the Act.
4. Based on the conduct described above, Creel caused the Firm’s violation of Section
102(a) of the Act.
D. FINDINGS
Based on the foregoing, the Commission finds that the Firm willfully violated Section
102(a) of the Sarbanes-Oxley Act of 2002, and that Creel caused the Firm’s violation of Section
102(a) of the Act.
E. UNDERTAKING
Respondents have undertaken not to request, demand, or accept, directly or indirectly, any
compensation from AuGRID in connection with the audit work associated with the AuGRID audit
report. In determining whether to accept the Offer, the Commission has considered this
undertaking.
4
A violation of the Act or any rule that the Board issues under the Act is treated for all purposes in the same
manner as a violation of the Exchange Act, including with respect to penalties. Sarbanes-Oxley Act of 2002, 15
U.S.C.A. § 7202(b)(1) (West 2002).
5
Section 102(a) became effective “[b]eginning 180 days after the date of the determination of the
Commission under Section 101(d)” of the Act that the Board was prepared to undertake its statutory responsibilities.
The Commission made the required determination on April 25, 2003. See
Order Regarding Section 101(d) of the
Sarbanes-Oxley Act of 2002, Securities Act Release No. 8223, Exchange Act Release No. 47746, 2003 WL
1956164 (Apr. 25, 2003).
6
“Willfully” as used in this Order means intentionally committing the act that constitutes the violation.
There is no requirement that the actor also be aware that he is violating a rule or statute. See Wonsover v. SEC, 205
F.3d 408, 414 (D.C. Cir. 2000); Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965).
3
IV.
In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondents’ Offer.
Accordingly, it is hereby ORDERED, effective immediately, that:
1. Henry L. Creel Co., Inc.
A. The Firm shall cease and desist from committing or causing any violations
and any future violations of Section 102(a) of the Act.
B. The Firm is censured.
C. The Firm may practice before the Commission as an independent accountant
provided that:
1. It is registered with the Board in accordance with the Act, and such
registration continues to be effective; and
2. It has submitted to the Commission staff (attention: Office of the
Chief Accountant) the Board’s letter notifying the Firm that its registration application has been
approved.
2. Henry L. Creel, CPA
A. Creel shall cease and desist from committing or causing any violations and
any future violations of Section 102(a) of the Act.
B. Creel may practice before the Commission as an independent accountant
provided that:
1. The public accounting firm with which he is associated is
registered with the Board in accordance with the Act, and such registration continues to be
effective; and
2. He has submitted to the Commission staff (attention: Office of the
Chief Accountant) the Board’s letter notifying the public accounting firm with which he is
associated that its registration application has been approved.
By the Commission.
Nancy M. Morris
Secretary
4
OCR text (8,667c · tika · 95% conf)
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 56413 / September 13, 2007
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 2693 / September 13, 2007
ADMINISTRATIVE PROCEEDING
File No. 3-12774
In the Matter of
Henry L. Creel Co., Inc. and
Henry L. Creel, CPA,
Respondents.
ORDER INSTITUTING PUBLIC
ADMINISTRATIVE AND CEASE-AND
DESIST PROCEEDINGS PURSUANT TO
SECTIONS 4C AND 21C OF THE
SECURITIES EXCHANGE ACT OF 1934
AND RULE 102(e) OF THE
COMMISSION’S RULES OF PRACTICE,
MAKING FINDINGS, AND IMPOSING
REMEDIAL SANCTIONS AND A CEASE
AND-DESIST ORDER
I.
The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted against Henry L. Creel Co., Inc. and Henry L.
Creel, CPA (collectively “Respondents”) pursuant to Section 21C of the Securities Exchange Act
of 1934 (“Exchange Act”), and that public administrative proceedings be, and hereby are, instituted
against Henry L. Creel Co., Inc. pursuant to Section 4C1 of the Exchange Act and Rule
102(e)(1)(iii) of the Commission’s Rules of Practice.2
1 Section 4C provides, in relevant part, that:
The Commission may censure any person, or deny, temporarily or permanently, to any person the
privilege of appearing or practicing before the Commission in any way, if that person is found . . .
to have willfully violated, or willfully aided and abetted the violation of, any provision of the
securities laws or the rules and regulations thereunder.
2 Rule 102(e)(1)(iii) provides, in relevant part, that:
The Commission may censure a person or deny, temporarily or permanently, the privilege of
appearing or practicing before it in any way to any person who is found . . . to have willfully
violated, or willfully aided and abetted the violation of any provision of the Federal securities laws
or the rules and regulations thereunder.
II.
In anticipation of the institution of these proceedings, Respondents have submitted an Offer
of Settlement (“Offer”), which the Commission has determined to accept. Solely for the purpose
of these proceedings and any other proceedings brought by or on behalf of the Commission, or to
which the Commission is a party, and without admitting or denying the findings herein, except as
to the Commission’s jurisdiction over them and the subject matter of these proceedings, which are
admitted, Respondents consent to the entry of this Order Instituting Public Administrative and
Cease-and-Desist Proceedings Pursuant to Sections 4C and 21C of the Securities Exchange Act of
1934 and Rule 102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing
Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.
III.
On the basis of this Order and Respondents’ Offer, the Commission finds3 that:
A. RESPONDENTS
1. Henry L. Creel Co., Inc. (the “Firm”) is an Ohio corporation and a public
accounting firm headquartered in Shaker Heights, Ohio. The Firm audited AuGRID Corporation’s
(“AuGRID”) financial statements for the company’s 2003 fiscal year ended December 31, 2003.
AuGRID dismissed the Firm as its independent auditor on January 27, 2005.
2. Henry L. Creel, CPA, (“Creel”), 64, of Shaker Heights, Ohio, is a certified public
accountant licensed in the state of Ohio since 1972. Creel was the engagement partner in
connection with the Firm’s audit of AuGRID’s financial statements for the company’s 2003 fiscal
year ended December 31, 2003.
B. FACTS
1. AuGRID is a Nevada corporation with its headquarters in Houston, Texas. During
the relevant period, AuGRID’s common stock was registered with the Commission pursuant to
Section 12(g) of the Exchange Act and traded on the Pink Sheets under the symbol AGHD. For its
fiscal year ended December 31, 2003, AuGRID reported revenues of $111,000 and total assets of
$477,000.
2. AuGRID has at all relevant times been an issuer as defined by the Sarbanes-Oxley
Act of 2002 (the “Act”).
3. The Firm audited AuGRID’s 2003 financial statements included in AuGRID’s
annual report for fiscal year 2003 on Form 10-KSB, filed with the Commission on April 14, 2004.
As part of that audit, the Firm prepared and issued an audit report dated March 1, 2004 (the
“AuGRID audit report”), which the company included in its 2003 Form 10-KSB. The Firm did
not collect any fees for the audit work.
The findings herein are made pursuant to Respondents’ Offer of Settlement and are not binding on any
other person or entity in this or any other proceeding.
2
3
4. At the time the Firm issued the AuGRID audit report, it was not registered with the
Public Company Accounting Oversight Board (the “Board”), as required by Section 102(a) of the
Act.
5. Creel was the engagement partner on the Firm’s audit of AuGRID’s 2003 financial
statements. Creel participated in the preparation and issuance of the AuGRID audit report.
C. VIOLATIONS
1. Section 102(a) of the Act provides that “it shall be unlawful for any person that is
not a registered public accounting firm to prepare or issue, or to participate in the preparation or
issuance of, any audit report with respect to any issuer.”4
2. The provisions of Section 102(a) of the Act became effective on October 22, 2003.5
3. Based on the conduct described above, the Firm willfully6 violated Section 102(a)
of the Act.
4. Based on the conduct described above, Creel caused the Firm’s violation of Section
102(a) of the Act.
D. FINDINGS
Based on the foregoing, the Commission finds that the Firm willfully violated Section
102(a) of the Sarbanes-Oxley Act of 2002, and that Creel caused the Firm’s violation of Section
102(a) of the Act.
E. UNDERTAKING
Respondents have undertaken not to request, demand, or accept, directly or indirectly, any
compensation from AuGRID in connection with the audit work associated with the AuGRID audit
report. In determining whether to accept the Offer, the Commission has considered this
undertaking.
4 A violation of the Act or any rule that the Board issues under the Act is treated for all purposes in the same
manner as a violation of the Exchange Act, including with respect to penalties. Sarbanes-Oxley Act of 2002, 15
U.S.C.A. § 7202(b)(1) (West 2002).
5 Section 102(a) became effective “[b]eginning 180 days after the date of the determination of the
Commission under Section 101(d)” of the Act that the Board was prepared to undertake its statutory responsibilities.
The Commission made the required determination on April 25, 2003. See Order Regarding Section 101(d) of the
Sarbanes-Oxley Act of 2002, Securities Act Release No. 8223, Exchange Act Release No. 47746, 2003 WL
1956164 (Apr. 25, 2003).
6 “Willfully” as used in this Order means intentionally committing the act that constitutes the violation.
There is no requirement that the actor also be aware that he is violating a rule or statute. See Wonsover v. SEC, 205
F.3d 408, 414 (D.C. Cir. 2000); Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965).
3
IV.
In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondents’ Offer.
Accordingly, it is hereby ORDERED, effective immediately, that:
1. Henry L. Creel Co., Inc.
A. The Firm shall cease and desist from committing or causing any violations
and any future violations of Section 102(a) of the Act.
B. The Firm is censured.
C. The Firm may practice before the Commission as an independent accountant
provided that:
1. It is registered with the Board in accordance with the Act, and such
registration continues to be effective; and
2. It has submitted to the Commission staff (attention: Office of the
Chief Accountant) the Board’s letter notifying the Firm that its registration application has been
approved.
2. Henry L. Creel, CPA
A. Creel shall cease and desist from committing or causing any violations and
any future violations of Section 102(a) of the Act.
B. Creel may practice before the Commission as an independent accountant
provided that:
1. The public accounting firm with which he is associated is
registered with the Board in accordance with the Act, and such registration continues to be
effective; and
2. He has submitted to the Commission staff (attention: Office of the
Chief Accountant) the Board’s letter notifying the public accounting firm with which he is
associated that its registration application has been approved.
By the Commission.
Nancy M. Morris
Secretary
4