case 5:09-cv-00res-re 1i$ffiA1,
1 ritea os11t2oos Pase of18
DISTRICTCOURT IN TTIEUNITEDSTATES DISTRICTOFTEXAS FORTHE WESTERN , SANANTONIODIVISION AND EXCIIANGE SECURITIES coMMISSION, Plaintiff, vs. CORPORATION.
POWERCOLD SIMOLA.
FRANCISL. JOSEPII CAHILLand
C. GRAYLINGRHOFER" ClvilActlonNo,r
FII.ED
.MARIIAOg
UTF TFA?
f,*S*re?,??fir
ssFm sAoecAol
COMPLAtr.{T
Defendants.
( . CommissionCommissiottl) files suit against and Exchange Plaintitr, Securities R.Hoferand C.CahillantlGrayling Francis Simola" L. Joseph Defendants PowerCold Corporation, show a respectfully dreCourt sfollows: would SUMMARY 1. 2005, ow€rcoldCorporation, P aTexas-based Orough thirdquarter the From2003
("HVAC') andsellsheatingventilatioqandair-conditioning company thatdesigns Pinl Sheet revenue from fictitious its syste,ms, materiallyoverstated financialresultsby recognizing rocognizing revenue actual from contracts. a result, As and contracts, inflatingandprematurely theperiod. its during m PowerCold atoiallyoverstated revenuos
e v. SEC PowerColdCotp;olation, l al. Corplaint Pagel
Case5:09-cv-00185-FB Document1
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o andchisfexecutiveffic€r, participated chairman PowerCold's Francis Simola" L.
to pooroperating results sought artificiallyinflate and whichhid thecompany's in the scheme, chiefaccounting for R. its stockprice. Grayling Hofer,whoserved a poiod asthecompany's other things, making failingto conectfalse or in b officer,alsoparticipated theschemey,among offcer at r€v the e that accountingntries rellected misstated enues. Powe€old's chieffinancial yet havebeen aware, the scheme, of or C. thetime - Joseph Cahill- wasalsoaware, should periodic themisstated repofts €amings releases and containing prepared, andsigned approved, financial information. 3. thepublicfrom anyfurtherillogal in of ThoCommissio& theinterest protecting
p reliet officerand seoking ermanant injunctive Defendants activity,bringsthis actionagainst p C b Simola, ahi andHoferandcivil monetaryenalties. director arsagainst VENUE JURTSDICEONANp 4. This Courthasjurisdictionover tliis actionpursuant 27 of the Securities $
Act') [15 U.S.C. 78(aa)andTitle 28 U.S.C. 1331. Act Exchange of 1934("Exchange $ $ use and directlyandindirectlymade ofthe mailsandofthemeans instumentalities Defendants, practices andcourses d in in withtheacts, ofbusinessesrribed cofirmeroe cornection ofinterstate many acts, of is because of thetransactions, practices andcouses thisComplaint. Venue proper o Disfict ofTexas. belowoccurred ithintheiurisdiction ftheWestern w business described PARTIES 5. corporation headquartered LaVemia, PowerColdCorporrtion, a Nevada in
common stockis registered the andbuildsHVAC systems. PowerCold's with Texas, designs
et SECv. PowerColdCorpomtion, dl. Complaint Page-2
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on Act, pursuant Section 12(g) theExchange andis quoted PinkOTCMarkets of to Commission under symbol the "PWCL." 6. p chairman, resident, hief c Frgncis L. Simola, 69, has been PowgrCold's
in resides Pennsylvania. since 1993.Simola o executivefficer,anda director 7. a v of JosephC. Cahitl, 54,wasPowerCold'sicepresident Administration nd
anda 2 2002to January 004,andits chief financialof6co, secretary, Finance from January in 2004 director fromJanuary to lanuty 2006.Cahillrosides NewJersey. . 8. asPowerCold's accounting chief oflicer, GraylingR. Hofer,51, hasserved
March2002,He cunently serves asVice since antVor direclor a corporateontrollo,teasurer, c CFO 2006to Novernber H of President Operations. oferwasalsoPowerCold's from January in h dutiesfiom its headquarters in and 2006. Hofu resides Texas, performs is PoweCold LaVemia, Texas. FACTUALBACKGROUND 9. participated a revenue recopitionscherne hichcreated w in the Thedefendants
company. was illusionthatPowerCold a gowing,vibrant 10. (tho entered a $5millionconvertibleinto In July20M, Powercold "Company'')
PowerCold repay loanwith stock,should to the the debttansaction.Theloanterms.allowed stockreach$1.87per share. On August5, 2004,a weekaftu closingthe convertible-debt PowerCold employees the company that needed showan to transaction, Simolae-mailed p and most was asset its operatingrofit thatquartoandthereafter, thatthecompany's important price. Simola with a Septembo, 2004 2 e-mail CahillandHofer, drat followed to advising stock
SECv. Powet€old CorporutioLet sl.
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w P 2005, owerCold ould palng interest nits loanandthat,in February o h PowerColdadstarted principal interest. and p tostart aying have 11. took two basicforms: l) o improprieties f the defendants, The accounting
or that fiom contracts did not exist; and,2) overstating prernaturely recognizing revenue ftom contacts. reoognizing revenue actual 12. P recognized 2 2 ttroughthethirdquarter 005, owerCold Fromthefirst quarter 003
that from of $8,017,624 revenues contracts did not exist,themajorityof whichflowedtluough Inc., (formerlyknown as PoweColdComfortAir Solutions, its Florida-basedubsidiary s Air"). For example, onJune30,2003,rwenueof Inc.)("Comfort UltimateComfortSysterns, ofHVAC equipment a St. at sale fromthesupposed andinstallation w $281,224 asrecognized however, never received oonkact a orperformednywork a Augustine, Florida hotel. PowerCold, revsnue ndaccrued for thisfictitious a withthisproject.PowerCold recorded costs in connection project n thelastdayof thequarter, the the therevenue butreversed costs nextclay.However, o entrywasnotreversed. 13. recorded in the onSepternbu 30,2003, Similarly, Company $1,134,317revanues
in associated expenses. Theday andalsoaccrued 807,059 allegedly on a varietyof projects $ theexpense accruals rwosed,butagain were afterthethirdquarter losed, c however, therevenue entries werenot. 14. two f itemspertained purported to hotel PowerCold's largest ictitiousrevenue
projects Henderson, L Nevada Ne* Orleans, ouisiana.On March31,2004,through and in hotel.TheCompany, Comfort PowerCold Air, recorded revenue $7I 5,000for theHenderson of for howwo, hadnocontract thisproject.
v. et SEC PowerCot Corporution, al, Complaint Page'4
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recorded revenue $1,485,754 theNew of for the On June29,2004, Company
in Orleans hotel and an invoicewas genoated the sameamountfor "hotel equipment." services delivered or did Ultimately,PowerCold not win the confiactand neverrendered for equipment thisproject. 16. fromnon-existent continued record to revenue Air, Through Comfort PowerCold
Air revenue f $568,500 o fiom Comfort recorded contracts 2005.For instance, April 2005, in in F Ait p County, lorida.Comfort alsorecorded purported rojectsn Fairfield, i IowaandHernando In morelegitimate. truth,however, PowerCold projects, themappear expenses forthese tomake projects ndnevoprovided in anygoods services or forthese a had andComfortAir no contracts withthes€ projects. connection 17. Simola Comfort employees and Air that ln lateSeptembo 2005, Hofete-mailed
PowerCold's revsnues thequader.Comfort for Air theyneeded to'bill something" support to Nevada.Neither hotel thenbooked for o $826,875f reverues a supposed poject in LasVegas, provided goods services, or had orever PowerColdorComfoilAir, n however, a contract, forthis prqect. 18. PowerColdesordedevenue from severaf otherfictitiouscontracts r r duringthe
(involving period. These generally magnitude ha$actionswsreof a muchsmaller .revenues patterasimilar those s to described ranging from$30,000 $389,513), theyfollowed to but above h (and thererording r€venue on projectshatPowerColdadnot yetbeurawarded sometimes of t wasnever warded), false documents. a andgenerating supporting 19. for From2003tlrough2005,Cahillwasresponsible obtaining rwiewing and
projects. o fulfill thisresponsibility, T Caihill hould insurancendbonds PowuCold's a have for s
SEC PowertoldCotpomtion, al. v. er
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or or d confacts. PowerColdid not havemntracts obtaininsurance all reviewed Powercold periodicSEC PowerCold's projects.Yet, Cahill signed certified and bondson non-existent figures. the reports containing falsified 20. violated GAAP recognition thefictitioustransactions from revenue PowerCold's
recognition its SEC in filings. Under GAAP, about andwascontaryto representalons revenue , S or until and revenueannot c berecognized it is (a)realized realizable, (b) earned.See tatsment ('CON') No.5, f 83. Revarues areconsidered been tohave Accounting C,oncepts of Financial what substantially it mustdo to be entitledto the whenthe entityhasaccomplished earned revenues 1d., of typicallyare represented therevenues. ll 83O). In thecase goods, by benefits whereas, the caseof services, in revenues deemed "eamed"whenthe goodsue delivered, / when services provided.d.,!l 84. the are are ordinarily "earned" 21. principles, thenotes PowerCold's to during financial statemetrts Reflecting these
policies thefollowing revenue reoognition in period the way: therelevant described company's revenue from productsalesuponshipmento the t The Company recognizes w are revenue recognized henservices performed is and customer. Service for accounts long+fin contracts billable...: TheCompany onthep€rcentage-of progresses asworkon contracts m and is ,, completion ethod, revenue recognized
p revenueecognitiol olicies.Rathu,it simply r PowerCold failedtrofollow GAAPor its stated transactions, substantially inflating reportedesults. its r recorded revenue made-up ftom 22. P also inflated and prematurely Throughits Florida subsidiary, owerCold
jobs. For examplg the first quarto2003,PowerCold in revenue from legitimate rccogiized
SEC Powe{old iorpomtion, tal. v. e Conrplaint Pase-6
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F at to conhacted install an HVAC system a St. Augustine, loridahotel. UnderGAAP, it until, at the earliest, had fromthis contract anyrevenue Powercoldcouldnot recognize u a and the delivered HVAC equipment, couldnotrecognizell ofthe revenuentil it hadinstalled of 81-1, ccounting S AICPAStatement Positton A withthecontract. ee thesystem accordance in ("SOPSl-1),lT Production'\ypte Conlracts and of for Performance Cowtruction-Type Certdin didootdeliver equipment theproject ntil to u however, 22;CONNo. 5,lJll83-84.TheCompany, installation until the first quarterof 2005. tlre third quarter 2004,nd did not complete of r 1 ofthe totalcontract revenue f $354,793 o Nonetheless, Company the improperlyecorded 00% . in thefint quarter 2003 of 23. revenuen another itimats transaction June o l€g in 2003, TheCompany overstated
C hotel. To obtainhis to whenComfortAir sold HVAC equipment a Wellington, olorado s on f a o the cnmmissionnthesale, PowerColdalesman theproject orwarded ninvoiceshowing paidthesalesman's commission thetotaldueto PowerColds$200,225. heCompany T based a in accounting systsm as$800,000. onthisamoun! utrecorded sale PowerCold's the b 24. did o Cahillshould have knownthatPowerCold noteamtheadditional revenue n
theWellington hewasnotableto obtain bonding installtheequipment. to tiansaction, because Thus,Cahill knew or shouldhaveknownthat this was only an equipment sale. Simola acknowledged receivable. thatthiswasnota legitimate 25. recognition from alsoimproperly accelerated revenue During2005,PowerCold
to contactstlrough a proces referred u "pr+billing." Quitesimply,pre-billinginvolved PowerCold creating invoicesor bids- andrecogizingrevenue before f wasselected provide to (or goods service€. In some howevu,PowerCold notselected theproject if it was for and cases,
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that was meaning the revenue never wils the wasinitially selected, contract latercancelled), a aboutfte H eamed. On August16, 2005,Simola" ofer andCahill wereexpressly dvised Air w be since that and cancelledontracts, later, thethirdquarter ould a disaster, Comfort could c 'lre-billed" projects O 5, thathadbeencancelled. n October 2005, with various not proceed (whichhe forwarded Hofer)identifoing to conhacts ith w Simola received Comfort memo a Air p cancelled, uponwhichPowerColdreviously ad but h revenues totaling$269,574 thathadbeen thirdquarto2005 they then in Powercold's recognized revenue. Nonetheless, wereincluded Forml0-Q financial statements. 26. premature from PoweCold's reoognition fictitiouscontracts, As with its revenue
violated fromlegitimate contracts GAAP. Power0old revenue recognition ndrevenu€inflation a deals or o because hadnot yet delivoedgoods it hadnot eamed therevenue recordednthese it providedsenices on thern when it recognized revenue.:Consequently, the PoweCold's was See 81-1, 22;CONNo. 5, tlll 83-84.It for transactions improper. SOP accounting these fl p publiclystated rwenue recognitionolicies describod above. alsocontradicted company's the 27. ("CorpFin') sent Finance 13,2004,theDivisionof Corporation OnDecember
the statement letterregarding registrution ielatingto theconvertible-debt Powercold comnient a amount PowerCold's of accounts receivable ere w transaction. CorpFin noted a substantial that auditors roteSimola thecomment overa yearpastdue. T$o dayslato, PowerCold's w about receivablet Septanbu30,2004,contracts the a letto, stating, Whenreviewing accounts in " problem from amount $1,271,184 temain outstanding December 2003.Thisis a major 31, of is accounting notreliable." whichzuggests theCompany's that
v.PowerCold orynation, al. C SEC et Cornplairt Page-8
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letters,Simolae-mailed Cahill, on January 2, of After receiving copies these
project eceivables pastduebecause r were andHenderson that 2005,stating the New Orleans p Colorado roject,or which f projects notyetstsrted.HealsosaidthattheWellington, had those in of2003,wasstill outstanding o had PoweCold recognized $800,000frevenue thefirst quarter later, nJanuary 2005, 7, o Simola +mailedCahill w A because project ascancelled. fewdays the (with a copy to Hofer) aboutPowerCold's suggesting this, too, that "pre-billing"practices, played rolein theaged receivables. a 29. had insured and of Coupled hisknowledge whattransactions or hadnotbeen with
letter,andSimola's letter,theauditor's e-mail bonded, combination CorpFin'scomment the of projects r revenueecognition from these haveknownthatPowerCold's Cahillknewor should prematuro. akingall of these T Cahill wasat least factstogether, hadbeen,at a minimum, recognition f this revenugand to the o in swuely reckless not takingsteps correct improper problems what existed. ascertaining other 30. Moreover,from 2003 through 2005, Simola"Cahill, and Hofer signed
questionnaires, indicated theinformation which that rspresentation andfraud letters management p and was financial PowerCold rovided the auditors truthfirlandaccuraie thatPowercold's to with respects. in staten€ntswerefairly stated accordance GMP in all material 31. fileda Form8-K,signed Simola" by On March14,2N6,PowerCold reporting
for by that revenues the frst nine monthsof 2005wereoverstated $3,958,420, 49%. or for of also that PowerCold amounced revenues eachof the first threequarters 2005were by39%,44Vo, 69%,respeclively, and overstated
Corporstion, ul. et SEC PowerCoV v. Conplaint Page-9
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a On July 6, 2006,the Company's udit firm notifiedPowercoldthat it was
this a its withdraving 20M and2005auditreports.PowerColdrmounced on July I l, 2006in a 2006. resignod November in by Form8-K sigred Simola.Theauditfirm ultimately 33. PoweCold'seamings materially overstated wmngdoing The defendants'
2 ftom its r overstated quarterlyevenues the first quarter 003 materially PoweCold Specifically, included for revenues 2003and2004.PoweCold 2 and through third quarter 005, its annual the i misstatementsits Formsl0-K for 2003and2004,ts Formsl0-Q for thefirst in these material statenents onForms in 2004' filed S-1 a quarters f 2003, o 2004, 2005, ndregisnation a[d three each certificates ccompanfng a eachof thesefilings, andthe Sarbanes-Oxley Simolasigned the 1 each FormI 0-QandI 0-K. Hofersigned of theFomrs 0-K andcertified 2005FormI 0-K. eachof the yean 2004and of and Cahill signed certifiedeach the FormslO-K, andcertified 2005Formsl0{, p PowerCold'sress Simolawith draftingandapproving He alsoassisted
routinelyissued eamings 2005. PowerCold releases from the first quarta of 2004through panotedthe releases releases hortlyafter eachquarterandyearclosed. Theseearnings s SEC in included thecompany's filings. revenues overstated CLAIMS FIRSTCLAIM A Violations ofSection 10ft) oftheExchanqect andRulel0b5 thereunder 34. pamsaphs through of this I 33 andincorporates PlaintiffCommission repeats
verbatim. w Complaint referen asif selfo.rlh by 35. singlyor in conaert others, connection with in Defardants, directlyor indirectly,
by and of with thepurchasendsaleof securities, useof themeans inskumentalities interstate a d schemes artifices defraud; and to corrlmerce andby useof themailshas: (a) employedevices,
i v. SEC Powettold Corporation,t aI. Conplaht Paeel0
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in tostate material necessary order facts (b) made facts of uoeue statem€nts material andomitted not under made, light of the circumstances whichtheyweremade, in to makethe statemenF a p a of whichoperate sa fraud in and misleading; (c) engaged acts, racticesndcoursos business persons. purchasers other prospective and purchasers, upon anddeceit 36. and ofthis scherne, Defendants, directly indirectly, As a partofandin fiutherance
promotional materials, writtenoffoing docurnents, prepared, or disserninated usedconfacts, which statements of untrus and a investor ndotherconespondence, oralpresentations, conlained to material facts a of matuialfacts, ndwhichomitted state matoialfactsandmisrepressntations made, under the net€ssaryin ordsrto make statements in lightofthe circumstances whichthey set 1 inclurling, butnotlimitedto, those forthin paragraphsthrough weremade, misleading, not 33above. 37. and made the above-refer€nc€d misrepresentations omissions Defendants
the regarding truth. knowhglyor withrecklessness 38. v will of By reason the foregoingDefendantsiolatedand, unlessenjoined,
l0(b) of theExchange [5 U.S.C. 78j(b)]and Act to the o continue violate provisions f Section $ Rule10b-5 thereunder C.F.R. 240.10b-5]. [7 $ CLAIM
SECOND l3(o) of thef,xchange Act
Violations Section of l3a-1.13a-11nd l3a-13
r 12b-20. sndRules 39. paragaphs tlrough 33 of this and repeats incorporates 1 PiaintiffCommission
by as Complaint reference if setforthverbarim. 40. issuen file Act requires to Section l3(a)of theExchange [5 U.S.C. 78m(a)] $
mayprescribe in conformity such and with amualandquarterlyeports theCommission r as such
etal. SEC v.PowerColdCorporation, Colnplaid l Page.l
1 Case 5:09-cv-00185-FB Document
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Exchange Rulel3a-l [17 C.F.R. 240.13a-l] Act may $ rulesastheCommission promulgate. r c Rule13a-11quiresfilingaccurateunmtreports reports, annual t requireshefiling ofaccurate requires the ActRule13a-13 C.FR. $240.13a'13] a [17 $ [17C.F.R. 240.13a-ll] ndExchange to requires issuer an quarterly R reports. ule12b-20 7 C.F'R' 240'l2b-20] filingof accurate $ [t in the statements,light of the tomake required information asmaybenecessary include material not made, misleading. under circumstances whichtheywere 41. in with thatwerenotprepared reports theCommission filed PowerCold periodic
promulgated Commission. bythe with accordance Rules 42. will violatedand, unlessenjoined, By reasonof the foregoingPowerCold
12b-20, andRules Act o Section 13(a) f theExchange [15U.S.C. 78m(a)] to continue violate $ 240.13a-1,240' and l3a-l1 13a-11 13a-13 and thereunrler. C.F.R. 240.12b-20, 13a-1, $$ t17 240.13a-131. THIRDCLAIM of Act a Violations fSections l 3(bX2XA) ndl3b(2XB) theExchanee o 43. paragaphs tlrough33 of this 1 repeats ndincorporates a PlaintiffCommission
by ceasif setfotlhverbatim. Complaint refoen 44. pursuant Section registered to having class securities a of PowerCold, Defendant
failedto: Act, 12oftheExchange in themannusetforthabove,
(a)
and which,in reasonable makeandkoepbooks,records, accounts, tlre and of andfairly reflect transactions tlispositions detail,accurately itsassets;
(b)
of accounting conaols sufficient asystem internal devise andmaintain lhat reasonable assuranoes to provide
el v. Coryorslion, slSEC PowerCold
LOmplaml Page-12
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(i)
transactions executedin accordance are with manasement's general r specificauthorization; o
(ii)
(I) a transactions rerecorded necessary !o permit preparation as of financial statements conformity with guroally accepted in principlesor any other criteria applicableto such accounting a statunents, nd(ll) to maintainaccountability assets; for
(iii) acc&ssto assets is permitted only in accordancewith
general r specificauthorization; management's o and
(iv) the recorded accountability assetss compared ith the for i w existing assets reasonable at intervals appropriate and action is taken respect anydifferences, with to 45. v Defendant PowerColdiolated By reason theforegoing, of and,unless enjoined,
l3(bX2XA) and13(b)(2)(B) theExchange [5U.S.C. will continue violate to Sections Act. of and $$78m(b)(2)(A) 78n(bX2)B)1. FOURTHCLAIM
Violetions f Section o l3(b)($ of theExchanee Act
46. PlaintiffCommission paragraphsthrough of this repeats incorporates and I 33 by Complaint reference sd forrhverbatin. asif 47. C Defendants Simola, ahi[ andHoferviolated l3(b)(5)of the Exchange Section
Act [15 U.S.C.$ 78m(b)(5)] knowingly by circumventing knowingly failingto implernent or a of or falsifuing system intemalaccountingontrols, knowingly c PowerCold's books, ecords r or accounts.
SECv.Powetlold Cotporation, al. et Corplaint Page-13
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Simola,Cahill andHofer violatedand"unless 48. By reason the foregoing, of 13(b)(5) oftheExchange [15U.S.C. 78m(bx5)]. Act enjoined, continue will toviolate Sectioa $ FIFTH CLAIM
Act l3b2-l and13b2-2
Violations fExchanse Rules o 49. paragraphs through of this and I 40 PlaintiffCommission repeats incorporates
asif Complaint byrefuence setforthverlatrz. 50. A Defendants Simola, Cahill andHoferviolatedExchange ct Rule l3b2-l |7
or falsiffing causing be falsified, books, or t0 the by, C.F.R. 240.13b2-11 directly indirectly, $ to 13(b)(2)(A) theExchange [5 U.S.C. of Act records r accounts Powercold of subject Section o g 78m(b)(2)(A)1. Exchange Rule l3b2-2 C Furthermore, Act Simola, ahillandHoferviolated to matoiallyfalseor misleading by [7 C.I.R. $ 240.13b2-2] makingor causing be made, or statements omissions or 1oanaccountant auditor. 51. Defendants Simola, CahillandHoferengaged thsabove-referenced in conduct in
mannor, anintsntional negligent or 52, Simola" Cahill and Hofer violatedand,unless By reason the foregoing, of
Act enjoinedwill continue violateExchange Rulesl3b2'1 and l3b2:2 ll7 C.F.R.$$ to 240.13b2-l 240.13b2-21. nd SDilHCLAIM
13(a) f tle Exchange Violations Section of AidingandAbetting o Act
134-11d 13a-13 andRules 12ts20. 13a-1. u thereunder
53. puagaphsI ttrough33 of this r€p PlaintiffCommission eats ard incorporates
Complaint reference setforft verbafin. by asif 54. a whose common stockis registered the \yith PowerCold s a publiccompany,
quarterly cunent and reports accordance Section in is to with Commission required file annual,
Corporutioel al. 9EC Powercold v. , Conplaint Page14
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Exchange Rule Act and thereunder, l3a-1,l3a-11 13a'13 Act 13(a) f theExchange andRules o to expressly required statute by and contain, addition disclosures in 12b-20 requires thatreports the to that made as rules, such other information is necessary ensure thestatements arenot,under circumstanoes, misleading, 55. Simola, and filed, CahillandHoferaided fraudulently andDefendants PoweCold
periodic annualports. Simola, filing and r€ falsoandmisleading of, cunent, abetted owsrcold's P filings contained and false CahillandHoferknw, or werereckl€ss in notknowingthatthese y to reportswith the misleading the statementset caused company file the misleading public. themavailable theinvesting Commission make and to 56. awareness Defendant Simol4with general By reason his actsandpractices, of
assistance, Powe€old's violations,and unless and throughsubstantial aldedand abetteal o Act enjoined will continue aid and abetviolations, f Sectionl3(a) of the Exchange to gg Rules 1 and l3a-1, 3a-11 13a-13 C.F.R. and [17 $$ [15U.S.C. 78m(a)], Commission 12b-20, thereunder. reason their actsand By 240.12b-20, 240.13a-1, 240.13a-lland240.13a-131 of practices, efendants ahill and Hofer, with genoralawareness tkough substantial D C and violations, unless assistance, andabetted owerCold's P and enjoined continue aid will to aided gg Act and abetviolations, Section of 13(a)of the Exchange [15U.S.C. 78n(a)],and Commission 12b-20, Rules l3a-1andl3a-13 C.F.R. 240.12b-20,240.13a-1 and240.l3a [7 $$ l3l thereundo. SDVENTH CLAIM Vlolations fRule134-14ftheExchanse o o Act
57. paragraphs through33 of this Complaintby 1 and incorporates Plaintiff repeats
reference if setforth verbatim. as
SEC Powet{old v. el Coryoralion, sl. Complaint Pag+15
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58.
a certification behalfof on Simola Cahillsigned Sarbanes-Oxley and Defendants
aware revenue the theywere thatPowerCold's sigired certification, PowerCold. thetimeeach At results ach thefinancial e certified accurate. as had impacted recogrition scherne materially 59. principal executive financial and requires anissuer's Act Exchange Rulel3a-14
andannual eportfiled or submitted the issuerunder r by officer to certiff in eachquarterly thereport; nd2) based a Act, ontheir Section 13(a) theExchange that:l) theyhavereviowed of fact,or omit to state a knowlulge,hereportdoes contain untrue not any statement material of t made, factnecessary order make statements in lightofthe circumstances in to tl€ under material n w to whichsuchstatsrn€.ltswae made, otmisleading ith respect the periodcovered the by report. Simola Cahillknew, r werereckless notknowing,hatthereports in t each and o cenified ofmaterial andomitted state fact to material necessary make facts containedntrue u statements to under thestatements thereiqin lightof thecircumstances whichthestatements madg made were notmisleading. 60. By reason Simola Cahillviolated, and enjoined will ofdre foregoing andunless
promulgated Section continue violate, to Rule13a-14 C.F.R. 240.13a-14] under 302ofthe $ [17 Sarbanes-Oxley 2002. Actof DIGIITH CLAIM l3ftX2XA)and13ftX2)(B) ftheExchrnpe o AidineandAbettineViolations ofSection Act paragraphsthrough of this Complaint 61,. Plairtiff repeats andincorporates I 33 by referencesif setforlhverbatim, a 62. pumuant Section registered Defendant PowerCold, havhga class securities of to
12 of the Exchange ct, is required marntain accounting !0 its records accordance A in with l3(b)(2)(e) ndt3(bX2Xb) Sections a oftheExchange Act.
SEC Powe{old Corporstion, ql. v, et Complaint Pag+16
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its records, nd Defendants Simola" a PowerCold failedto maintain accounting
records in Powe€old's failureto maintain accounting its CahillandHoferaidedandabetted Act. oftheExchange andt3(bX2)O) withSections 13(b)(2)(A) accordance 64. C Simola" ahill and Hofer aidedand By reason the foregoingDefendants of
violations Sections of l3(b)(2)(A) and abet, enjoined continue will toaidand abetted, andunless and 78n(b)(2)e)]. Act. oftheExchango [15 U.S.C.$78m(b)(z)(A)
13(b)(2)(B) $ PRAYER
requests theCourt:
that respectfully TheCommission 65. from and restrain enjoinDefendants violatingot aiding abetting and Permanently
oflaw andrulesalleged thisComplaint. in theprovisions directly indilectly, or violations, 66, plus post-judgrnent interest to OrderDefendants pay civil moneypenalties,
t Act 2l(dX3) of the Exchange [15 U.S.C.$ 78u(d)(3)in anamounto be pursuant Section to by determined theCourt. 67, under 21(d)(2) theExchange [15 U.S.C. of Act that Ordsr Defendants, Section
g 78u(d)(2),arepohibitedfrom aclirgasoltcsrs or directors anyissuerhathasa class of t of p 12 to Act r securitiesegisteredursuant Section of the Exchange [15 U.S.C.$ 78!] or that is pursuant Section oftheExchange [15U.S.C. 7So(d)]. l5(d) Act to required tofilereports $ 68. just m deem or appropriate. s oiherielief asthisCourt ay Grant uch
et SECv.Pqwercold Corporstion, ql. Conplaint Page-l'l
1 Document Case5:09-cv-00185-FB
Page18of 18 Filed0311112009
Dataliln* auyot /h"^J-zoos. /v4
Loftin,
Haro'ldR. Texas No. 12491090
Bar U.S. ecurities Exchange
S and Commission Bumett laza, Suite1900
P 80I Cherry Street, #I 8
Unit '76102-6882 FortWorth, X T (817) 978-6450
(817) 78-4927
(fax) 9
9ECv.PowercoldCorporstion, t sl. e Complaint Page'18