For Release: April 8, 1998
CFTC FILES ENFORCEMENT ACTION
AGAINST HENRY & HORNE, PLC, AN ACCOUNTING FIRM, AND TWO OF ITS
The Commodity Futures Trading Commission (CFTC) announced today that it
has instituted administrative proceedings against Henry &
Horne, PLC, a public accounting firm, and Sherald Griffin,
CPA and Donna Laubscher, CPA, all of Tempe,
Arizona. Simultaneously, the CFTC accepted offers of settlement tendered by
Griffin, a partner with the firm, and Laubscher, pursuant to which they are
denied the privilege of appearing or practicing before the CFTC, with the
right to apply for reinstatement in five years.
The CFTC complaint against Henry & Horne alleges that from March 1992 through September 1995, Henry & Horne performed four separate annual audits of O'Connell & Associates (OCA), a Vermont limited partnership, operated by Thomas O'Connell as a commodity pool. O'Connell is alleged to have operated OCA as a Ponzi scheme and defrauded investors of more than $14 million before he was arrested by law enforcement authorities. (Also today, the CFTC filed an injunctive action against O'Connell in the United States District Court for the District of Vermont. In that action, O'Connell consented to the entry of a permanent injunction and other relief.)
According to the complaint, the audits of OCA, which Henry & Horne distributed to OCA's limited partners and which were prepared by Griffin and Laubscher in the course of their employment at Henry & Horne, failed to adhere to the requirements of Generally Accepted Auditing Standards (GAAS) in numerous material respects. The CFTC complaint alleges that as a result of the GAAS failures, Henry & Horne engaged in "improper unprofessional conduct" within the meaning of Section 14.8(c) of the CFTC's regulations. According to the complaint, "In part as a result of these audit reports, O'Connell was able to perpetuate OCA's criminal activity for an additional three and a half years, during which time he defrauded investors out of an additional $6,000,000." The complaint institutes public administrative proceedings to determine whether an order should be entered directing that Henry & Horne be permanently barred from appearing or practicing before the CFTC.
Based on the same allegations contained in its complaint against Henry
& Horne, the CFTC simultaneously issued an order finding that Griffin
and Laubscher engaged in "improper unprofessional conduct" within the
meaning of Section 14.8(c) of the CFTC's regulations. Under the terms of
the settlement with Griffin and Laubscher, they are permanently denied the
privilege of appearing or practicing before the CFTC and agree not to apply
to the CFTC for reinstatement for five years from the date of the order. If
Griffin or Laubscher applies to the Commission for reinstatement after that
date, the Commission will grant such application if it finds, upon
consideration of their professional performance and disciplinary records
and any other relevant information, no grounds to warrant denying them the
privilege of appearing or practicing before it.
Geoffrey Aronow, the Director of the CFTC's Division of Enforcement stated regarding today's administrative proceedings,
"The audit process provides an important bulwark for the public against misconduct by unscrupulous operators in the financial services industry. When an auditor fails to discharge its basic responsibilities when performing an audit of an entity involved in the futures business, the Division will pursue the matter vigorously and, as is the case here, seek substantial remedies to protect the public against the risks created by auditors' conduct."