Sec Sues Media Vision Over Largest-Ever Valley Fraud

Computergram International, July 10, 1998

Four former officers of Media Vision Technology Inc are being sued by the Securities and Exchange Commission in what the SEC described as the largest financial fraud case seen in Silicon Valley. The company's former chief executive Paul Jain, chief financial officer Steven Allen, controller Robert Williams and manufacturing director Wayne Nakamura are all charged with financial reporting fraud and insider trading.

"This is the largest fraud that this office has seen in Silicon Valley" said David Bayless of the SEC's San Francisco office. The regulators allege that after artificially inflating revenue and understating expenses, they lied to auditors and created false accounting entries. Jain is alleged to have made $1.5m selling stock in the multimedia computer products company. To add to the woes of the former directors, the Federal Bureau of Investigation is carrying out a parallel criminal investigation and has obtained confessions from three Media Vision officials, who have agreed to co-operate with the investigations. While Media Vision had a stock market value of $640m in 1994, it crashed after the fraud was revealed and the company filed for bankruptcy. It was then reorganized to become Aureal Semiconductor Inc, which despite some important contracts for its 3D audio technology, made a loss of $5.5m on revenues of just $3.6m in its first quarter to March 31.