David A. Jones

Securities Exchange Act of 1934
Release No. 49784 / May 28, 2004

Accounting and Auditing Enforcement
Release No. 2025 / May 28, 2004

Administrative Proceeding
File No. 3-11504

In the Matter of DAVID A. JONES, CPA

: : : : : : : :

ORDER INSTITUTING PROCEEDINGS PURSUANT TO RULE 102(e) OF THE COMMISSION'S RULES OF PRACTICE, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that administrative proceedings be, and hereby are, instituted against David A. Jones ("Jones" or "Respondent") pursuant to Rule 102(e)(3) of the Commission's Rules of Practice.¹

II.

In anticipation of the institution of these proceedings, Jones has submitted an Offer of Settlement ("Offer") that 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 contained herein, except as to the Commission's jurisdiction over him and the matters herein and the entry of the injunction, which are admitted, Jones consents to the findings and sanctions set forth below.

Accordingly, IT IS ORDERED that proceedings pursuant to Rule 102(e) of the Commission's Rules of Practice be, and they hereby are, instituted.

III.

On the basis of this Order Instituting Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions ("Order") and the Offer submitted by Jones, the Commission finds that:

A. On July 12, 2002, the Commission filed a complaint (the "Complaint") in the United States District Court for the District of Utah against Intelliquis International, Inc., Mark W. Tippets, David A. Jones, and Kevin E. Orton. The Complaint alleges, among other things, that Jones violated Section 17(a)(1), (2) or (3) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 13b2-1 thereunder. The Complaint further alleges Jones aided and abetted Intelliquis' violations of Sections 13(a) and 13(b)(2)(A) and (B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. Through its Complaint, the Commission sought a permanent injunction and other relief against Jones.

B. The Complaint alleges that Jones, Chief Financial Officer of Intelliquis and a certified public accountant licensed to practice in the State of Utah, knowingly permitted Intelliquis to engage in improper revenue recognition practices in violation of Generally Accepted Accounting Principles ("GAAP").

C. The Complaint also alleges Jones allowed Intelliquis to recognize revenue from the sale of its software products upon shipment despite the fact that Intelliquis' contracts with its distributor granted the distributor an unlimited right to return Intelliquis products.

D. The Complaint alleges that: (1) under GAAP, Intelliquis should not have recognized revenue upon shipment and, as a result overstated income and revenue; (2) Jones prepared Intelliquis' financial statements which included the improperly recorded revenue; and (3) the improper revenue from transactions with its distributor caused Intelliquis' financial statements to be materially misstated.

E. The Complaint also alleges Intelliquis included those materially inaccurate financial statements with its Forms 10-KSB for the years ended December 31, 1998 and December 31, 1999, in its Forms 10-QSB for the quarters ended March 31, 1999, June 30, 1999, and September 30, 1999, and in a Form SB-2 registration statement that was filed with the Commission.

F. On March 24, 2004, without admitting or denying the allegations in the Complaint, Jones was enjoined by the United States District Court for the District of Utah from future violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and from aiding and abetting future violations of Sections 13(a) and 13(b)(2)(A) and (B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder, and ordered to disgorge $34,591.32 plus prejudgment interest thereon of $5,088.56. Payment of all but $5,000 of that amount was waived based on the representations in Jones' sworn financial statement. In addition, no penalty was imposed on Jones based on the representations in his sworn financial statements.

IV.

In view of the foregoing, the following sanctions agreed to in the Offer submitted by Jones are imposed. Accordingly, IT IS ORDERED that:

A. Jones is suspended from appearing or practicing before the Commission as an accountant.

B. After 5 years from the date of this order, Jones may request that the Commission consider his reinstatement by submitting an application (attention: Office of the Chief Accountant) to resume appearing or practicing before the Commission as:

1. a preparer or reviewer, or a person responsible for the preparation or review, of any public company's financial statements that are filed with the Commission. Such an application must satisfy the Commission that Jones' work in his practice before the Commission will be reviewed either by the independent audit committee of the public company for which he works or in some other acceptable manner, as long as he practices before the Commission in this capacity; and/or

2. an independent accountant. Such an application must satisfy the Commission that:

• (a) Respondent, or the public accounting firm with which he/she is associated, is registered with the Public Company Accounting Oversight Board ("Board") in accordance with the Sarbanes-Oxley Act of 2002, and such registration continues to be effective;

  (b) Respondent, or the registered public accounting firm with which he is associated, has been inspected by the Board and that inspection did not identify any criticisms of or potential defects in the Respondent's or the firm's quality control system that would indicate that the Respondent will not receive appropriate supervision or, if the Board has not conducted an inspection, has received an unqualified report relating to his, or the firm's, most recent peer review conducted in accordance with the guidelines adopted by the former SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms or an organization providing equivalent oversight and quality control functions;

  (c) Respondent has resolved all disciplinary issues with the Board, and has complied with all terms and conditions of any sanctions imposed by the Board (other than reinstatement by the Commission); and

  (d) Respondent acknowledges his responsibility, as long as Respondent appears or practices before the Commission as an independent accountant, to comply with all requirements of the Commission and the Board, including, but not limited to, all requirements relating to registration, inspections, concurring partner reviews and quality control standards.

C. The Commission will consider an application by Jones to resume appearing or practicing before the Commission provided that his state CPA license is current and he has resolved all other disciplinary issues with the applicable state boards of accountancy. However, if state licensure is dependant on reinstatement by the Commission, the Commission will consider an application on its other merits. The Commission's review may include consideration of, in addition to the matters referenced above, any other matters relating to Jones' character, integrity, professional conduct, or qualifications to appear or practice before the Commission.

The sanctions ordered herein shall become effective immediately.

By the Commission.

Endnotes

---

¹ Rule 102(e)(3)(i) provides, in relevant part, that:

The Commission, with due regard to the public interest and without preliminary hearing, may, by order, . . . suspend from appearing or practicing before it any . . . accountant . . . who has been by name . . . permanently enjoined by any court of competent jurisdiction, by reason of his or her misconduct in an action brought by the Commission, from violating or aiding and abetting the violation of any provision of the Federal securities laws or of the rules and regulations thereunder.