Dale Peterson et al.

The Securities and Exchange Commission (ACommission@) announced today that on June 26, 2003, the Honorable Patricia V. Trumbull, of the United States District Court for the Northern District of California, entered final judgments against seven former senior officers of Signal Technology Corp., a Danvers, Massachusetts defense contractor formerly located in Sunnyvale, California. The Court entered injunctions against all defendants, ordered that six of the seven defendants pay civil monetary penalties, and barred the four defendants who had been the most senior officers of the company from serving as officers or directors of public companies. The defendants consented to the judgments, without admitting or denying the allegations in the Commission=s lawsuit.

In the suit, the Commission alleged that defendants caused Signal Tech to inflate its reported earnings by over $9 million from January 1996 through June 1998. According to the Complaint, each of the individual defendants personally directed or participated in the company's improper accounting practices at its Florida-based Keltec division, when it failed to record known losses on major contracts, prematurely recognized revenue, and failed to write off worthless inventory. As a result of the defendants= accounting fraud, the Complaint alleged, Signal Tech misstated its net income by amounts ranging from 8% to 294% in financial statements filed for reporting periods during January 1996 through March 1998 and reported a profit, rather than its actual loss, for the year 1997. The Commission alleged that the defendants' conduct violated the antifraud, periodic reporting, record keeping, internal controls and lying to auditors provisions of the federal securities laws.

The final judgments ordered the following relief from the defendants:

Dale Peterson, Signal Tech's Chief Executive Officer and Chairman of the Board from 1994 to mid-1998, was ordered to pay a civil monetary penalty of $100,000, was barred from serving as an officer or director of a public company, and was permanently enjoined from violating Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Securities Exchange Act of 1934 (AExchange Act@) and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1 and 13b2-2.

Russell Kinsch, Signal Tech's Chief Financial Officer from February 1996 through June 1997, was ordered to pay a civil monetary penalty of $50,000, was barred from serving as an officer or director of a public company, and was permanently enjoined from violating Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1 and 13b2-2.

James Walsh, president of Signal Tech from May 1993 until August 1997 and vice chairman and chief technical officer from August 1997 until December 1997, who also served as Keltec's de facto president during the third quarter of 1997, was ordered to pay a civil monetary penalty of $75,000, was barred from serving as an officer or director of a public company, and was permanently enjoined from violating Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1.

Richard Nabozny, vice president of operations of Signal Tech from 1992 through June 1998 and Keltec's president from January through June 1998, was ordered to pay a civil monetary penalty of $75,000, was barred from serving as an officer or director of a public company, and was permanently enjoined from violating Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1.

Michael Smith, president of the company's Keltec division from February 1996 until March 1997, was ordered to pay a civil monetary penalty of $50,000 and was permanently enjoined from violating Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1.

Charles Balentine, controller of the Keltec division from February 1996 to March 1998, was permanently enjoined from violating Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1.

Wayne Armstrong, president of Keltec from March 1997 through December 1997, was ordered to pay a civil monetary penalty of $25,000 and was permanently enjoined from violating Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1.

See also, Litigation Release No. 17439 (March 27, 2002).