Kevin J. Morrison, et al.

The Securities and Exchange Commission ("Commission") announced that on November 6, 2003, Mildred K. Miller was sentenced to 60 months imprisonment and ordered to pay more than $4.7 million in connection with criminal charges brought by the United States Attorney for the District of Connecticut. On March 7, 2003, Miller, age 54, of West Hartford, Connecticut, pleaded guilty to one count of wire fraud in violation of 18 U.S.C. § 1343 for her role in a financial fraud perpetrated at a American Commercial Financial Corporation ("ACFC"), a wholly-owned subsidiary of Boston-based HPSC, Inc.

In a related civil enforcement action, the Commission alleged that Miller improperly received more than $4.7 million in connection with a financial fraud perpetrated by Kevin J. Morrison, also of West Hartford, Connecticut. According to the Complaint, between 1997 and May 2002, Morrison, the former executive vice president of ACFC, improperly diverted more than $4.7 million of corporate assets to Miller, a purported ACFC factoring customer. Morrison attempted to conceal his embezzlement by regularly providing fictitious financial reports, which were incorporated in the parent company's Forms 10-K and Forms 10-Q filed with the Commission for the periods ended December 31, 1997 through March 31, 2002, causing HPSC to materially overstate its net income and earnings per share by between 4% and 112% during the affected filing periods. On February 13, 2003, the Commission obtained a default judgment against Miller. The court ordered Miller to pay disgorgement of $4,782,381.26, plus prejudgment interest thereon of $189,813.63.

On November 21, 2002, in a separate criminal action, Morrison pleaded guilty for his role in the fraudulent scheme before Judge Hall to one count of wire fraud in violation of 18 U.S.C. § 1343. On March 31, 2003, Morrison was sentenced to serve 16 months in prison and ordered to pay restitution of more than $4.7 million.

For more information, see Litigation Release Nos. 17686 (August 16, 2002) and 17921 (January 8, 2003).