UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF OHIO

SECURITIES AND EXCHANGE COMMISSION'S COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF

Plaintiff, the Securities and Exchange Commission ("Plaintiff" or "Commission"), alleges as follows:

NATURE OF THE ACTION

1. This action involves accounting fraud committed by two senior officers of the Australian subsidiary of CorrPro Companies, Inc. (CorrPro), a U.S. public corporation based in Medina, Ohio. From at least October 2000 through February 2002, Greg Waring (Waring), the managing director of CorrPro Companies Australia Pty., Ltd. (CorrPro Australia), and Craig Treloar (Treloar), the financial accountant of CorrPro Australia, falsified the subsidiary's accounting records in order to inflate its net income and its net assets.

2. Waring and Treloar falsified CorrPro Australia's financial records so that CorrPro Australia would meet financial performance targets set by managers at the parent company. In turn, CorrPro misstated its financial statements after incorporating the false numbers from CorrPro Australia. CorrPro eventually issued a restatement for 2001 reducing net income by $3.6 million from $8.3 to $4.7 million and net worth by $3.8 million.

3. Defendants Waring and Treloar, directly or indirectly, have engaged in, and unless restrained and enjoined by this Court will continue to engage in, transactions, acts, practices, and courses of business which violate Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) [15 U.S.C. §§ 78j(b), 78m(a), 78m(b)(2)(A), 78m(b)(2)(B) and 78m(b)(5)] and Rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1 thereunder [17 C.F.R. §§ 240.10b-5, 240.12b-20, 240.13a-1, 240.13a-13 and 240.13b2-1.]

4. The Commission brings this action to enjoin such transactions, acts, practices and courses of business pursuant to Sections 20(e), 21(d) and 21(e) of the Exchange Act [15 U.S.C. §§ 78t(e), 78u(d) and 78u(e)].

JURISDICTION AND VENUE

5. The Court has jurisdiction over this action pursuant to Sections 21(d), 21(e) and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e) and 78aa].

6. Venue is proper in this Court pursuant to Section 27 of the Exchange Act [15 U.S.C. § 78aa].

7. Waring and Treloar are residents of Australia.

8. Personal jurisdiction is proper where a defendant has "purposefully directed" his activities toward the forum jurisdiction and where the underlying action is based upon activities that arise out of or relate to the defendant's contacts with the forum. The exercise of jurisdiction must be reasonable and must not offend traditional notions of fair play and substantial justice.

9. Personal jurisdiction is satisfied here. Waring and Treloar purposefully directed their activities towards the United States by supplying false financial records of CorrPro Australia to CorrPro in Medina, Ohio which had the effect of misstating CorrPro's true financial condition.

10. Subject matter jurisdiction is also satisfied. Subject matter jurisdiction exists over defendants whose conduct, although occurring outside the United States, substantially affected the United States securities markets or United States investors. Waring and Treloar acted with an intention to deceive CorrPro by supplying it with false accounting records. Their fraudulent conduct had a severe impact on both CorrPro and its shareholders.

11. Waring and Treloar have made use of the means and instrumentalities of interstate commerce in connection with the acts, practices and courses of business alleged herein in the Northern District of Ohio and elsewhere.

12. Waring and Treloar will, unless enjoined, continue to engage in the acts, practices and courses of business set forth in this Complaint and acts, practices and courses of business of similar purport and object.

DEFENDANTS

13. Greg Waring is a resident of Victoria, Australia. Waring, age 58, was CorrPro Australia's managing director (the equivalent of an American Chief Executive Officer) until February 2002. Prior to serving as managing director, Waring served as controller of Wilson Walton International, CorrPro Australia's predecessor company and in other positions with that company prior to that time. As managing director, Waring was responsible for all activities of CorrPro Australia, and reported to CorrPro's Vice-President, International. Waring was eventually terminated by CorrPro because of his role in fraudulent accounting practices.

14. Craig Treloar is a resident of Wyndham Vale, Victoria, Australia. Treloar, age 41, was CorrPro Australia's financial accountant (the equivalent of an American Chief Financial Officer) until February 2002. Prior to serving CorrPro Australia as financial accountant, Treloar worked for CorrPro Australia's predecessor company, Wilson Walton International, from 1982 through July 1998, starting as an accounts payable clerk and ultimately serving as company secretary and financial accountant. Treloar resigned in February 2002 while CorrPro was conducting a review of CorrPro Australia's books and records.

OTHER RELEVANT ENTITIES

15. CorrPro Companies, Inc. (CorrPro) is an Ohio corporation with its principal place of business in Medina, Ohio. CorrPro provides corrosion control engineering and related services and products to infrastructure, environmental and energy markets. CorrPro's products and services include (i) corrosion control engineering services, systems and equipment, (ii) coatings services, and (iii) pipeline integrity and risk assessment services. CorrPro's common stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act and is traded on the American Stock Exchange under the symbol CO. During the relevant period, CorrPro filed required reports with the Commission pursuant to Section 13(a) of the Exchange Act. CorrPro's fiscal year end is March 31.

16. CorrPro Companies Australia Pty., Ltd. (CorrPro Australia) was a subsidiary of CorrPro with its principal place of business in Melbourne, Australia. CorrPro Australia was created when CorrPro acquired Wilson Walton International in July 1998 and renamed it as CorrPro's Australian subsidiary. CorrPro sold CorrPro Australia on or about October 1, 2002. While it was a subsidiary of CorrPro, CorrPro Australia provided corrosion control products and services to the petroleum, utility, industrial, marine and offshore industries, and government infrastructure. CorrPro Australia also provided coatings and pipeline integrity services to the oil and gas, water treatment, mining and marine industries.

WARING AND TRELOAR ENGAGED IN A FRAUDULENT SCHEME TO FALSIFY THE ACCOUNTING RECORDS OF CORRPRO AUSTRALIA

17. Beginning in at least October 2000, Waring, and Treloar at Waring's direction, began entering journal entries to CorrPro Australia's general ledger that increased profit and net assets. Among other falsifications, Waring and Treloar falsified invoices and credit notes, and made false entries to subledgers including accounts payable, accounts receivable, costs of goods sold and inventory, and falsified reporting packages sent to CorrPro.

18. In addition, before the year-end audit of fiscal year 2001 (year ended March 2001) by CorrPro's independent auditor, Treloar and Waring recorded fictitious invoices in CorrPro's computerized accounting records and, when requested by the auditor, later printed physical copies of the false invoices. Waring and Treloar also falsified credit notes from suppliers, and accordingly, the accounts payable ledger, to make it look like CorrPro Australia owed less money than it did. Ultimately, Treloar and Waring created two different versions of the "debtors subledger" (what U.S. accountants would call accounts receivable).

19. Beginning in April 2001, CorrPro Australia was no longer required to send its monthly trial balance to CorrPro along with a monthly reporting package that CorrPro required from each of its subsidiaries. Because CorrPro Australia was no longer submitting its actual trial balance, Waring and Treloar simply falsified the reporting package itself, rather than falsifying the underlying CorrPro Australia general ledger and subledgers.

20. In August, September and October 2001 Waring and Treloar took steps to reconcile the general ledger to the misstated reporting packages. In doing so, Waring and Treloar falsified entries to the accounts receivable and accounts payable subledgers, inventory subledgers, and cost of sales records. In addition, Waring and Treloar took steps to fabricate documents to be reviewed by the company's independent auditors.

21. In November 2001 before an expected audit, Treloar e-mailed Waring two versions of a spreadsheet summarizing monthly results from April 2001 through September 2001. In order to ensure that the auditors would review general ledger balances that matched those previously sent to CorrPro, Waring recorded false entries to the general ledger to increase profit in each month.

22. In December 2001, CorrPro instructed the corporate controller of CorrPro Asia, to visit CorrPro Australia to ensure that CorrPro Australia could produce the necessary reports for the auditor's review and to investigate possible accounting difficulties. Waring and Treloar had also failed to cooperate with the independent auditors by failing to provide them with information necessary for the auditors to complete their work in November 2001.

23. In January 2002, in anticipation of this visit, Waring instructed Treloar to request a second copy of CorrPro Australia's general ledger from the software support company that managed the program. Waring used the second copy of the general ledger to create support for the misstated results that CorrPro Australia had reported to CorrPro in its monthly reporting packages, from August 2001 through December 2001. Waring instructed the accounts receivable clerk to place the falsified physical subledger report in the CorrPro Australia files.

24. When the corporate controller of CorrPro Asia arrived in Australia on February 7, 2002, he found that Waring and Treloar could or would not give him certain key financial records for his review. After he returned to Asia, CorrPro pressured Waring to get the corporate controller of CorrPro Asia the records, but as of February 18, 2002, Waring and Treloar still had not produced the records. Thereafter, Treloar resigned, and was therefore unavailable to assist in the review by the corporate controller of CorrPro Asia who thereafter dealt directly with Waring, and with lower-level staff in the accounting department, when he visited CorrPro Australia again on February 21, 2002.

25. During his second visit, the corporate controller of CorrPro Asia began to review certain of CorrPro Australia's invoices and financial records that were available in the office. He found duplicate copies of some subledgers that bore different captions, which indicated to him that one of the copies was produced by a different system or at a different time. He also found that some invoice numbers had been duplicated and altered, which indicated to him that some of the invoices were false.

26. The corporate controller of CorrPro Asia asked the accounts receivable clerk for an explanation of the discrepancies in the invoices. She reported that just that day, Waring had asked her to falsify invoices and/or cash receipts and include them in the records provided to Lim. Although Treloar had already resigned and no longer worked at CorrPro, the corporate controller of CorrPro Asia called Treloar and met with him on the evening of February 26, 2002. Treloar said he and Waring had been falsifying CorrPro Australia's reports of revenue, costs of sales, receivables, inventory and other records. Treloar had kept a copy of what he claimed to be the actual financial statements, and shared that with the corporate controller of CorrPro Asia who notified CorrPro of his discoveries. CorrPro placed Waring on administrative leave the next day.

27. On March 20, 2002 CorrPro issued a press release disclosing that it had detected possible accounting irregularities at CorrPro Australia.

THE MAGNITIDE AND IMPACT OF WARING'S AND TRELOAR'S CONDUCT

28. The fraud perpetuated by Waring and Treloar had a major impact on both CorrPro and its shareholders. Their deliberate fraud caused CorrPro Australia to file the Australian equivalent of Chapter 11 bankruptcy.

29. CorrPro did not file its 10K report for fiscal 2002 due July 1, 2002 until July 16th when it indicated that it would file required financial statements by later amendment. On August 9, 2002 CorrPro filed an amendment that included restated financials for 2001 and for each of the first three quarters for the year ended March 2002.

30. Waring's and Treloar's conduct caused major inaccuracies in the financials included in CorrPro's Form 10-K for the year ended March 31, 2001, and its Forms 10-Q for the next three quarters. The Form 10-K was filed with the Commission on July 13, 2001 and the Forms 10-Q were filed on August 14, 2001, November 14, 2001 and February 14, 2002 respectively.

31. As a result, CorrPro was forced to restate its financials with changes from its previously stated figures. CorrPro's net income for the year ended March 31, 2001 was reduced by $3.6 million, from a previously reported $8.3 million to $4.7 million. The company's net worth as of March 31, 2001 was reduced by $3.8 million from $ 45.3 million. Quarterly net income for the first three quarters of the year ended March 2002 were restated and reduced. Net income for the first quarter was reduced by $451,000 from a previously reported $225,000 to

$-226,000; net income for the second quarter was reduced by $763,000 from a previously reported $897,000 to $134,000; and net income for the third quarter reduced by $474,000 from a previously reported $545,000 to $71,000.

32. CorrPro Australia's filing of the equivalent of Chapter 11 bankruptcy caused CorrPro to write off the remainder of its investment ($2.48 million) in CorrPro Australia during the fourth quarter, citing loss of operating control due to CorrPro Australia filing bankruptcy.

33. The revelation of Waring's and Treloar's fraud also had a major impact on CorrPro's stock price causing large losses for the company's shareholders. On March 19, 2002, the day before CorrPro announced these problems, its stock closed at $2.30. On March 21, 2002, the day after CorrPro disclosed that it had detected possible accounting irregularities at CorrPro Australia, the stock closed at $1.10 — a decline of over 52%. As a result, CorrPro's market capitalization declined over $10 million.

COUNT I

Violations of Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]

34. Paragraphs 1 through 33 are realleged and incorporated by reference.

35. From at least October 2000 through February 2002, Defendants Waring and Treloar in connection with the purchase and sale of securities, by the use of the means and instrumentalities of interstate commerce, directly and indirectly: used and employed devices, schemes and artifices to defraud; made untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and engaged in acts, practices and courses of business which operated or would have operated as a fraud and deceit upon purchasers and sellers and prospective purchasers and sellers of securities.

36. Defendants Waring and Treloar knew or were reckless in not knowing of the facts and circumstances alleged in Paragraphs 34 and 35.

37. As a result of the conduct alleged in Paragraphs 34 through 36, Defendants Waring and Treloar violated Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5].

COUNT II

Aiding and Abetting Violations of Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 12b-20, 13a-1 and 13a-13 thereunder
[17 C.F.R. §§ 240.12b-20, 240.13a-1 and 240.13a-13]

38. Paragraphs 1 through 33 are realleged and incorporated herein by reference.

39. Between at least July 2001 through February 2002, CorrPro filed with the Commission financial statements in its annual reports on Form 10-K and quarterly reports on Form 10-Q that contained false financial data submitted by Waring and Treloar.

40. Between at least July 2001 through February 2002, CorrPro, directly and indirectly, filed with the Commission annual reports on Form 10-K and quarterly reports on Form 10-Q that were not in accordance with such rules and regulations that the Commission has prescribed as necessary and appropriate in the public interest and for the protection of investors, and also failed to include in those reports such further material information as was necessary to make the required statements, in light of the circumstances under which they were made, not misleading, as more fully described in paragraphs 1 through 33 above.

41. As a result of the conduct alleged in Paragraphs 38 through 40, CorrPro violated Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 12b-20, 13a-1 and 13a-13 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1 and 240.13a-13].

42. As a result of the conduct alleged in Paragraphs 38 through 41, Defendants Waring and Treloar aided and abetted CorrPro's violations of Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 12b-20, 13a-1 and 13a-13 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1 and 240.13a-13].

COUNT III

Aiding and Abetting Violations of Section 13(b)(2)(A) and 13(b)(2)(B) [15 U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)] of the Exchange Act

43. Paragraphs 1 through 33 are realleged and incorporated herein by reference.

44. From at least October 2000 through February 2002, CorrPro, directly and indirectly, failed to make and keep books, records and accounts, which in reasonable detail accurately and fairly reflected the transactions and disposition of the assets of CorrPro, as more fully described in paragraphs 1 through 33 above.

45. From at least October 2000 through February 2002, CorrPro failed to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions were recorded as necessary to permit preparation of financial statements in conformity with GAAP or any other criteria applicable to such statements as more fully described in paragraphs 1 through 33 above.

46. As a result of the conduct alleged in paragraphs 1 through 33, CorrPro violated Section 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act [15 U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)].

47. As a result of the conduct alleged in paragraphs 1 through 33, Defendants Treloar and Waring aided and abetted CorrPro in its violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act [15 U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)].

COUNT IV

Violations of Exchange Act Rule 13b2-1 [17 C.F.R. 240.13b2-1]

48. Paragraphs 1 through 33 are realleged and incorporated herein by reference.

49. From at least October 2000 through February 2002, Defendants Treloar and Waring, directly and indirectly, falsified or caused to be falsified books, records and accounts subject to Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. §§ 78m(b)(2)(A)] as more fully described in paragraphs 1 through 33 above.

50. As a result of the conduct alleged in Paragraphs 48 and 49, Defendants Treloar and Waring violated Rule 13b2-1 [17 C.F.R. 240.13b2-1] promulgated under Section 13(b)(2) of the Exchange Act [15 U.S.C. § 78m(b)(2)].

COUNT V

Violations of Section 13(b)(5) of the Exchange Act [15 U.S.C. § 78m(b)(5)]

51. Paragraphs 1 through 33 are realleged and incorporated herein by reference.

From at least October 2000 through February 2002, Defendants Treloar and Waring knowingly circumvented and knowingly failed to implement a system of internal accounting controls and knowingly falsified books, records and accounts described in Section 13(b)(2) of the Exchange Act [15 U.S.C. § 78m(b)(2)] as more fully described in paragraphs 1-33.

52. As a result of the conduct alleged in paragraph 51, Defendants Treloar and Waring violated Section 13(b)(5) of the Exchange Act [15 U.S.C. § 78m(b)(5)].

PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that the Court:

I.

Issue findings of fact and conclusions of law that the Defendants committed the violations charged and alleged herein.

II.

Issue an Order of Permanent Injunction, in a form consistent with Rule 65(d) of the Federal Rules of Civil Procedure, permanently restraining and enjoining Defendants Waring and Treloar, their officers, agents, servants, employees, attorneys and those persons in active concert or participation with them who receive actual notice of the Order, by personal service or otherwise, and each of them from, directly or indirectly, engaging in the acts, practices or courses of business alleged above, or in conduct of similar purport and object, as principals or aiders and abettors, in violation of Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the Exchange Act [15 U.S.C. §§ 78j(b), 78m(a), 78m(b)(2)(A), 78m(b)(2)(B) and 78m(b)(5)] and Rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1 thereunder [17 C.F.R. §§ 240.10b-5, 240.12b-20, 240.13a-1, 240.13a-13 and 240.13b2-1].

III.

Issue an Order pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)] prohibiting Defendants Waring and Treloar, permanently and unconditionally, from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)].

IV.

Retain jurisdiction of this action in accordance with the principles of equity and the Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and decrees that may be entered or to entertain any suitable application or motion for additional relief within the jurisdiction of this Court.

V.

Grant Orders for such further relief as the Court may deem appropriate.

Dated: September 30, 2003

http://www.sec.gov/litigation/complaints/comp18382.htm