FOR IMMEDIATE RELEASE:
Friday - October 29, 2004
OUTSIDE ACCOUNTANT FOR INTERNATIONAL HERITAGE, INC.
PLEADS GUILTY TO CONSPIRACY
RALEIGH - United States Attorney Frank D. Whitney announced that DAVIN WALTER BROWN pled guilty in federal court in Raleigh on Friday, October 29, 2004, to conspiring to obstruct a lawsuit brought by the U. S. Securities and Exchange Commission against Raleigh-based International Heritage, Inc. ("IHI"). BROWN, 50, of Raleigh, was IHI's outside accountant. The SEC has previously referred to IHI as "one of the biggest pyramid schemes the SEC has ever seen."
According to court documents, BROWN conspired with others to present false and misleading financial information to the SEC and the U. S. District Court in Atlanta in 1998. This false and misleading financial information included IHI's financial statements for 1996, which BROWN had audited. As a part of the plea agreement, BROWN will surrender his Certified Public Accountant licenses.
BROWN, along with IHI and three IHI senior executives, including Chief Executive Officer Stanley H. Van Etten, were originally indicted by a federal grand jury on October 16, 2002. A superseding indictment was filed on March 20, 2003.
BROWN is the fifth defendant associated with IHI to plead guilty in federal court. On January 21, 2003, Larry G. Smith, a founding director, member of the board of directors, and a leading sales representative, pled guilty to one count of conspiracy to commit mail fraud, wire fraud, securities fraud, and to make false statements to the United States. On October 20, 2003, IHI's legal counsel and Vice-President for legal affairs, pled guilty to a criminal information charging her with misprision of a felony. Claude William Savage, 66, a founder, a member of the board of directors, and a leading sales representative of IHI, pled guilty in federal court in Raleigh on March 23, 2004, to a one-count criminal information charging him with mail fraud. On April 8, 2004, John David Brothers, Chief Operating Officer and Compliance Officer of IHI, pled guilty to conspiracy to commit mail fraud, wire fraud, securities fraud, obstruction of justice, subornation of perjury, and to make false statements to the United States. Smith, Mollick, Savage, and Brothers are awaiting sentencing.
A trial is pending for former Chief Executive Officer Stanley Van Etten. Van Etten was recently indicted for additional charges, not related to IHI, by a federal grand jury in Raleigh.
Investigation of the IHI case was conducted by the Federal Bureau of Investigation and the Internal Revenue Service - Criminal Investigation Division. Assistant U. S. Attorneys J. Gaston B. Williams and Clay C. Wheeler are prosecuting the case for the United States.
News releases are available on the U. S. Attorney's web page at www.usdoj.gov/usao/nce within 48 hours of release.