WASHINGTON – The SEC recently filed a complaint against a wireless medical prescription firm that used a fake CD from a so-called credit union to bolster its non-existent profits. The SEC filed a complaint against Safescript Pharmacies, Inc., formerly known as RTIN Holdings, Inc., In early 2002, RTIN, managed by the Stanley L. Swanson and his son, Curtis A. Swanson acquired the rights to a wireless medical prescription transmission technology and operating software. RTIN began selling licenses to the wireless technology through territorial franchises. Despite buyers not being able to make good on their franchise installment payments, RTIN reported profits in its 2002 and 2003 SEC filings. The Swansons, along with defendants R. Stephen Cavender and Curtis A. Borman, concealed the overstatement through a series of fraudulent note restructurings. On December 5, 2002, RTIN sold a franchise to Mid America for $924,000, which also had a "purported" $2 million loan with United Indian Credit Union (UICU), the SEC said. No information is available with NCUA or any state regulator's Web site on the credit union. The SEC said no one at RTIN or Mid America claimed to have verified UICU's authenticity, the "credit union" never funded the loan, and Mid America never paid RTIN $924,000. Still, on December 11, 2002, C. Swanson drafted and caused RTIN to issue a press release announcing that RTIN had received $924,000 in cash from Mid America in connection with Mid America's purchase of an RTIN franchise, the SEC said. Borman, who had agreed to RTIN's issuing this release only after UICU provided funding for Mid America's franchise payment, complained to Cavender when he discovered that RTIN issued the release. Other than complaining, Borman took no steps to cause RTIN to retract or correct the press release. Borman later joined RTIN's board of directors, the SEC said. Between December 2002 and January 2003, correspondence from Borman to the Swansons discussed the "highly tenuous status of Mid America's unfunded `loan' from UICU," the SEC said. Borman suggested that UICU could issue to RTIN a $924,000 UICU CD until the UICU loan to Mid America was funded, which took place was on December 17, 2002. "This UICU CD was a sham and simply another device designed to substantiate RTIN's fraudulent recognition of $924,000 in revenue from the franchise sale to Mid America," the SEC said. The defendants falsified RTIN's year-end books and records by reporting the CD as an asset and reporting $924,000 of corresponding revenue. The defendants then misled the auditors in connection with RTIN's 2002 annual audit. In March 2003, the auditors enlisted the assistance of Cavender, then RTIN's CFO, to obtain confirmation of the CD from UICU. Cavender, in turn, sought help from Borman, who had by then become a member of RTIN's audit committee. Borman, like the Swansons and Cavender, intentionally failed to disclose to the auditors that UICU had never funded the UICU loan or the real reason for the CD. Further undisclosed to RTIN's auditors, during early April 2003, both Swansons and Borman met with principles of UICU and discussed the status of the still un-funded Mid American loan. After the April meeting, the elder Swanson and Cavender "orchestrated an additional subterfuge to create the appearance of $284,000 of successful withdrawals against the CD, which were purportedly deposited in RTIN accounts. The SEC would discover that those deposits did not come from UICU but from Perissos Investments, Inc. an entity controlled by the Swansons and Cavender. C. Swanson manufactured the deceptive origin of the deposits by annotating RTIN's bank statements with instructions that the $284,000 in deposits be recorded as CD withdrawals. Cavender then used the deposits to justify to RTIN's auditors the recognition of the Mid America revenue, and to reassure the auditors that the CD was liquid. In all, the SEC has filed seven claims against the defendants and is seeking to permanently bar them from serving as officers or directors of a publicly traded company; disgorge all ill-gotten gains from the alleged conduct; and pay civil penalties. [email protected]