U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19479 / December 1, 2005

Accounting and Auditing Enforcement Release No. 2349 / December 1, 2005

SECURITIES AND EXCHANGE COMMISSION v. WILLIAM W. FREISE, 1:04CV00531 (D.D.C. November 23, 2005)

SEC OBTAINS FINAL JUDGMENT FOR FRAUD AGAINST FORMER POWERBALL INTERNATIONAL, INC. PRESIDENT WILLIAM W. FREISE

On November 23, 2005, the United States District Court for the District of Columbia entered a final judgment against William W. Freise, the former president and director of Powerball, for falsifying company records to hide his theft of $7,200 and his failure to pay for stock that he received from the exercise of warrants. Freise consented to the entry of the final judgment, including a permanent injunction enjoining him from violating the antifraud provisions of the federal securities laws and a permanent officer and director bar.

On March 31, 2004, the Commission filed a complaint alleging that during the period June 2002 through April 2003, Freise falsified company records to hide his theft of $7,200 and to hide his failure to pay $40,000 for stock he had received through the exercise of warrants. The Complaint alleges that in order to conceal his fraud, Freise altered monthly bank statements for Powerball's bank account, which made that account appear that it contained a substantially higher cash balance than it actually contained. The Complaint alleges that Freise knew that Powerball's financial statements and its reports to the Commission would reflect such false cash balances. As a result of such conduct, Powerball materially misstated its financial statements for the quarters ended June 30, 2002, and September 30, 2002, and for the year ended December 31, 2002.

Without admitting or denying the allegations in the complaint, William Freise consented to the entry of a final judgment permanently enjoining him from violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rules 10b-5, 13b2-1, and 13b2-2 promulgated thereunder, as well as, aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 promulgated thereunder. William Freise also consented to an order barring him from serving as an officer or director of a public company. The final judgment does not impose civil penalties based on William Freise’s representations in a sworn Statement of Financial Condition and other supporting documents.

The Commission previously instituted settled administrative proceedings against Powerball’s former auditors, David T. Thomson, CPA, and David T. Thomson PC. [In the Matter David T. Thomson, CPA and David T. Thomson PC (Rel. 34-49516; File No. 3-11453)]

For additional information, see Litigation Release No. 18654 (April 1, 2004).

http://www.sec.gov/litigation/litreleases/lr19479.htm