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securitization facility.  Stockman directed Williams and others to create invoices prematurely and include those invoices in the borrowing base, knowing that this violated the agreement with GECC.  Williams ensured that his employees in C&A's Business Group carried out Stockman’s instructions, even though he knew, or was reckless in not knowing, that they were improper and that the inflated liquidity figures would be reported to the public.  When drafting the April 4 press release, Stockman and Galante knew, or were reckless in not knowing, that the liquidity figure provided for March 31, 2005, was false or misleading, because it was inflated by $52 million that had been obtained from the fraudulently inflated GECC borrowing base.

72.On April 5, 2005, C&A filed this press release with the Commission as a current report (Form 8-K).  


    Violations of Section 17(a) of the Securities Act

(C&A, Stockman, Stepp, and Cosgrove)

73.Paragraphs 1-72 are incorporated herein with the same force and

effect as if set out in full.

74.Pursuant to 17(a) of the Securities Act [15 U.S.C. § 77q(a)], it is unlawful for any person, in the offer or sale of any security by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, to (i) employ any device, scheme, or artifice to defraud, (ii) obtain money or property by means of any untrue statement of a material fact or any omission of a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading; or (iii) engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.

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