Milton Mende purchased the Star Midas Mining Co., Inc., for $ 6,500. This Nevada Corporation was a shell corporation with no assets. Mende changed the name of the corporation to American Equities Corporation (American Equities) and hired Bernard Howard to prepare certain accounting reports so that the company could issue securities to the public. In preparing the financial accounts, Howard (1) made no examination of American Equities’ books; (2) falsely included an asset of more than $ 700,000 on the books, which was a dormant mining company that had been through insolvency proceedings; (3) included in the profit and loss statement companies that Howard knew American Equities did not own; and (4) recklessly stated as facts things of which he was ignorant. Did Howard act unethically? The United States sued Howard for criminal conspiracy in violation of federal securities laws. Is Howard criminally liable? United States v. Howard, 328 F. 2d 854, 1964 U. S. App. Lexis 6343 (United States Court of Appeals for the Second Circuit)
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