SEC Files Injunction Against Former Officers Of IBP, Inc. Subsidiary

SEC NEWS DIGEST
Issue 2004-145 July 29, 2004

The Commission announced that it filed a complaint seeking injunctive
and other relief against Andrew J. Zahn, Philip J. Sexauer, and Cynthia
K. Berryman, all of whom reside in the Chicago area. Each of these
individuals is a former officer of DFG, L.L.C. (DFG), a Chicago-based
company that was a subsidiary of a subsidiary of IBP, Inc. (IBP). At
the time of the relevant conduct, IBP was a public company based in
Dakota Dunes, South Dakota, and was one of the nation's largest
producers of fresh beef and pork.

The Commission alleges that Zahn (DFG's former president), Sexauer
(DFG's chief financial officer in 1999), and Berryman (DFG's controller
in 1999 and chief financial officer in 2000) engaged in an array of
accounting improprieties to inflate DFG's earnings. These misstatements
caused IBP to materially misstate its own financial results for the
fourth quarter of 1999 and the first three quarters of 2000.
Specifically, the Commission alleges that Zahn, Sexauer, and Berryman
directed that DFG not charge certain expense items in the period they
were incurred, but instead improperly included these amounts in
inventory, prepaid expense, and accounts receivable asset accounts to
overstate DFG's earnings. The Commission alleges that each of the
defendants was motivated by personal compensation tied to DFG's
financial performance.

In its complaint, the Commission claims that, through these actions,
each of the defendants violated Section 13(b)(5) of the Securities
Exchange Act of 1934 (Exchange Act) and Rule 13b2-1 thereunder, and
aided and abetted IBP's violations of Sections 13(a), 13(b)(2)(A), and
13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder.
It further claims that Zahn and Berryman violated Section 10(b) of the
Exchange Act and Rules 10b-5 and 13a-13 thereunder. The Commission
seeks a final judgment enjoining all of the defendants from future
violations of the federal securities laws, ordering the defendants to
disgorge ill-gotten gains, and imposing civil monetary penalties. The
Commission also seeks an order barring Zahn and Berryman from serving as
an officer or director of a public company.

Simultaneously with the filing of the complaint, Sexauer consented to
the entry of an injunction against him prohibiting him from future
violations of all of the provisions the Commission claims he violated.
Sexauer also agreed to pay full disgorgement of his ill-gotten gains,
prejudgment interest, and a civil penalty of $35,000. [SEC v. Zahn, et
al., Civil Action No. 04C4948, N.D. Ill.] (LR-18809; AAE Rel. 2066)