The Unabridged History of Winners and Losers

[Tatari Gami]

CEASE-AND-DESIST ORDER ENTERED AGAINST ACCOUNTANT MARGARET GARDNER

On March 31, the Commission issued a cease-and-desist order against
Margaret M. Gardner, an accountant employed by Michael Johnson & Co.,
LLC (Johnson & Co.), a Denver, Colorado accounting firm. In the Order
the Commission found that, in late 1999 and 2000, Johnson & Co.
purported to be the independent auditor for Winners Internet Network,
Inc. (Winners), a publicly traded company. Gardner made entries to
certain of Winners' accounts, and participated in the preparation,
compilation, audits and/or reviews of certain of Winners' financial
statements included in a Securities Exchange Act of 1934 (Exchange Act)
registration statement, a current report on Form 8-K and quarterly
reports on Forms 10-QSB and 10-QSB/A filed with the Commission by
Winners between Dec. 23, 1999 and Dec. 6, 2000.

The Commission further found that Winners' financial statements
prepared, compiled, audited and reviewed by Gardner materially
overstated Winners' assets by up to 2,550% and revenues by up to 83%,
and understated expenses by up to 16%, by improperly: capitalizing
certain expenses, recognizing assets from a transaction that lacked
economic substance, recording license fees and receivables, recognizing
receivables from licensing fees that Winners had little or no chance of
collecting, and recognizing revenue and receivables that had not been
realized or earned by Winners. Moreover, the Commission found that, for
the year ended Dec. 31, 1999, the overstatements of revenue and
understatements of expenses enabled Winners to report net income of
$5,067 instead of a net loss of over $501,000.

Finally, the Commission found that Gardner caused Johnson & Co. to issue
audit reports that falsely stated that the firm's audits of Winners'
1997, 1998 and 1999 financial statements were presented in conformity
with Generally Accepted Accounting Principles (GAAP) and that the audit
of the 1999 financial statements was conducted in accordance with
Generally Accepted Auditing Standards (GAAS). According to the Order,
these statements were false because, among other things, by
participating in both the preparation and audit of the 1999 financial
statements, Gardner failed to maintain her independence from Winners.

Without admitting or denying the findings in the Commission's order,
Gardner consented to the issuance of an order requiring that she cease
and desist from committing or causing any violations and any future
violations of Sections 10(b) and 13(b)(5) of the Exchange Act and
Exchange Act Rules 10b-5 and 13b2-1; and from causing any violations and
any future violations of Sections 13(a) and 13(b)(2) of the Exchange Act
and Exchange Act Rules 12b-20, 13a-11 and 13a-13. (Rel. 34-49510; AAE
Rel. 1982; File No. 3-11452)

http://www.sec.gov/news/digest/dig040104.txt