Access the "Litigation" section of the SEC's website at www.sec.gov/litigation.shtml. Click on "Accounting and Auditing Enforcement Releases." Click on "AAER-3234" filed January 20, 2011. Read the release and the related SEC Complaint. Summarize the release and complaint in 2-3 pages (12-point, double spaced).

U. S Securities and Exchange Commission
Litigation Release No. 21819/ January 20, 2011
Accounting and Auditing Release No. 3234/ January 20, 2011
Securities and Exchange Commission v. NutraCea et al., United States District of Arizona, Civil Action No. CV 11-0092-PHX-DGC

Summary:

This release explains how NutraCea, a company based out of Phoenix, Arizona that manufactures and sells health food products, was involved in a very dishonest accounting scheme. The SEC became aware and brought up charges on January 13, 2011. The SEC alleged that the accounting scheme occurred because the former CEO, CFO, Senior Vice President/Secretary, Controller, and Director of Financial Services all engaged in accounting fraud by overstating product sales revenues, recording false sales and recognizing false revenues to reflect a higher net worth in order to support the false Sales. All of this ultimately resulted in misstated financials that misrepresented the true operating results for NutraCea’s second and third quarter of fiscal year 2007 and the entire Fiscal Year 2007.

Specifics on exactly how the fraud occurred in detail are as follows: NutraCea, its former CEO, Bradley D. Edison, CFO, Todd C. Crow, Senior Vice President/Secretary, Margie Adleman, Controller, Joanne D. Kline and Director of Financial Services, Scott Wilkinson falsified Sales Revenues by recording $2.6 million dollars in false sales to Bi-Coastal Pharmaceutical Corp. when in fact Bi-Coastal’s “ down payment” for the $2.6 million sale came from NutraCea’s former COO in the form of a loan in the amount