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SEC Subpoenas 2 Former AMS Executives

Two former executives of Advanced Marketing Services, a San Diego book distributor that has been wracked by an accounting fraud scandal dating to 2003, have been issued subpoenas by the Securities and Exchange Commission, according to an SEC press statement released April 30.

Former Chief Executive Officer Michael Nicita and ex-Chief Financial Officer Edward Leonard were sought by the SEC to provide testimony in an ongoing investigation into the company’s accounting fraud that involved misstating financial results, and using funds intended for promoting book sales to boost the firm’s revenues, according to the commission.

The SEC said Nicita and Leonard have refused to appear to testify in the case or produce documents the commission is seeking to finish its investigation.

“The facts are more complicated than that, and we dispute that characterization (by the SEC),” said Nicita’s attorney, Chuck LaBella. “We’re going to respond in court in front of a judge and when we do, you’ll see our response.”

Three former AMS executives, Marcy Wilson Roke, Sandra Miller Christie and Karyn Ann Larko, pleaded guilty to fraud charges in the matter and incurred penalties last year.

AMS, which provided books and other materials to large retail chains including Costco and Sam’s Club, has been under investigation since 2003 when federal agents raided the company’s Sorrento Mesa headquarters.

In December, AMS filed for federal bankruptcy protection, and in March, the company’s main assets were sold to Baker & Taylor, a Charlotte, N.C., book distribution firm, for $76 million.

In one of its last filings before it declared bankruptcy, AMS said its 2005 fiscal year revenue was more than $900 million. The company had more than 1,400 employees, including 264 at its headquarters.

, Mike Allen

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