UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 73722 / December 3, 2014

ADMINISTRATIVE PROCEEDING

File No. 3-16293

In the Matter of

LAURIE BEBO, and 

 JOHN BUONO, CPA

Respondents.

ORDER INSTITUTING PUBLIC 

ADMINISTRATIVE AND CEASE-ANDDESIST PROCEEDINGS PURSUANT 

TO SECTIONS 4C AND 21C OF THE 

SECURITIES EXCHANGE ACT OF 

1934 AND RULE 102(e) OF THE 

COMMISSION’S RULES OF 

PRACTICE

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate 

and in the public interest that public administrative and cease-and-desist proceedings be, 

and hereby are, instituted against Laurie Bebo (“Bebo”) pursuant to Section 21C of the 

Securities Exchange Act of 1934 (“Exchange Act”), and against John Buono (“Buono”) 

pursuant to Sections 4C and 21C of the Exchange Act and Rule 102(e) of the 

Commission’s Rules of Practice.

II.

After an investigation, the Division of Enforcement alleges that:

A. Summary

1. This matter involves disclosure fraud, a fraudulent scheme, lying to 

auditors, and reporting, record-keeping and internal controls violations by Bebo and 

Buono, respectively the CEO and CFO of Assisted Living Concepts, Inc. (“ALC”). During 

the relevant period, ALC was a publicly-traded assisted living and senior residence 

provider headquartered in Menomonee Falls, Wisconsin.

2. From 2009 through early 2012, Bebo and Buono (collectively, 

“Respondents”) knew, or were reckless in not knowing, that ALC misrepresented in its 

Forms 10-K and 10-Q that it was in compliance with occupancy and financial covenants 

included in a lease pursuant to which ALC leased eight of its senior residence facilities. 

Furthermore, Bebo and Buono undertook an elaborate scheme to hide ALC’s lack of 

compliance with the covenants. Bebo and Buono engaged in the misconduct to avoid 

defaulting on the lease, which would have required, among other things, ALC to pay the 
2

landlord the amount of rent due on the remaining term of the lease. That amount was

between $16 million and $25 million in the relevant time frame. 

3. To execute the scheme, Bebo and Buono directed ALC personnel to include 

in the lease covenant calculations large numbers of fabricated occupants who did not reside 

at the facilities. Bebo and Buono further directed ALC personnel to record journal entries 

increasing revenue associated with the fabricated occupancy in the accounts for the leased 

facilities. ALC made a corresponding journal entry decreasing revenue each period to 

mask the fraud in ALC’s accounting records. To establish the number of fabricated 

occupants to be included in the covenant calculations, ALC personnel, at Bebo and 

Buono’s direction, reverse-engineered the requisite number of fabricated occupants needed 

to meet the covenants. Then, shortly after the end of each quarter, ALC provided the 

facilities’ landlord with covenant calculations which included the fabricated occupants and 

the associated revenue, thus falsely showing that ALC was meeting the covenants.

4. In furtherance of the scheme, Bebo and Buono each quarter created lists 

identifying the fictitious occupants and their associated lengths of stay at the facilities. 

These lists contained the following types of non-residents that Bebo and Buono directed 

ALC to include in the covenant calculations: (1) Bebo’s family members and friends; (2) 

family members (including the seven-year old nephew) of one of Bebo’s friends; (3) 

employees who did not travel to, let alone stay at, the facilities; (4) employees of the leased 

facilities, who lived nearby and rarely or never stayed at those facilities; (5) employees who 

had been terminated by ALC or employees who ALC anticipated hiring but who had not 

yet started; (6) employees who ALC listed as occupants of multiple facilities for the same 

time period; and (7) other individuals who were neither ALC employees nor residents of 

the leased facilities. 

5. ALC’s landlord never agreed to the inclusion of such individuals in the 

covenant calculations. In addition, ALC’s landlord never knew that ALC was including 

such individuals in the covenant calculations and never knew that ALC would have failed

the covenants, by significant amounts, without their inclusion.

6. Nevertheless, in each ALC Form 10-K and 10-Q from the third quarter of 

2009 to the fourth quarter of 2011, Bebo and Buono certified the accuracy of ALC’s 

representations that it was in compliance with the lease covenants. Bebo and Buono knew, 

or were reckless in not knowing, that ALC’s representations about the lease covenants were 

false, misleading, and omitted material information.

B. Respondents

7. Bebo, age 43, is a resident of Hartland, Wisconsin. From November 2006 

through May 2012, when she was terminated, Bebo was ALC’s President and Chief 

Executive Officer. From May 2008 through July 2012, Bebo was also a member of ALC’s 

Board of Directors. 

8. Buono, age 51, is a resident of Pewaukee, Wisconsin. From October 2006 

through July 2013, Buono was ALC’s Chief Financial Officer, Senior Vice President, and 
3

Treasurer. From March 1988 through at least September 2013, Buono was a licensed 

certified public accountant in the state of Wisconsin. 

C. Relevant Entities

9. ALC was a Nevada corporation with its principal place of business in 

Menomonee Falls, Wisconsin. Between November 2006 and July 2013, ALC’s common 

stock was registered with the Commission pursuant to Section 12(b) of the Exchange Act 

and traded on the New York Stock Exchange. During the relevant time period, ALC’s 

primary business was the operation of senior living residences in the United States. In 

February 2013, ALC agreed to be sold to a private equity firm. In July 2013, when the sale 

was completed, ALC’s stock ceased trading on the New York Stock Exchange.

10. Ventas, Inc. (“Ventas”) is a Delaware corporation with its principal place of 

business in Chicago, Illinois. Ventas’s common stock is registered with the Commission 

pursuant to Section 12(b) of the Exchange Act and trades on the New York Stock 

Exchange. Ventas is a real estate investment trust (“REIT”) with a portfolio of nearly 

1,500 senior housing and healthcare properties in the United States and Canada. 

D. ALC and the Ventas Lease

11. During the relevant time period, approximately 2008 through mid-2012, 

ALC operated more than 200 senior living residences in the United States, totaling more 

than 9,000 units. ALC employed approximately 4,200 people, approximately 200 of whom 

worked at: (1) ALC’s corporate headquarters; or (2) regional or divisional levels, which 

meant that they worked out of their home or at a regional office. The remainder of ALC’s 

employees worked at the assisted living facilities themselves. For the years 2008 through 

2012, ALC’s annual revenues ranged from $225 to $234 million.

12. In 2007, Bebo and ALC’s Board of Directors were interested in expanding 

ALC’s operations and were offered an opportunity to acquire the operations of a firm 

which operated eight assisted living facilities that the firm leased from Ventas and were 

located in Alabama, Florida, Georgia, and South Carolina (the “Ventas facilities”). In 

order to acquire the operations of the Ventas facilities, ALC was required to enter into a 

lease with Ventas. 

13. As of January 1, 2008, ALC acquired the operations of the Ventas facilities 

and simultaneously entered into a lease with Ventas to operate those facilities (the “Ventas 

lease”). These facilities were comprised of approximately 540 total units. The Ventas 

lease specifically provided that it could only be modified by a writing signed by authorized 

representatives of both ALC and Ventas and that all “notices, demands, requests, consents, 

approvals and other communications” under the lease were to be in writing with a copy to 

Ventas’s general counsel.

14. ALC entered the Ventas lease even though it considered various provisions

of the lease to be potentially onerous. For instance, the lease contained financial covenants

(the “financial covenants”), which required that ALC maintain: (1) a quarterly occupancy 

of at least 65% at each individual Ventas facility; (2) a trailing twelve-month occupancy of 
4

at least 75% at each individual facility; (3) a trailing twelve-month occupancy of at least 

82% for the eight-facility portfolio; (4) a trailing twelve-month coverage ratio of at least 0.8 

for each facility; and (5) a trailing twelve-month coverage ratio of at least 1.0 for the entire 

portfolio. The lease defined “coverage ratio” as each facility’s cash flow for an applicable 

period, divided by ALC’s rent payments to Ventas for that facility. The cash flow 

component of the coverage ratio calculation generally correlated to a facility’s occupancy, 

such that a decline in occupancy would result in an attendant decline in coverage ratio, and 

vice-versa.

15. The lease’s default provisions had significant consequences to ALC. In the 

event that ALC violated any of the financial covenants, Ventas could: (1) terminate the 

lease in its entirety; (2) evict ALC from all eight facilities; and (3) require ALC to pay 

damages equal to the net present value of the unpaid rent for the remaining term of the 

lease (through March 2015) for the entire portfolio. These damages as of ALC’s 2009, 

2010, and 2011 fiscal year end would have been $24.9 million, $20.9 million and $16.7 

million, respectively. For ALC’s 2009, 2010 and 2011 fiscal years, the damage amounts 

approximated 101%, 81%, and 46% respectively of ALC’s income from operations before 

income taxes, and 56%, 45%, and 31% respectively of ALC’s cash flows from operations. 

Such amounts were material to ALC’s financial statements.

16. While Bebo was a strong proponent of entering the Ventas lease, certain 

ALC officers and directors advocated against entering the lease because of the lease’s 

many disadvantageous provisions, including those referenced above related to the financial 

covenants. In response to those concerns, Bebo assured the directors that she was confident

that ALC could meet the financial covenants. 

17. On January 7, 2008, ALC filed a Form 8-K which announced that it had 

entered the lease with Ventas. The Form 8-K specifically disclosed the financial covenants 

and the consequences for non-compliance discussed above, and ALC attached the lease as 

an exhibit to the filing.

E. Less Than a Year After Entering the Ventas Lease, Bebo and Buono

Realized that a Financial Covenant Default Was Likely

18. Under the terms of the Ventas lease, ALC was required to demonstrate its 

compliance with the financial covenants on a quarterly basis. In that regard, ALC was 

required to provide Ventas within 45 days of the end of a quarter: trailing twelve month 

income statements for each Ventas facility and for the entire portfolio; quarterly financial 

statements for each facility, prepared in accordance with Generally Accepted Accounting 

Principles (“GAAP”); and schedules documenting compliance with the financial covenants. 

In addition, an ALC executive was required to attest to the completeness and accuracy of 

such information by signing an officer’s certificate and providing it to Ventas along with 

the information.

19. Bebo, Buono, and various members of ALC’s accounting department 

regularly reviewed and monitored occupancy and coverage ratios at the Ventas facilities to 

ensure that ALC was meeting the financial covenants and to prepare the required 
5

documentation. Both Bebo and Buono were generally aware of the facilities’ occupancy 

rates and coverage ratios at all times in the relevant time period. In addition, ALC’s board 

required Bebo and Buono to report on ALC’s compliance with the covenants in advance of 

meetings. At each board meeting during the relevant time period (from 2008 through early 

2012), Bebo and Buono reported that ALC was in compliance with the covenants.

20. Ventas also paid close attention to ALC’s compliance, and considered 

occupancy and coverage ratio to be key metrics of its properties’ performance. For these 

reasons, Ventas reviewed and scrutinized the financial covenant calculations, quarterly 

financial statements and other information which accompanied ALC’s officer certificates. 

Ventas personnel also held quarterly conference calls with Bebo and Buono and 

periodically visited the facilities, during which Ventas representatives asked detailed 

questions about the financial performance of the Ventas facilities.

21. Shortly after ALC assumed operations of the Ventas facilities, occupancy 

began declining. In response to concerns raised by the board in the August 2008 meeting 

regarding ALC’s ability to meet the financial covenants, Buono prepared a memo for the 

November board meeting. That memo, which Bebo reviewed and approved, stated that 

ALC needed immediate improvement at four of the facilities to meet the financial 

covenants. By mid-January 2009, Bebo and Buono both knew that ALC would likely 

default on one or more of the financial covenants in the near future. 

F. Bebo and Buono’s Scheme to Include ALC Employees and Other NonResidents in the Ventas Lease Covenant Calculations

22. In an attempt to avoid defaulting on the financial covenants, Bebo initially 

devised a plan to include ALC employees who stayed overnight at the Ventas facilities as 

occupants of the properties for purposes of the financial covenant calculations. At certain 

times, a limited number of ALC corporate, regional and divisional level employees 

travelled to the Ventas facilities as part of their normal job responsibilities. In an effort to 

save money, Bebo had directed that some of those employees stay overnight at the facilities 

in lieu of staying at a hotel. 

23. Bebo sought the advice of ALC’s general counsel on the permissibility of 

including employees who stayed at the Ventas facilities in the financial covenant 

calculations. In response, on January 19, 2009, the general counsel wrote Bebo and Buono 

an email advising them that for such a practice to be permissible under the Ventas lease, 

ALC needed to fully disclose the practice to Ventas and obtain Ventas’s approval in 

writing. Nevertheless, ALC never obtained Ventas’s written approval to include 

employees in the covenant calculations or disclosed to Ventas the scheme discussed herein.

24. Beginning in the first quarter of 2009, occupancy at the Ventas facilities had 

declined to the point where ALC was in violation of certain financial covenants in the 

Ventas lease. Rather than report the defaults to Ventas, ALC’s board of directors, or ALC’s 

shareholders, Bebo directed Buono and his staff to include employees and other nonresidents in the financial covenant calculations.
6

25. Among the non-residents that ALC included in the financial covenant 

calculations at Bebo and Buono’s direction were:

a. ALC employees who never stayed at or traveled to the Ventas 

facilities; 

b. ALC employees who occasionally stayed at the Ventas facilities, but 

were included in the financial covenant calculations beyond the 

limited periods that they actually stayed at the facilities; 

c. ALC employees who worked at the Ventas facilities, who lived 

nearby and did not stay overnight at the facilities; 

d. Bebo’s friends and family members, including her parents and her 

husband (under different last names than Bebo); 

e. Family members, including the seven-year old nephew, of one of 

Bebo’s friends;

f. Former ALC employees who had been terminated by the company; 

g. Employees who ALC anticipated hiring but who had not yet started 

working for the company; 

h. ALC employees and other individuals who ALC listed as occupants 

of multiple Ventas facilities for the same time period; and 

i. Other individuals who were neither ALC employees nor residents of 

the Ventas facilities. 

26. At Bebo and Buono’s direction, from the third quarter of 2009 to the fourth 

quarter of 2011, ALC included between 45 and 103 non-residents, such as those persons 

described in the preceding paragraph, in the Ventas financial covenant calculations. When 

ALC included such non-residents in the financial covenant calculations, ALC generally

included each non-resident in the calculations for every day of the quarter. For each quarter 

during that time period, ALC would have failed certain occupancy and coverage ratio 

requirements in the Ventas lease, by significant margins, without the inclusion of such nonresidents in the financial covenant calculations.

27. Ventas never agreed to, and was unaware of, ALC’s inclusion of such nonresidents in the financial covenant calculations. Ventas was also unaware that, without the 

inclusion of such individuals, ALC would have failed the financial covenant calculations. 
7

G. ALC’s Process for Including Employees and Other Non-Residents in

the Ventas Lease Covenant Calculations 

28. To effectuate the above-described scheme, ALC personnel developed a 

complex process to determine the required number of employees and other non-residents

needed to meet the financial covenants. The process involved the following steps, all of 

which were performed as directed by Buono, with Bebo’s approval, or performed by Bebo 

and Buono themselves. 

29. First, after the end of each month in a given quarter, ALC accounting 

personnel determined the amount by which ALC would fail any of the financial covenants. 

Then, ALC personnel reverse-engineered the number of non-residents necessary for the 

month to at least meet, if not exceed, the financial covenants. In doing so, ALC presumed 

that each non-resident would be included in the financial covenant calculations for every 

day of the month. 

30. ALC then prepared monthly journal entries which recorded revenue 

associated with the non-residents’ inclusion in the financial covenant calculations. These 

journal entries: (1) increased revenue for the individual Ventas facilities; and (2) decreased 

revenue in the same amount in a corporate revenue account. Either Buono or Bebo 

initialed the entry before it was recorded in ALC’s books and records. 

31. After the revenue for the last month of a given quarter was recorded, ALC 

accounting personnel performed the financial covenant calculations, including the abovereferenced non-resident occupancy and revenue adjustments, to ensure that all the financial 

covenants had been met. 

32. Following the end of each quarter, after ALC calculated the number of nonresidents to include in the financial covenant calculations, Bebo personally determined the 

identities of the non-residents that ALC would include in the financial covenant 

calculations, and provided a list of such individuals to Buono and ALC accounting 

personnel, who then provided the list to ALC’s auditors. 

33. Each quarter, beginning with the first quarter of 2009, ALC prepared and 

sent to Ventas: (1) the quarterly financial covenant calculations which included the abovereferenced non-residents and attendant revenue, and thus showed ALC meeting or 

exceeding the financial covenants; (2) financial statements for the Ventas facilities which 

incorporated the revenue associated with the non-residents; and (3) an officer’s certificate 

signed by Buono in which he attested that the information provided was complete and 

accurate and that the financial statements for the Ventas facilities complied with GAAP. 

The quarterly materials ALC sent to Ventas did not reference the inclusion of non-residents 

in the covenant calculations.

H. Bebo and Buono Actively Sought to Prevent Ventas from Learning 

About the Inclusion of Non-Residents in the Covenant Calculations

34. At Buono’s and Bebo’s direction, ALC personnel did not provide Ventas 

with any information indicating that ALC had included non-residents in the financial 
8

covenant calculations. As a result, Ventas was unaware that ALC was including nonresidents in the financial covenant calculations. Moreover, rather than disclose the 

inclusion of the non-residents in the financial covenant calculations, Bebo and Buono 

employed a variety of measures to hide the practice from Ventas.

35. For instance, on a number of occasions, Bebo or Buono provided Ventas 

with fictitious explanations for quarterly occupancy or coverage ratio changes at the Ventas

facilities in lieu of providing the only possible truthful explanation, which was an increase 

or decrease in the number of non-residents being included in the financial covenant 

calculations.

36. On at least two occasions, Buono changed the number of non-residents 

being included in the financial covenant calculations to avoid arousing suspicion on the 

part of Ventas. Buono did so to make it appear that ALC was exceeding the financial 

covenants, as opposed to just meeting them, or to make changes in the number of nonresidents so that changes in occupancy and coverage ratio ALC reported to Ventas 

appeared less dramatic and more realistic. 

37. On another occasion, ALC had to revise the number of non-residents 

included in the financial covenant calculations, because it had initially reported occupancy 

to Ventas in excess of 100%. At Buono’s direction, ALC told Ventas that the initial 

reporting was due to an accounting error and did not disclose that the revision related to the 

number of non-residents included in the financial covenant calculations.

38. In summer 2011, ALC was exploring a sale of the company, and was 

preparing due diligence materials to be reviewed by potential buyers, one of which was 

Ventas. Bebo directed ALC’s investment bankers not to provide Ventas with actual 

occupancy figures at the Ventas facilities but permitted the investment bankers to provide 

such information to other interested buyers.

39. Moreover, Bebo attempted to thwart Ventas’s ability to determine actual 

occupancy during Ventas’s periodic inspections of the Ventas facilities. To that end, Bebo: 

(a) restricted Ventas from visiting certain facilities at particular times, and (b) directed that 

resident name tags be removed from their doors during Ventas’s inspections, such that 

Ventas could not manually count the number of occupied rooms. 

40. In March 2012, Bebo tried to convince ALC’s board not to disclose the

inclusion of non-residents in the Ventas financial covenant calculations to the remaining 

potential bidders interested in purchasing ALC. 

I. ALC’s False and Misleading Disclosures in its Commission Filings 

41. ALC’s Forms 10-K for the years ending December 31, 2009, 2010 and 

2011 (which Bebo and Buono signed) and its Forms 10-Q for the first three quarters of 

those years (which Buono signed) contained the representation that ALC was in 

compliance with the financial covenants in the Ventas lease.
9

42. Moreover, ALC’s Form 10-K for the year ending December 31, 2011 and

its Forms 10-Q for the second and third quarter of that year contained the following 

representation: “ALC does not believe that there is a reasonably likely degree of risk of 

breach of the [Ventas financial] covenants.” 

43. As a result of the improper inclusion of employees and other non-residents 

in the Ventas financial covenant calculations, and the fact that ALC would have failed the 

covenants without the inclusion of such persons, the above-described statements in ALC’s 

Forms 10-K and 10-Q were false, misleading, and omitted material information.

44. In connection with each of the above-referenced Forms 10-K and 10-Q,

Bebo and Buono signed certifications which certified that: (1) ALC’s filings did not 

contain any material misstatements or omissions; (2) ALC’s filings fairly presented in all 

material respects ALC’s financial condition, results of operation and cash flows; and (3) 

they had designed or caused to be designed such internal controls to provide reasonable 

assurance regarding the reliability of financial reporting and the preparation of financial 

statements in accordance with GAAP. 

45. Given the inclusion of employees and other non-residents in the Ventas 

financial covenant calculations, Bebo and Buono either knew, or were reckless in not 

knowing, that ALC’s above-referenced Forms 10-K and 10-Q and the above-referenced

certifications were false, misleading, and omitted material information.

46. In each of the above-referenced Forms 10-K and 10-Q, ALC additionally

failed to disclose a loss contingency associated with ALC’s violation of the Ventas financial 

covenants and the impact of such contingency on ALC’s operations and financial 

statements. Such a disclosure was required under GAAP. Accounting Standards 

Codification (“ASC”) 450-20-50-3. Buono either knew, or was reckless in not knowing, 

that ALC’s filings improperly failed to disclose such a loss contingency. 

J. Bebo and Buono Made False Representations to ALC’s Auditors

47. In connection with the audits of ALC’s financial statements for the years 

ending December 31, 2009, 2010 and 2011, and in connection with the reviews of ALC’s 

quarterly financial statements for the first three quarters of those years, Bebo and Buono 

signed a representation letter addressed to ALC’s auditors in which they falsely represented 

that ALC had “complied with all aspects of contractual agreements that would have a 

material effect on the financial statements in the event of a noncompliance.” Bebo, Buono, 

and ALC’s auditors understood this representation to attest to compliance with the Ventas

financial covenants. 

48. Given the inclusion of employees and other non-residents in the Ventas 

financial covenant calculations, Bebo and Buono either knew, or were reckless in not 

knowing, that their above-described representation to ALC’s auditors was false, misleading, 

and omitted material information.

49. In connection with the same audits and reviews, ALC, at Bebo’s and 

Buono’s direction, provided the auditors with the above-referenced lists, created by Bebo 
10

and Buono, identifying fictitious occupants at the Ventas facilities and their associated 

lengths of stay at the facilities.

50. Moreover, in connection with the audit of ALC’s financial statements for the 

year ending December 31, 2011, Bebo and Buono signed a representation letter addressed to 

ALC’s auditors that represented that Bebo and Buono had no knowledge of any allegations 

of fraud or suspected fraud by any ALC employee. Bebo and Buono either knew, or were 

reckless in not knowing, that such statement was false and misleading, given that in 

approximately November 2011, an ALC employee confronted Bebo and Buono with 

concerns that the inclusion of employees in the Ventas financial covenant calculations was 

fraudulent.

K. The Scheme Unravels

51. In April 2012, Ventas filed a lawsuit against ALC unrelated to the financial 

covenants. At the time, Ventas was unaware that ALC had been including employees and 

other non-residents in the financial covenant calculations. 

52. In connection with related settlement negotiations with Ventas, Bebo tried 

to convince ALC’s board not to disclose to Ventas ALC’s inclusion of employees and other 

nonresidents in the Ventas financial covenant calculations. Bebo actively lobbied against a 

director’s demand that ALC include in any settlement proposal specific language whereby 

Ventas would release claims arising from ALC’s inclusion of employees in the financial 

covenant calculations. 

53. Bebo’s efforts were unsuccessful, and ALC sought a release from Ventas 

expressly relating to the inclusion of employees in the financial covenant calculations and 

the quarterly certifications ALC sent to Ventas. After receiving ALC’s request for the 

release, Ventas moved to amend its complaint against ALC to include allegations relating to 

ALC’s inclusion of employees in the covenant calculations.

54. In June 2012, ALC and Ventas settled the lawsuit, which included a release 

of all claims related to the Ventas lease. As part of the settlement, ALC purchased the 

Ventas facilities and certain other facilities from Ventas for an amount far greater than the 

appraised value of the facilities. ALC paid approximately $100 million to settle the 

litigation and purchase the facilities, even though independent third party appraisals only 

valued the purchased facilities at $62.8 million. Thus, in its financial statements for the 

second quarter of 2012, ALC included as an expense $37.2 million for “lease termination 

and settlement” and also wrote off the entirety of the remaining lease intangible assets

associated with the Ventas facilities, which were approximately $8.96 million. 

L. Violations

55. As a result of the conduct described above, Bebo violated and Buono

willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which 

prohibit fraudulent conduct in connection with the purchase or sale of any security 

involving: a) the use of any device, scheme, or artifice to defraud; b) the making of 

material misrepresentations or omissions; and c) any act, practice, or course of business 
11

which operates or would operate as a fraud or deceit upon any person. Also, by engaging 

in the conduct described above, Bebo caused and Buono willfully aided and abetted and 

caused ALC’s violations of Section 10(b) of the Exchange Act and Rule 10b-5 

thereunder.

56. As a result of the conduct described above, Bebo caused and Buono 

willfully aided and abetted and caused ALC’s violations of Section 13(a) of the Exchange 

Act and Rules 13a-1 and 13a-13 thereunder, which require issuers with securities 

registered under Section 12 of the Exchange Act to file factually accurate annual and 

quarterly reports. Also, Bebo caused and Buono willfully aided and abetted and caused 

ALC’s violations of Rule 12b-20 of the Exchange Act, which requires the addition to

such reports any further material information necessary to make the required reports not

misleading.

57. As a result of the conduct described above, Bebo violated and Buono

willfully violated Exchange Act Rule 13a-14, which requires an issuer’s principal 

executive officer and principal financial officer to certify each periodic report containing 

financial statements filed by the issuer pursuant to Section 13(a) of the Exchange Act.

58. As a result of the conduct described above, Bebo violated and Buono

willfully violated Exchange Act Section 13(b)(5), which prohibits any person from 

knowingly circumventing or knowingly failing to implement a system of internal 

accounting controls or knowingly falsifying any book, record or account subject to 

Exchange Act Section 13(b)(2). Also, Bebo violated and Buono willfully violated 

Exchange Act Rule 13b2-1, which prohibits any person from, directly or indirectly, 

falsifying or causing to be falsified, any book, record or account subject to Exchange Act 

Section 13(b)(2).

59. As a result of the conduct described above, Bebo violated and Buono

willfully violated Exchange Act Rule 13b2-2, which prohibits any director or officer of 

an issuer from, directly or indirectly from: (a) making or causing to be made a materially

false or misleading statement; or (b) omitting or causing another person to omit to state a 

material fact necessary in order to make statements made, in light of the circumstances 

under which such statements were made, not misleading, to an accountant in connection 

with financial statement audits, reviews, or examinations or the preparation or filing of 

any document or report required to be filed with the Commission.

60. By engaging in the conduct described above, Bebo caused and Buono 

willfully aided and abetted and caused ALC’s violations of Sections 13(b)(2)(A) and 

13(b)(2)(B) of the Exchange Act, which requires an issuer of securities registered under 

Section 12 of the Exchange Act to make and keep accurate books, records, and accounts, 

and to devise and maintain a sufficient system of internal accounting controls.
12

III.

In view of the allegations made by the Division of Enforcement, the Commission 

deems it necessary and appropriate in the public interest that public administrative and 

cease-and-desist proceedings be instituted to determine:

A. Whether the allegations set forth in Section II hereof are true and, in 

connection therewith, to afford Respondents an opportunity to establish any defenses to such 

allegations; 

B. Whether, pursuant to Section 21C of the Exchange Act, Respondents 

should be ordered to cease and desist from committing or causing violations of and any 

future violations of Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the 

Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13a-14, 13b2-1 and 13b2-2 

thereunder;

C. What, if any, remedial action is appropriate in the public interest against 

Respondents, including, but not limited to, disgorgement and civil penalties pursuant to 

Section 21B of the Exchange Act; 

D. Whether, pursuant to Section 21C(f) of the Exchange Act, Respondents 

should be prohibited, conditionally or unconditionally, and permanently or for such 

period of time as the Commission shall determine, from acting as an officer or director of 

any issuer that has a class of securities registered pursuant to Section 12 of the Exchange 

Act, or that is required to file reports pursuant to Section 15(d) of the Exchange Act; and

E. Whether, pursuant to Section 4C of the Exchange Act and Section 102(e) of 

the Commission’s Rules of Practice, Buono should be denied, temporarily or permanently, 

the privilege of appearing or practicing before the Commission as an accountant.

IV.

IT IS ORDERED that a public hearing for the purpose of taking evidence on the 

questions set forth in Section III hereof shall be convened not earlier than 30 days and not 

later than 60 days from service of this Order at a time and place to be fixed, and before an 

Administrative Law Judge to be designated by further order as provided by Rule 110 of the 

Commission's Rules of Practice, 17 C.F.R. § 201.110. 

IT IS FURTHER ORDERED that Respondents shall file an Answer to the 

allegations contained in this Order within twenty (20) days after service of this Order, as 

provided by Rule 220 of the Commission’s Rules of Practice, 17 C.F.R. § 201.220. 

If a Respondent fails to file the directed answer, or fails to appear at a hearing after 

being duly notified, the Respondent may be deemed in default and the proceedings may be 

determined against him or her upon consideration of this Order, the allegations of which 

may be deemed to be true as provided by Rules 155(a), 220(f), 221(f) and 310 of the 
13

Commission’s Rules of Practice, 17 C.F.R. §§ 201.155(a), 201.220(f), 201.221(f) and 

201.310.

This Order shall be served forthwith upon Respondents as provided for in the 

Commission’s Rules of Practice.

IT IS FURTHER ORDERED that the Administrative Law Judge shall issue an 

initial decision no later than 300 days from the date of service of this Order, pursuant to 

Rule 360(a)(2) of the Commission’s Rules of Practice. 

In the absence of an appropriate waiver, no officer or employee of the Commission 

engaged in the performance of investigative or prosecuting functions in this or any factually 

related proceeding will be permitted to participate or advise in the decision of this matter, 

except as witness or counsel in proceedings held pursuant to notice. Since this proceeding is 

not “rule making” within the meaning of Section 551 of the Administrative Procedure Act, it 

is not deemed subject to the provisions of Section 553 delaying the effective date of any 

final Commission action.

By the Commission.

Brent J. Fields

Secretary