UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 6, 2009
UCI MEDICAL AFFILIATES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 0-13265 59-2225346
(State or Other Jurisdiction of Incorporation) (Commission File Number)(I.R.S. Employer Identification)
4416 Forest Drive, Columbia, South Carolina 29206
(Address, Including Zip Code of Principal Executive Offices)
(803) 782-4278
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 8.01 Other Events
On July 6, 2009, the Securities and Exchange Commission (the
"Commission") filed a complaint (the "Complaint") in the United States District
Court for the District of South Carolina against Jerry F. Wells, Jr., the former
Executive Vice-President of Finance, Chief Financial Officer, and Secretary of
UCI Medical Affiliates, Inc. (the "Company") alleging violations of the
Securities and Exchange Act of 1934 and the rules promulgated thereunder, and
seeking to permanently enjoin Mr. Wells from engaging in any future violations
and from serving as an officer or director of a public company. On July 6, 2009,
Mr. Wells filed a Consent with the court stating that he will not oppose the
court's awarding the injunction requested by the Commission. On July 8, 2009,
the Company issued the press release attached as Exhibit 99.1 hereto and
incorporated herein by reference.
The Complaint alleges, among other things, the following information.
Between 2003 and 2008, Mr. Wells embezzled approximately $2.97 million from the
Company through a variety of measures including: (1) using the Company's
corporate credit card to pay personal expenses; (2) preparing false expense
reports and submitting them for reimbursement; and (3) submitting check requests
for non-business expenses, including construction work on Mr. Wells' personal
residences. Mr. Wells capitalized a portion of the expenses as fixed assets on
the Company's balance sheet, rather than expensing them in their entirety as
they were incurred, thereby causing the Company to overstate its net earnings in
the affected periods. To justify capitalizing some of these expenses, Mr. Wells
altered invoices from contractors performing work on his personal residences to
indicate that the work was for one of the Company's facilities, and provided
fraudulent work descriptions on the related check requests. Mr. Wells signed
each of the Company's Forms 10-Q and 10-K and accompanying Sarbanes-Oxley
certifications, thereby misrepresenting that they were free of any untrue
statements of material fact. In connection with the audit of the Company's
annual financial statements, Mr. Wells also signed multiple management
representation letters to the Company's auditors, thereby misrepresenting that
the Company's financial statements were prepared in conformity with GAAP.
The misconduct of Mr. Wells, upon which the Complaint and the pending
criminal charges brought by the United States Department of Justice are based,
was identified during the Company's internal investigation announced on Forms
8-K filed by the Company on December 18, 2008 and January 15, 2009. The internal
investigation, which was conducted by the Company's Audit Committee of the Board
of Directors, commenced on December 10, 2008, after the Company's former
independent registered accounting firm reported certain suspicious transactions
to the Audit Committee on that date. On December 17, 2008, the Board of
Directors of the Company terminated the employment of Mr. Wells.
On December 18, 2008, the Company advised the Commission that the Audit
Committee had undertaken its internal investigation. With the assistance of
Robinson Bradshaw & Hinson, P.A., the outside counsel to the Audit Committee,
the Audit Committee diligently conducted its inquiry.
On Friday, February 20, 2009, the Audit Committee presented its
findings regarding the misconduct of Mr. Wells to the Board of Directors of the
Company. On Monday, February 23, 2009, the Company reported the results of its
investigation to the Office of the United States Attorney and to the Commission.
During and since its internal investigation, the Company has fully cooperated,
and continues to cooperate fully, with the U.S. Attorney's Office, the
Commission, and the Federal Bureau of Investigation in their respective
investigations into the misconduct of Mr. Wells.
On February 27, 2009, Mr. Wells executed a Confession of Judgment and
admitted that he owes UCI Medical Affiliates of South Carolina, Inc., a
wholly-owed subsidiary of the Company, Two Million Nine Hundred Sixty-Seven
Thousand Three Hundred and Eight-Two ($2,967,382) Dollars for transfers made to
him or on his behalf and for expenses paid to him or on his behalf.
As previously announced by the Company on Form 8-K filed on January 15,
2009, the Company currently expects to restate its audited financial statements
for the year ended September 30, 2006 and the interim periods in fiscal year
2006 due to errors associated with the improper expense reimbursements and other
disbursements requested by and processed on Mr. Wells' behalf. The Company also
announced on Form 8-K filed on March 18, 2009 that the Company engaged Elliott
Davis, LLC (the "New Auditor") as its independent registered public accounting
firm. Depending upon the results of the audit being conducted by the New
Auditor, the Company may also determine that it will restate additional prior
period financial statements. Because of the work the Company and its New Auditor
continue to perform in connection with the restatement of prior period financial
statements, the Company has been unable to file its Form 10-K for the year-ended
September 30, 2008 ("2008 From 10-K"). Although the Company cannot at this time
estimate when it will file its restated financial statements and its 2008 Form
10-K, it is diligently pursuing these matters and intends to make the filings as
soon as reasonably practicable after the conclusion of the completion of work
regarding its restated financial statements.
Advisory Note Regarding Forward-Looking Statements
Certain of the statements contained in this Report on Form 8-K are
forward-looking statements subject to the safe harbor created by the Private
Securities Litigation Reform Act of 1995. We caution readers of this Form 8-K
that such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to materially
differ from our current expectations or any results expressed or implied by such
forward-looking statements. Specifically, our statements in this Form 8-K
regarding the status, preliminary indications and ongoing nature of, and our
expectations regarding, the financial statements that we intend to restate or
may restate, as well as any estimated amounts and impact of potential
adjustments in any restated financial statements are forward-looking statements.
Factors that could cause actual results to differ from current expectations
include, among other things, additional developments in and findings of the
ongoing audit, the possible impact of such developments, factors that may affect
the timing of and ability to complete the audit and the time needed for the
Company, its counsel and outside auditors to review these matters, any matters
arising from the review and preparation of adjustments to our previously issued
financial statements and the impact of all such matters on reports filed or to
be filed with the Securities and Exchange Commission. These possible impacts
include, but are not limited to, the following: damage to our business or
reputation; the discovery of items that require additional or greater than
expected adjustment to, or restatement of, our historical financial statements;
impairment of our ability to prepare and timely file with the Securities and
Exchange Commission our future financial reports; possible litigation or
regulatory action; or ancillary impacts on our relationships or agreements with
employees, vendors, lenders or other constituencies important to our business.
We can give no assurance that one or more of these impacts, or other unexpected
effects, may result from the audit or expected restatement of our historical
financial statements, any one of which could materially and adversely affect our
business, results of operations, financial condition, or trading price of our
common stock. Other risks we face are described in the Company's annual report
on Form 10-K for the year-ended September 30, 2007 and in other reports we file
with or furnish to the Securities and Exchange Commission from time to time.
Item 9.01 Financial Statements and Exhibits.
(a) - (c) Not applicable.
(d) Exhibits.
Exhibit 99.1 Press Release of UCI Medical Affiliates, Inc. dated July 8, 2009.
SIGNATURES
Pursuant to requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
UCI MEDICAL AFFILIATES, INC.
By: /s/ Joseph A. Boyle, CPA
Joseph A. Boyle, CPA
Title: Chief Financial Officer
Date: July 8, 2009