Former Officers Charged With Overstating Performance of Credit Card …

Former Officers Charged With Overstating Performance of Credit Card Receivables Portfolio; Former Chairman, Directors and CEO Charged for Decision to Withhold Filing of Spiegel’s Required Financial Reports

Washington, D.C., Nov. 2, 2006 – LAWFUEL – US Law & Law Jobs Network – The Securities and Exchange Commission today filed settled enforcement actions against eight former officers and directors of Spiegel, Inc., an Illinois-based public company. During the relevant period, Spiegel owned and operated catalogue retailers Spiegel, Eddie Bauer and Newport News.

The Commission filed settled charges against the former Co-Presidents of Spiegel, Michael Moran and James Sievers, former CEO Martin Zaepfel, former CFO James Cannataro, and former Treasurer John Steele, in connection with the overstatement of the performance of Spiegel’s credit card receivables portfolio. In addition, the Commission settled with the former Chairman of Spiegel’s Board of Directors, Michael Otto, two former directors, Michael Crusemann and Horst Hansen, and former CEO Martin Zaepfel in connection with the decision to withhold Spiegel’s required financial reports to avoid issuance by its outside auditor of a “going concern” opinion.

Linda Chatman Thomsen, Director of the Commission’s Division of Enforcement, said, “The Commission’s action against the Spiegel directors demonstrates that the Commission will hold those at the highest corporate ranks accountable for their conduct. Directors who keep important financial information from the investing public by purposely failing to file required financial reports will be sanctioned. Shareholders and investors deserve to know the unadulterated truth.”

Merri Jo Gillette, Director of the Commission’s Midwest Regional Office, said, “This enforcement action demonstrates the Commission’s continuing resolve to hold individuals responsible when they contribute to a company’s misstatement of financial information to the investing public.”

The Commission alleges in its complaints that Moran, Sievers, Zaepfel, Cannataro and Steele improperly increased inter-company fees between Spiegel’s retail subsidiaries and Spiegel’s bank subsidiary, which had the effect of hiding the deteriorating performance of the company’s credit card receivables portfolio. Spiegel was thus able to benefit improperly from the securitization of that portfolio.

The Commission also alleged that former Directors Otto, Crusemann and Hansen and former CEO Zaepfel all participated in the decision to not file Spiegel’s 2001 Form 10-K and first quarter 2002 Form 10-Q on a timely basis. Prior to the deadline for the filing of the Form 10-K, Spiegel’s outside auditor informed the company that a “going concern” opinion would accompany the filing unless Spiegel was able to resolve its underlying financial problems. When it failed to resolve those problems by the April 15, 2002 deadline, the company improperly elected to withhold its filing rather than make the required disclosures to the investing public.

In light of the above, the Commission alleged that Moran, Sievers, Zaepfel, Cannataro and Steele violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 and violated and aided and abetted violations of various books and records and financial reporting provisions of the Securities Exchange Act of 1934. The Commission also alleged that Otto, Crusemann and Zaepfel aided and abetted Spiegel’s violations of the financial reporting provisions of the Exchange Act. Finally, the Commission alleged that Hansen was a cause of Spiegel’s violations of these reporting provisions.

Without admitting or denying the Commission’s allegations, Moran, Sievers, Cannataro, Steele, Otto, Crusemann and Zaepfel have consented to the Court’s issuance of an order of permanent injunction enjoining them from future violations of the federal securities laws. In addition, Moran, Sievers, Cannataro and Steele have consented to each pay a civil penalty of $120,000. Otto and Crusemann have consented to each pay a civil penalty of $100,000. Zaepfel has consented to pay a civil penalty of $170,000. Finally, without admitting or denying the Commission’s findings, Hansen has consented to the Commission’s entry of an order ordering him to cease and desist from committing or causing future violations of the reporting provisions of the federal securities laws.

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For further information, contact:

Peter K.M. Chan

(312) 353-7410

Defense counsel:

Defendants: Michael Moran and James Sievers
Counsel: Walter Carlson

Sidley Austin LLP

One South Dearborn

Chicago, IL

(312) 853-7000
[email protected]

Defendant: Martin Zaepfel

Counsel: Michael Considine

Day Berry & Howard LLP

One Canterbury Green
Stamford, CT 06901
(203) 977-7300

and

Counsel: Robert Knuts

Allen & Overy LLP

1221 Avenue of the Americas

New York, NY 10020

(212) 610-6321

Defendant: James Cannataro

Counsel: Mark Radke

LeBouef Lamb McRae

1875 Connecticut Ave., N.W.
Suite 1200
Washington, DC 20009
202 986 8000

[email protected]

and

Counsel: Ted Sonde

Hogan & Hartson, LLP

500 13th Street, NW

Washington, DC 20004

(202) 637-3569

[email protected]

Defendant: John Steele
Counsel: Ted Sonde

Hogan & Hartson, LLP

500 13th Street, NW

Washington, DC 20004

(202) 637-3569

[email protected]

Defendant: Michael Crusemann

Counsel: Tom Fitzpatrick

500 Fifth Avenue, 33rd Floor

New York, NY 10110-3398

(212) 930-1290

[email protected]

Defendant: Michael Otto

Counsel: Larry Iason

Morvillo, Abramowitz, Grand, Iason & Silberberg

565 Fifth Avenue

New York, NY 10017

(212) 856-9600

[email protected]

Defendant: Horst Hansen

Counsel: Martin Perschetz

Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY 10022

(212) 756-2247

[email protected]

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