U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.

LITIGATION RELEASE NO. 17319 / January 16, 2002

ACCOUNTING AND AUDITING ENFORCEMENT RELEASE NO. 1500 / January 16, 2002

Securities and Exchange Commission v. Thomas W. Lambach, Case No. 1:CV-02-69 (M.D. Pa.)

SEC CHARGES FORMER CFO OF ATCHISON CASTING CORPORATION SUBSIDIARY UNIT WITH ACCOUNTING FRAUD

Defendant Falsified Books and Records, Causing Income Overstatement and Concealing Theft of Over $900,000

The Securities and Exchange Commission ("Commission") today charged Thomas W. Lambach, a former Controller and Chief Financial Officer of a subsidiary unit of Atchison Casting Corporation ("Atchison"), with accounting fraud. The Commission's Complaint, filed in the United States District Court for the Middle District of Pennsylvania, alleges that, while Lambach was employed with Atchison's Pennsylvania Foundry Group ("PFG"), he stole more than $900,000 of corporate funds and made numerous false accounting entries in the PFG's books and records, which had the effect of concealing his theft and making the PFG and, in turn, Atchison, appear more profitable than they were.

Specifically, the Complaint alleges that Lambach made or caused to be made "miscellaneous adjustment" journal entries over a multi-year period to alter balances in various of the PFG's accounts. These adjustments lacked any economic or accounting justification. Mr. Lambach also allegedly created fictitious asset and other accounts that lacked any support or substance. During the same period, Lambach stole more than $900,000 of corporate funds by writing numerous unauthorized checks payable to himself from certain Atchison bank accounts.

The Complaint further details that Lambach, in his position as CFO of the PFG, regularly compiled and transmitted the fraudulent accounting information for the PFG to Atchison's corporate offices for inclusion in the company's consolidated financial statements. As a result of Lambach's conduct, the periodic reports filed by Atchison with the Commission for its fiscal years ending June 30, 1997, 1998, 1999, and 2000, contained materially false and misleading consolidated financial statements. More specifically, the Complaint alleges that, over that period, Atchison's net income was overstated by between 12% and 575% and its operating income was overstated by as much as 1580%. The Commission also alleges that Lambach actively attempted to conceal his accounting fraud and theft by interfering with an audit conducted by Atchison's independent auditors in July and August 2000.

Lambach resigned his position in October 2000, and, on November 2, Atchison announced that it had discovered accounting errors involving the PFG and that it had begun an investigation into the matter. On April 24, 2001, Atchison announced it had completed its investigation and restated its financial statements for the fiscal years ended June 30, 1997 through June 30, 2000, including a reduction in net income of approximately $24.5 million over that period.

The Commission alleges that Lambach's conduct violated Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934, and Rules 10b-5 and 13b2-1 thereunder. Lambach has agreed to settle the charges brought against him without admitting or denying the allegations set forth in the Complaint. Lambach has consented to the entry of a final judgment permanently enjoining him from future violations of Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder. In addition, the final judgment to which Lambach consented provides that he is permanently barred from acting as an officer or director of any public company.

The United States Attorney's Office for the Middle District of Pennsylvania has filed criminal charges against Lambach related to the same conduct. The thirteen-count indictment, filed on December 6, 2001, charges Lambach with twelve counts of wire fraud and one count of conspiracy.

SEC Complaint in this matter.