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United States District Court
For the District of Columbia
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Securities and Exchange Commission,
450 5th Street, N.W.
Washington, DC 20549
Plaintiff,
v.
LERNOUT & HAUSPIE SPEECH PRODUCTS N.V.,
Defendant.
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:Civil Action No._________
Complaint for Injunctive Relief
Plaintiff Securities and Exchange Commission alleges that:
Summary
1. From at least the fourth quarter of 1996 through at least the second quarter of 2000, Lernout & Hauspie Speech Products N.V. ("L&H" or "Defendant") engaged in a variety of undisclosed and deceptive transactions to inflate L&H's reported income and, consequently, the price of its stock. These deceptive transactions included guaranteed and conditional sales and sales that were secretly financed by L&H. The eventual result of this fraudulent conduct was the destruction of L&H as an operating company and a financial loss, borne by investors in the U.S., Belgium and elsewhere, of at least $8 billion in market capitalization. 2. In this action, the Securities and Exchange Commission seeks to permanently enjoin L&H from future violations of the anti-fraud, reporting and recordkeeping provisions of the federal securities laws. Jurisdiction

3. The Securities and Exchange Commission (the "Commission") brings this action pursuant to the authority conferred upon it by Section 20(b) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. § 77t(b)] and Section 21(d) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § 78u(d)]. 4. This Court has jurisdiction over this action, and venue is proper, pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)] and Sections 21(e) and 27 of the Exchange Act, [15 U.S.C. §§ 78u(e) and 78aa]. The Defendant, directly or indirectly, made use of the means and instrumentalities of interstate commerce or of the mails, or the facilities of a national securities exchange in connection with the acts, transactions, practices and courses of business alleged herein. The Defendant

5. Lernout & Hauspie Speech Products N.V., is a Belgian corporation formed in 1987. During the relevant period, L&H was a developer, licensor and provider of speech and language technologies, headquartered in Ieper, Belgium and Burlington, Massachusetts. L&H's common stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act [15 U.S.C. §78l(g)]. 6. At all relevant times, the Defendant's common stock was listed on EASDAQ (now known as NASDAQ Europe) and the NASDAQ National Market System. Trading in L&H common stock was suspended by EASDAQ and NASDAQ on November 9, 2000. The Defendant's common stock was de-listed by NASDAQ on December 6, 2000. Subsequently, in March 2001, the Defendant voluntarily de-listed from NASDAQ Europe. The Defendant's common stock is currently quoted on the "Pink Sheets" disseminated by Pink Sheets LLC. 7. At the beginning of the relevant period, L&H was a "foreign private issuer," required to file annual and other reports on Commission Form 20-F and Form 6-K, pursuant to Section 13a-16 of the Exchange Act. In fiscal year 2000, L&H acquired two U.S. technology corporations (Dictaphone Corporation and Dragon Systems, Inc.), and, thereafter, was required to fileperiodic reports pursuant to Sections 13a-1 and 13a-13 of the Exchange Act. 8. After failed attempts at reorganization, the Defendant is presently in liquidation proceedings in the U.S. and Belgium. Facts

Dictation Consortium N.V. and Brussels Translation Group N.V. 9. Between 1996 and 1999, L&H improperly recorded over $60 million in revenue from transactions with two Belgian entities -- Dictation Consortium N.V. ("Dictation") and Brussels Translation Group N.V. ("BTG") -- formed for the purpose of engaging in transactions with L&H. Transactions between L&H and these two companies were arranged to allow L&H to fraudulently claim...
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