3ELANE L. MORRISON (Cal. Bar No. 127752) LOBERT L. MITCHELL (Cal. Bar No. 161354) rRAcY L. DAVIS (cal.

BX NO. 184129) LOBERT L. TASHJIAN (Cal. Bar No. 191007) ittomeys for Plaintiff ;ECURITIES AND EXCHANGE COMMISSION I4 Monteomerv Street. Suite 2600 ;an ~ran&xo,'~alifo&ia94104 relephone: (415) 705-2500 'acsimile: (415) 705-2501

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION jECURITIES AND EXCHANGE COMMISSION, Plaintiff.
VS.

COMPLAINT

;E INVISION, INC. (formerly known as MVISION TECHNOLOGIES, INC.), Defendant.

Plaintiff Securities and Exchange Commission ("Commission") alleges against defendant GE nVision, Inc., formerly known as InVision Technologies, Inc. ("InVision" or "Defendant"):

SUMMARY OF THE ACTION

1. This matter involves violations of the Foreign Corrupt Practices Act ("FCPA") by

nVision, a California-based manufacturer of explosive detection systems used at airports. In three nstances from at least June 2002 through June 2004, Invision was aware of a high probability that its ales agents or distributors made or offered to make improper payments to foreign government officials

n China, the Philippines and Thailand, in order to obtain or retain business for InVision. Despite this,
nVision allowed the agents or distributors to proceed on Invision's behalf, in violation of the FCPA. nVision also failed to devise and maintain a system of internal controls with respect to foreign sales ufficient to assure compliance with the FCPA.

2.

In a separate administrativeproceeding relating to these violations, the Commission has

issued an order directing InVision to cease and desist from violating certain provisions of the FCPA and disgorge the profits from its violations, $589,000, plus prejudgment interest of $28,703.57. 3.

In this action, the Commission seeks a Court order requiring InVision to pay a civil

monetary penalty of $500,000 based on that same conduct.

JURISDICTION
4. This Court has jurisdiction over this action pursuant to Sections 21(d)(3) and 27 of the

Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. $9 78u(d)(3) and 78aal. Defendant, directly or indirectly, made use of the means and instrumentalities of interstate commerce and the mails in connection with the acts, transactions, practices and courses of business alleged in this Complaint. 5. Venue in this District is proper pursuant to Section 27 of the Exchange Act [15 U.S.C.

78aaI because Defendant 1s located in the Northern District of California and a substantial portion

of the conduct alleged in this Complaint occurred within the Northern District of California.

INTRADISTRICT ASSIGNMENT
6.

Assignment to the San Francisco Division is proper pursuant to Civil Local

Rule 3-2(c). Defendant mamtains its headquarters in Alameda County, where a substantial part of the events or omissions that give rise to the claims alleged in this Complaint occurred.

DEFENDANT
7.

InVision designs and manufactures advanced explosive detection systems to scan

checked baggage by airport security personnel in the United States and other countries. At the time of the conduct described below, InVision was incorporated in Delaware and headquartered in Newark, California. Invision's common stock was registered with the Commission pursuant to Section 12(g) of the Exchange Act and was listed on the NASDAQ National Market. InVision filed reports with the Commission pursuant to Section 13 of the Exchange Act. On December 6,2004, InVision was acquired by an affiliate of General Electric Company ("General Electric"). The successor company, known as GE InVision, Inc., is an indirect wholly-owned subsidiary of General

Electric. All of the conduct described in this Complaint occurred prior to the acquisition of InVision by General Electric. FACTS
8.

During the relevant period, Invision marketed and sold its explosive detection systems

to customers worldwide. To facilitate its sales outside the United States, InVision retained local sales agents and distributors who were familiar with the business practices and customs of their respective countries. The sales agents and distributors negotiated with Invision's customers, including governmental aviation authorities, and typically reported to InVision through an Invision Regional Sales Manager. The Regional Sales Managers reported directly to an InVision senior sales executive (the "Senior Executive").

A.

China
9.

In November 2002, InVision agreed to sell two explosive detection machines for use

at an airport under construction in Guangzhou, China. The airport is owned and controlled by the government of China. The sale to the airport was conducted through InVision's local distributor in China, which purchased the two machines from InVision for approximately $2.8 million. The distributor, in t r ,negotiated the sale of the machines and was InVision's primary representative to un the airport and associated governmental agencies.
10.

Under the terms of the transaction, InVision was obligated to deliver the two machines

by mid-2003. Due to problems in obtaining an export license from the United States government, however, InVision did not deliver the machines until October 2003. During the delay, the distributor in China informed the responsible Regional Sales Manager and the Senior Executive that the airport intended to impose a financial penalty on InVision. The distributor advised the Regional Sales Manager that, in order to avoid this penalty, it intended to offer foreign travel and other benefits to airport officials. The Regional Sales Manager notified the Senior Executive of the distributor's intention.

11.

The distributor requested financial compensation from InVision to pay for penalties

and costs that, it claimed, would be incurred as a result of the delay in shipment. The distributor's

request included compensation for benefits that the distributor intended to offer to airport officials. In October 2003, the Senior Executive agreed to pay the distributor $95,000. Based on information provided by the Senior Executive and the Regional Sales Manager, InVision's finance department subsequently authorized the payment, which was completed in April 2004. At the time of the payment, based on the information provided to the Regional Sales Manager and the Senior Executive, InVision was aware of a high probability that the distributor intended to use part of the h d s it received from InVision to pay for foreign travel and other benefits for airport officials. 12. InVision improperly recorded the payment in its books as a cost of goods sold.

InVision realized profits of approximately $589,000 from the sale of the two machines in China.

B.

Philippines
13. InVision sold two explosive detection machines for use in an airport in the Philippines

in November 2001. Although InVision had retained a sales agent in the Philippines since at least 1996, the sale was made directly by InVision to the subcontractor responsible for building the airport terminal baggage handling system.

14.

Beginning at about the time of the November 2001 sale, InVision received repeated

requests for a commission on the sale from its sales agent in the Philippines. At the same time, in communications with both the responsible Regional Sales Manager and the Senior Executive, the agent indicated that it was negotiating for additional sales of InVision products to other airports owned and controlled by the government of the Philippines. The agent indicated that it intended to use part of any commission it obtained in connection with the November 2001 sale to make gifts or pay cash to govemment officials in order to influence their decision to purchase additional InVision products. 15. In December 2001, the Senior Executive agreed to pay the Filipino sales agent a

commission in the amount of approximately $108,000 in connection with theNovember 2001 sale. Based on information provided by the Regional Sales Manager and Senior Executive, InVision's finance department subsequently authorized the payment, which was completed in July 2002. At the time of the payment, based on the information provided to the Regional Sales Manager and the

Senior Executive, Invision was aware of a high probability that the sales agent intended to use part of the commission to make gifts or pay cash to influence Filipino government officials to purchase Wision products. InVision improperly recorded the payment in its books as a sales commission. The Filipino agent did not complete any additional sales on behalf of InVision.
C.

Thailand
16. Beginning no later than 2002, InVision competed for the right to supply explosive

detection machines to an airport under construction in Bangkok, Thailand. Construction of the airport is overseen by a corporation controlled by the government of Thailand. Invision retained a distributor in Thailand to lobby the airport corporation and the Thai government on the Company's behalf. Under the terms of the transaction, the distributor would purchase the explosives detection machines from InVision and then make its profit by reselling them at a higher price for use by the airport. The distributor was Invision's primary representative to the airport and associated governmental agencies. 17. From at least January 2003 through April 2004, in communications with the

responsible Regional Sales Manager and the Senior Executive, the distributor indicated that it had offered to make gifts or payments to officials with influence over the airport corporation. Based on the information provided to the Regional Sales Manager and the Senior Executive, InVision was aware of a high probability that the distributor intended to fund any such gifts or offers out of the difference between the price the distributor paid InVision to acquire the machines and the price for which the distributor was able to resell them. Despite this awareness, InVision authorized the distributor to continue to pursue the transaction. 18. In or about April 2004, the airport corporation, through its general contractor, agreed

to purchase 26 of Invision's explosive detection machines fiom the InVision distributor in a sale InVision valued at approximately $35.8 million. Consummation of the transaction was deferred after InVision received notification of possible FCPA violations. InVision has not recognized any revenue kom the transaction and has agreed that the transaction will proceed, if at all, only as a sale directly to the airport corporation or another Thai governmental entity.

D.

InVision's Lack of Internal Controls

19.

During the period of the foreign transactions described above, InVision failed to

develop an adequate process to select and train its sales agents and distributors employed outside the United States. In choosing foreign sales agents and distributors, Invision primarily relied on introductions by other American companies. InVision conducted little, if any, investigation into the backgrounds of its foreign sales agents and distributors. 20. Invision's standard agreement with its foreign agents and distributors contained a

clause prohibiting violations of the FCPA. Beyond the contractual provision, however, Invision provided no formal training or education to its employees (including its Regional Sales Managers) or its sales agents and distributors regarding the requirements of the FCPA. 21. InVision also failed to establish a program to monitor its foreign agents and

distributors for compliance wlth the FCPA. For example, InVision did not have a regular practice of periodically updating background checks or other information regarding foreign agents and distributors. With respect to the transactions described above, InVision failed to establish an internal system sufficient to prevent and detect violations of the FCPA.

FIRST CLAIM
Violation of Section 30A of the Exchange Act (Illegal OSfers and Payments) 22. 23. Paragraphs 1 through 21 are re-alleged and incorporated by reference. As described above, InVision made or authorized payments, t h u g h money and gifts,

to foreign officials for the purpose of influencing their official acts and decisions and inducing them to use their influence to assist InVision in obtaining or retaining business with foreign airport authorities. Throughout the relevant period, the recipients of these offers and payments were foreign officials within the meaning of the FCPA, and the relevant foreign airport authorities were instrumentalities of foreign governments within the meaning of the FCPA. 24. By reason of the foregoing, InVision violated the illegal offers and payments

provisions of the FCPA, codified as Section 30A of the Exchange Act [15 U.S.C.

5 78dd-11.

SECOND CLAIM

Violation of Section 13@)(2)(A) of the Exchange Act (Books and Records)

Paragraphs 1 through 24 are re-alleged and incorporated by reference. As described above, with respect to the offers and payments described above, W i s i o n failed to make and keep books, records and accounts which, in reasonable detail, accurately and fairly reflected its transactions and dispositions of its assets. 27. By reason of the foregoing, InVision violated the books-and-records provisions of the

FCPA, as codified at Section 13@)(2)(A)of the Exchange Act [15 U.S.C. 5 78m@)(2)(A)].

THIRD CLAIM
Violationof Section 13@)(2)(B) of the Exchange Act (Internal Controls)
28. 29. Paragraphs 1 through 27 are re-alleged and incorporated by reference. As described above, with respect to the offers and payments described above, InVision

failed to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions were executed in accordance with management's general or specific authorization; and (ii) transactions were recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and to maintain accountability for its assets.

30.

By reason of the foregoing, InVision violated the internal controls provisions of the

FCPA, as codified at Section 13@)(2)(B)of the Exchange Act [15 U.S.C.

5 78m@)(2)(B)].

PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that the Court enter a Final Judgment ordering Defendant to pay a $500,000 civil penalty pursuant to Section 21(d)(3) and 32(c) of the Exchange Act [I5 U.S.C. $9 78u(d)(3) and 78ff(c)], and granting such other relief as the Court deems appropriate.

Dated: February 11,2005 Respectfully submitted:

Tracy L. Davis Robert L. Tashjian Attorneys for Plaintiff SECURITIES AND EXCHANGE COMMISSION