SEC v. SAVE THE WORLD AIR, INC., ET AL.
On December 19, the Commission filed civil charges in federal district
court in New York, New York, against Save the World Air, Inc. (STWA),
Jeffrey Alan Muller (Muller), and Billy Blackwelder (Blackwelder),
(collectively, Defendants), alleging that they engaged in a fraudulent
scheme to manipulate the market for stock in STWA, a public company
controlled by Muller. The Defendants used the Internet to facilitate
the fraud.
The SEC's complaint alleges that from at least February 1999 through at
least April 2001, STWA and Muller carried out a fraudulent promotional
campaign using press releases, Internet postings, an elaborate Internet
website, and televised media events to disseminate false and materially
misleading information about STWA's product and commercial prospects.
STWA's and Muller's actions led to the artificial inflation of the price
and trading volume of STWA stock, causing its market capitalization to
be as much as $218,728,062. At the same time he publicly promoted STWA,
Muller privately sold millions of shares of restricted STWA stock that,
if sold at then-prevailing market prices, would have provided him with
over $9 million in personal profits. He concealed these sales by
failing to disclose in Commission filings, as required, any changes in
his beneficial ownership in STWA. Finally, STWA and Muller made at
least nine SEC filings that contain false financials statements and
disclosures.
The complaint further alleges that Blackwelder engaged in at least part
of the manipulative scheme. He prepared and arranged to have issued at
least one false press release announcing a major licensing deal, when in
fact no such deal existed. Blackwelder also posted positive messages on
Raging Bull, an Internet message board, without making required
disclosures about compensation he received from STWA for his promotional
activities.
The complaint charges STWA and Muller with violations of the antifraud
and reporting provisions of the federal securities laws, Section 17(a)
of the Securities Act of 1933 (Securities Act); Sections 10(b), 13(a),
and 13(b) of the Securities Exchange Act of 1934 (Exchange Act); and
Rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1 thereunder. The complaint
also alleges that Muller violated Section 16(a) of the Exchange Act and
Rules 16a-2 and 16a-3 thereunder. The complaint charges Blackwelder
with violations of the antifraud provisions, Section 17(b) of the
Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5
thereunder.
In a separate, but related, proceeding, the SEC issued a cease and
desist order on consent against former STWA promoter Dennis Wilson of
Longwood, Florida. Wilson, whom the Commission found to have made
Internet postings touting STWA without making required disclosures
concerning his compensation for such activity, agreed, without admitting
or denying the Commission's findings, to cease and desist from
committing violations of Section 17(b) of the Securities Act. [SEC v.
Save The World Air, Inc., Jeffrey Alan Muller, and Billy Blackwelder,
Civil Action No. 01 CV 11586 (Judge Daniels), SDNY] (LR-17283) |
