SEC v. Countryland Wellness Resorts, Inc., Fred Cruz (a.k.a.
Federico
Cruz Gonzalez), Luis R. Hidalgo, Jr. and Donald E. Studer
(Rel. 34-43360; AAE Rel. 1316; File No. 3-10314)
(U.S. District Court, District of Nevada)
In the Matter of Countryland Wellness Resorts, Inc.
(Administrative Proceeding)
(SEC Contact: Diana K. Tani (323) 965-3991)
The SEC's injunctive action names the following parties: Countryland
Wellness Resorts, Inc., based in Las Vegas, which claims to be in the
mining and electrical contracting business and purports to plan to
operate a longevity center at a wellness resort and casino in Las Vegas;
Fred Cruz, aka Federico Cruz Gonzalez, Countryland's president and
chairman of the board; Luis R. Hidalgo, Jr., Countryland's auditor and a
licensed California certified public accountant; and Donald E. Studer,
Countryland's attorney, who is licensed to practice law in California
and Louisiana.
The complaint alleges that Countryland and Cruz lied to investors about
the following assets reported in the company's financial statements and
in various SEC filings:
ú Dirt stored in a warehouse was reported as gold with a value ranging
from $19.5 million to over $27.3 million;
ú Mining reserves were reported to have proven values ranging from $1.2
billion to $2.1 billion; in fact extensive work needed to be performed to
determine the amount and value, if any, of recoverable minerals.
Nonetheless, Countryland reported the mining reserves as assets from 1997
through 2000.
ú Indonesian bank guarantees were reported to have values ranging from
$400 million to $1.1 billion; in fact, the bank guarantees did not exist.
The complaint also alleges that Hidalgo rendered false audit reports on
Countryland's 1996, 1997, and 1998 financial statements, falsely stating
that the company's financial statements were presented in conformity
with Generally Accepted Accounting Principles and that he conducted his
audit in accordance with Generally Accepted Auditing Standards. The
complaint further alleges that Cruz and Countryland's counsel, Studer,
knowingly included an unauthorized audit report in a June 1999
registration statement filed with the SEC.
The complaint charges all of the defendants with securities fraud. The
complaint also charges Countryland with violating and Cruz with aiding
and abetting Countryland's violations of the periodic reporting, record-
keeping and internal controls provisions and Cruz with violating the
falsifying books and records and lying to an accountant provisions of
the federal securities laws.
Studer and Hidalgo agreed to settle the action by consenting to a
permanent injunction without admitting or denying the allegations in the
complaint; no penalties were assessed based on their demonstrated
inability to pay. Countryland and Cruz also consented to the entry of a
permanent injunction without admitting or denying the allegations in the
complaint. Additionally, Cruz agreed to pay a $55,000 penalty.
The SEC instituted a separate administrative proceeding against
Countryland to determine whether the registration of its stock should be
revoked. A hearing on this matter will be scheduled before an
administrative law judge. (Press Rel. 2000-142)
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