From today's SEC Digest:
SEC SUES FORMER TOP OFFICERS OF MOUNTAIN ENERGY FOR PUMP AND DUMP SCHEME; TWO OTHER DEFENDANTS AGREE TO DISGORGE PROCEEDS OF $1.35 MILLION FROM SALE OF UNREGISTERED STOCK
The Commission today filed a civil injunctive action in U.S. District Court in Houston, Texas, charging Mountain Energy, Inc., a start-up energy company, its two former chief executive officers, Donald John Christensen, II and Jack E. Uselton, and an associated individual, Marc R. Tow, with engaging in a "pump-and-dump" scheme in the company's securities. In addition, the Commission charged two financial consultants, Joseph M. Blumenthal and George W. Guttman, with illegally selling unregistered Mountain Energy securities.
According to the Commission's complaint, during the spring and summer of 1998, Mountain Energy issued six fraudulent press releases that misrepresented the ownership, nature and value of the company's assets. Specifically, the Company falsely claimed to have obtained mineral rights to West Virginia properties valued at $200 million. These press releases dramatically elevated the price of Mountain Energy's securities. Contemporaneously with the publication of the releases, Christensen authorized the issuance of over 10 million shares of stock to Guttman, Blumenthal and a third individual, who is now deceased. All three men immediately resold the securities, and Guttman paid Christensen at least $896,000 of his trading profits. In settlement of the Commission's action, Blumenthal and Guttman have agreed to pay a total of $1.35 million in disgorgement of illegal profits. [SEC v. Donald John Christensen, II, Jack E. Uselton, Marc R. Tow, George W. Guttman, Joseph M. Blumenthal, and Mountain Energy, Inc., Civ. No. HO1-3203] (LR-17144)
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