SEC wins $7.6-million (U.S.) fine against Australian
2005-11-23 15:09 ET - Street Wire
Also Street Wire (U-ZERO) Save The World Air Inc
by Stockwatch Business Reporter
In 1999 Australian Jeffrey Alan Muller said he had a device that would reduce air pollution from cars and improve fuel economy. The U.S. Securities and Exchange Commission said he had a pump-and-dump and filed a lawsuit.
The SEC won that suit last week. A New York judge fined Mr. Muller $7.6-million for fraudulently promoting Save The World Air Inc., an OTC Bulletin Board listing. (All figures are in U.S. dollars.)
Save The World Air was born in 1999 after Mandalay Capital Corp., a Vancouver company, bought Mr. Muller's pollution control technology for five million shares and changed its name.
Mandalay's three Vancouver directors -- Edward Skoda, Del Thachuk and Michael Wolf -- appear to have left the company after the acquisition, and the SEC did not mention them.
The SEC's lawsuit
After Mr. Muller took over the company the SEC says he pumped the stock to $14 while selling most of his five million shares in private deals.
"SWTA and Muller distributed a barrage of promotional information," the SEC said in its 12-page civil suit.
In addition to touting the company on Raging Bull, the SEC said Mr. Muller staged demonstrations for news cameras showing off the technology, called ZEFS, which was short for the Zero Emission Fuel Saver.
ZEFS, according to the SEC, was not the pollution-saving device Mr. Muller claimed it was.
"During a Los Angeles demonstration, after connecting the ZEFS device, the emission of harmful nitric oxide actually increased," the SEC says.
After a mechanic made adjustments Mr. Muller was apparently able to get some favourable readings.
Two weeks later, Save The World said Fox News was going to televise ZEFS. The stock jumped from $7.03 to $12.
Two days after that the company said it was going to show off its technology for MSNBC. The stock hit $14 on volume of 1,354,700 shares.
At the same time, Save The World Air apparently claimed Ford Motor Company was looking to test its pollution control device.
The SEC says Ford, however, just talked to Mr. Muller on the phone twice.
"In those conversations, Ford employees told Muller that any interest by Ford was conditional on Ford's receipt of a completed Ford confidentiality agreement and its receipt of [reliable data] on whatever tests had been performed on the ZEFS," the SEC says.
The SEC halts Save The World Air
The SEC halted the stock three weeks later, questioning the accuracy of its news releases. Around the same time, New York Times reporter Gretchen Morgensen said the stock did not pass the "smell test."
When the 10-day halt expired the company resumed at $2.62, down from an already diminished $4.87 on the day of the halt.
Mr. Muller resigned in October, 2001, two months before the SEC's suit. Well-known environmental lawyer Edward Masry took over the company.
Mr. Muller banned for 20 years
New York Judge Frank Maas found that Mr. Muller's promotion of Save The World Air was fraudulent and misleading.
In addition to fining him $7.6-million, Judge Maas barred Mr. Muller, 54, from stocks for 20 years. Mr. Muller's penalty was the largest in the Save The World Air pump-and-dump.
The SEC previously settled with two hired touts in the case, Dennis Wilson and Billy Blackwelder.
Florida stock tout Mr. Wilson agreed to a cease-and-desist order in December, 2001. The SEC said Save The World Air paid Mr. Wilson $25,000 to tout the company in Raging Bull with the alias "Majorbuyer."
Mr. Blackwelder, the other paid tout, agreed to a similar order in November, 2003.
Save The World Air, which is still in the environmental technology business, gained two cents on Tuesday to close at $1.02.
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When I was running my phone room in Spain,we moved some for them.They didn't pay me and I started threatening people as I always do.
Posted by mark harris @ 2005-11-23 16:19
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"Mandalay's three Vancouver directors -- Edward Skoda, Del Thachuk and Michael Wolf -- appear to have left the company after the acquisition, and the SEC did not mention them."
bcsc.bc.ca
98/27 July 24, 1998
Commission Imposes Sanctions against Executives of Junior Company Released: July 23, 1998 Contact: Michael Bernard 899-6524 or (BC only) 1-800-373-6393
VANCOUVER – The British Columbia Securities Commission has ruled that a junior company managed by four Vancouver executives violated several disclosure requirements under the Securities Act while it was purportedly being developed to offer “green solutions” to the pulp and paper industry.
The Commission found that the company, Simon Fraser Resources Ltd., distributed securities under a Statement of Material Facts that did not contain full, true and plain disclosure, failed to disclose material changes in its affairs, failed to keep proper records of its financial transactions and failed to comply with various policies of the Vancouver Stock Exchange.
The Commission has ordered that Mark Burgert and Jeff Thachuk, who were managing the company when many of the violations occurred between February 1990 and May 1991, be prohibited from acting as directors and officers of any reporting issuers for three years.
The order also requires that before they can serve as directors or officers again they must take a course on the duties of those positions. A similar order for a one year period was made against two other Simon Fraser directors, Karl Burgert and Michael Thachuk.
The group took a company listed on the Vancouver Stock Exchange and used it to fund a business that would provide the pulp and paper industry with green solutions to environmental problems.
However, Mark Burgert and Jeff Thachuk, who were university students at the time, had no experience in running a public company and the company soon ran afoul of various disclosure requirements.
The commission panel also ruled that Simon Fraser, which has been under a cease trading order since 1991, cannot resume trading until it files a prospectus containing full, true and plain disclosure of its affairs.
The British Columbia Securities Commission is a provincial government agency responsible for regulating trading in securities and exchange contracts. Copies of the decision (52 pages) are available on request.
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