|THe information in this article would have made Mr. D. a happier man. Perhaps this retribution for the MTEI perpetrators came as a result of his DD from the "other side". All who knew him would not doubt that he could be in the spiritual world getting this situation straightened out once and for all!!|
Sept. 21, 2001, 12:10AM
SEC sues two executives in fraud case Mountain Energy officials accused of pumping up stock's value
By MICHAEL DAVIS
Copyright 2001 Houston Chronicle
The Securities and Exchange Commission sued two executives of a Houston energy firm Thursday, accusing them of securities fraud by pumping up the value of the stock using inflated claims. The commission filed its action against two former chief executive officers of Mountain Energy. In 1998 the small Houston firm claimed to own property
in West Virginia with oil and coal reserves estimated to be worth $200 million.
In fact, the 30 properties in West Virginia were acquired for payment of back taxes and the men named in the complaint had no idea whether they contained any oil.
The company was formed in May 1998 using the shell of another publicly held company named International Casino Cruises. After its formation, press releases containing false and misleading information, according to the SEC,
were issued concerning the value of oil and coal reserves the company claimed to possess. "In fact, the defendants had no reasonable basis for these statements," the commission said in a written statement. The SEC described it as a pump and dump scheme. Mountain Energy shares are essentially worthless but continue to trade. The last quote for the shares was .0001 cent per share. Between May and June of 1998, the phony claims in press releases pumped up
the stock from around 5 cents per share to a high of $1.75. When the shares topped out, the insiders used an elaborate scheme to sell their shares, or "dump" them.
Accused of securities fraud by the commission were John Christensen II, Jack Uselton, both of whom served briefly as chief executive officer of the company, and Mark Tow, a California attorney who initially purchased the West Virginia properties and sold them to Mountain Energy for shares in the company. Christensen, his relatives and family members were some of the largest shareholders in Mountain Energy, holding about 2.5 million shares.
Also accused of selling unregistered Mountain Energy shares were two New York-based financial consultants, Joseph Blumenthal and George Guttman. Both have agreed to settle without admitting any wrongdoing and to pay $1.35
million, according the SEC release. Many of the investors in the company, both large and small, learned of the
stock on the Internet, and a group of those who felt they had been swindled banded together to spread the word about the company. Many remain close online friends.
"What sets this apart is the Internet and how it was initially used to push the stock and how we have been able to use it to get the word out," investor Gregg Polley, who lost $50,000 in Mountain Energy stock, told the Houston
Chronicle in November 1998. "This sort of effort would not have been possible in the old days." The commission said it is seeking permanent injunctions against the defendants barring them from any future violations, civil penalties against Christensen, Uselton and Tow, and repayment of profits from Christensen, Blumenthal and Guttman.
It also seeks to bar Christensen and Uselton from ever again serving as officers or directors of a publicly held company. The agreement Blumenthal and Guttman struck with the commission requires them to give up their profits from the deal.