The Securities & Exchange Commission today filed two fraud cases targeting companies that issued false press releases designed to artificially inflate their stock prices.
The SEC charged Atlantis Technology Group of Fort Lauderdale, Fla., which claimed to offer Internet protocol television and video phone services, and Quri Resources, Inc., a purported mining company headquartered in Miami and operating in Ecuador, with violating the anti-fraud provisions of the securities laws.
Both complaints were filed in U.S. District Court for the Southern District of Florida. According to the SEC, Atlantis made “grossly misleading claims” in numerous press releases from at least Aug. 7, 2009 through April 5, 2010.
For example, press releases claimed that the company’s subsidiary, Global Online Television Corp., offered internet protocol television services to consumers and had relationships with television networks and others to offer their content to Atlantis subscribers. The SEC says neither was true.
Company CEO Christopher Dubeau allegedly wrote the press releases, then “repeatedly sold Atlantis stock into the inflated market, earning at least $240,000,” according to the SEC.
The SEC is seeking permanent injunctions against Atlantis and Dubeau, civil penalties, and an order requiring Dubeau to disgorge his ill-gotten gains. The SEC also seeks a penny stock bar and an officer and director bar against Dubeau.
In the complaint against Quri Resources, the SEC pointed to press releases claiming, for example, that the company was ready to begin drilling on a mining project in Ecuador with a probable gold reserve worth over $1 billion; it had signed letters of intent to acquire two valuable mining projects in Arizona; and it had acquired a second mining project in Ecuador and anticipated producing gold within three months.
The SEC alleged there was no way to know the value of the gold without detailed exploration, there was no project in Arizona and only one in Ecuador, which was not developed. “Quri had no money, was never able to raise any funds, had no reasonable expectation of any funding, and was heavily indebted,” the SEC said.
Company CEO Jaime Santiago Gomez allegedly “dumped over half a million shares of Quri stock on the unsuspecting public, selling Quri stock in unregistered transactions, earning at least $17,500 from the sale of the stock,” according to the SEC.
The SEC is seeking an injunction, disgorgement, civil penalties, and a penny stock bar.