ADMINISTRATIVE PROCEEDING
File No. 3-20898

The Securities and Exchange Commission today charged Petroteq Energy, Inc., former executive chairman Aleksandr Blyumkin, and former Chief Financial Officer Mark Korb for their roles in making materially false and misleading disclosures in the company's SEC filings about related party transactions, Petroteq's assets, and Blyumkin's receipt and use of Petroteq funds. Blyumkin also raised millions of dollars for Petroteq through a fraudulent, unregistered securities offering.

Petroteq is a publicly traded company engaged in developing tar sands mining and processing technology. An administrative order entered by the SEC against Petroteq and Blyumkin finds that, from September 2017 to May 2019, Petroteq raised $7.39 million through an unregistered offering of stock. Petroteq filed with the SEC Form D notices signed by Blyumkin that represented that Petroteq would not pay commissions in connection with the offering and that its officers or directors would not receive offering proceeds. The SEC's order finds, however, that Petroteq paid commissions totaling $2.89 million to two individuals retained to conduct the offering. The SEC's order further finds that Blyumkin personally received $68,623 of the offering proceeds.

Additionally, the SEC's order finds that Petroteq's SEC filings failed to disclose the related party nature of multiple transactions, including the company's payment of $23.8 million in cash and stock in January 2019 for rights to mine tar sands in Utah. The SEC's order finds that the companies from which Petroteq purchased these rights were "related persons" because they and their affiliates controlled large blocks of Petroteq stock. The SEC contends that these companies acquired the rights shortly before selling them to Petroteq, giving the seller just $275,000 in cash and an option to buy up to 20 million of their Petroteq shares. The SEC's order further finds that of the $1.8 million in cash that Petroteq paid for the rights, $1.39 million went back to Petroteq and $479,500 went to Blyumkin in round-trip transactions. None of these facts was disclosed in Petroteq's filings, according to the SEC.

As the SEC's order further finds, the rights are subject to various undisclosed risks, contingencies, and costs that may prevent Petroteq from ever exercising the rights. Yet Petroteq's filings on Form 10-K for 2019, 2020, and 2021 valued the rights at the full purchase price of $23.8 million.

The SEC's order also finds that Blyumkin directed undisclosed transfers of over $3 million of Petroteq funds to himself, his companies, his relatives, and his former domestic partner, thereby receiving financial benefits from Petroteq exceeding his compensation as described in Petroteq's SEC filings.

To resolve the SEC's charges, Petroteq and Blyumkin consented, without admitting or denying the SEC's findings, to the entry of the SEC order, which finds that:

• Petroteq violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, and 13a-15(a) thereunder; imposes a cease-and-desist order and remedial undertakings; and orders it to pay a $1 million civil penalty; and
   
• Blyumkin violated Sections 5(a), 5(c), and 17(a) of the Securities Act and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13a-14, 13b2-1, and 13b2-2 thereunder, and caused Petroteq's violations of Securities Act Sections 5(a), 5(c), and 17(a), and Exchange Act Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, and 13a-15(a) thereunder; imposes a cease-and-desist order; bars him from serving as an officer or director of a public company; orders him to pay a $450,000 civil penalty; and orders further proceedings to determine what disgorgement and prejudgment interest should be ordered against him.

As to Korb, the SEC filed a Complaint in U.S. District Court for the Central District of California, alleging that he violated Securities Act Section 17(a)(3) and Exchange Act Section 13(b)(5) and Rules 13a-14 and 13b2-1 thereunder, and that he aided and abetted Petroteq's violations of Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B), and Rules 12b-20, 13a-1, 13a-13, and 13a-15(a) thereunder. The Complaint seeks permanent injunctive relief against Korb, and also a civil money penalty. Among other things, the Complaint alleges that Korb failed to consider whether the mining rights were appropriately priced and analyzed for impairment, and was at least negligent in not inquiring into or disclosing the multiple transactions benefiting Blyumkin, his family, and his associates.

The SEC's investigation was conducted by Robert C. Hannan and Jody Z. Moore, and supervised by Timothy McCole and Eric Werner. The SEC's litigation will be led by Jason P. Reinsch and supervised by B. David Fraser.