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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20080 / April 18, 2007

SEC v. Aquacell Batteries, Inc. and Michael J. Naste, Civil Action No. 6:07-CV-0608-ORL-22-DAB (M.D. Fla.)

SEC Obtains Order Halting $4.7 Million Offering Fraud

The Securities and Exchange Commission ("Commission") announced today that on April 13, 2007 it filed an emergency action to halt an ongoing fraud involving the sale of stock and loan agreements by Aquacell Batteries, Inc. ("Aquacell"), and its principal, Michael J. Naste, a resident of New Smyrna Beach, Florida. The Commission charged Aquacell and Naste, and also charged as Aquacell Batteries Florida, Inc., Eternergy, Inc., Gaming Software Corporation (f/k/a Bet-Net Enterprises, Inc.), Gaming Software International, Godfather's, Inc., Mighty Muscle Cars, Inc., Hollywood Movie Hair Products, Inc. (collectively "relief defendants"), shell companies controlled by Naste into which Naste improperly funneled investor funds. Acting on the Commission's request for emergency relief, on April 14, 2007, Judge Ann Conway of the United States District Court for the Middle District of Florida issued temporary restraining orders, asset freezes and other relief against the defendants. The Court also appointed Michael L. Gore, Esq. as Receiver over Aquacell and the relief defendants.

The Commission's complaint alleges that, from at least May 2002 through the present, the defendants raised at least $4.7 million from over 35 investors nationwide by conducting a fraudulent offering of securities of Aquacell, a New Smyrna Beach company purportedly in the business of developing and marketing alternative energy sources and products. According to the complaint, the defendants falsely claimed to have an experienced management team and a highly-qualified staff of scientists and engineers; to have developed a new energy source that which will replace oil, gas, coal and other sources of energy within 15 years, among other breakthrough products; and to have extremely lucrative licensing and development opportunities. Defendants' claims were patently false because Aquacell has no management team or employees other than Naste, and no patents, licenses, contracts or products. Additionally, the complaint alleges that the defendants have failed to disclose to investors that the state of Pennsylvania issued cease-and-desist orders and a bar against them for state securities violations. Moreover, contrary to defendants' assurances that they would use investor funds to expand Aquacell's research and development facility and bring Aquacell's products to market, the complaint alleges that Naste has misappropriated millions of dollars in investors' funds to bankroll his lavish lifestyle, and has funneled hundreds of thousands of dollars to his family and to accounts he controls.

The Commission's complaint alleges that Aquacell and Naste violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Court's April 14 Order provides that the temporary restraining order and asset freeze would remain in effect until April 24, 2007, at which time the Court scheduled a hearing on the Commission's motion for a preliminary injunction. In addition to the interim relief already granted by the Court, the Commission seeks a final judgment against the defendants enjoining them from future violations of the foregoing antifraud and securities registration laws, ordering them to disgorge all ill-gotten gains, and assessing civil penalties.

SEC Complaint in this matter

 

http://www.sec.gov/litigation/litreleases/2007/lr20080.htm


Modified: 04/18/2007