U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21034 / May 11, 2009
Securities and Exchange Commission v. Daniel W. Nodurft, Civil Action No. 8:09-CV-866-T26/TGW (M.D. Fla.)
SEC BRINGS ACTION AGAINST ATTORNEY FOR ROLE IN UNREGISTERED OFFERING FRAUD
The Securities and Exchange Commission (Commission) announced today that on May 8, 2009 it filed a complaint against Daniel W. Nodurft, a resident of Louisiana and the former vice-president and current secretary and general counsel of Aerokinetic, Energy Corporation ("Aerokinetic"), a Sarasota-based company purportedly in the business of developing and marketing alternative power technologies and products. The Commission's complaint alleges that Nodurft violated the registration and antifraud provisions of the securities laws in connection with Aerokinetic's fraudulent unregistered securities offering.
The Commission's complaint alleges that from at least September 2006 until the Commission's emergency action in July 2008, Aerokinetic raised at least $535,000 from 24 investors nationwide, and was seeking to raise an additional $575,000, by making material misrepresentations and omissions about its technology, products, and financial prospects. Aerokinetic's fraudulent offering was halted on July 24, 2008, when the U.S. District Court for the Middle District of Florida issued a temporary restraining order against Aerokinetic and its president.
According to the complaint, Aerokinetic claimed to have developed new energy technologies, including a power generation station capable of creating electrical energy at a fraction of the cost of conventional or nuclear means, without generating any pollution. It further claimed to have built an operating power generation station and to hold patents on these new technologies, as well as to have standing purchase orders for the finished product. In addition, Aerokinetic projected millions of dollars of sales revenue within its first years of operations and billions of dollars shortly thereafter. The complaint alleges that these claims were false because Aerokinetic had no patents, income, or standing orders for its technology or products. Aerokinetic's purported energy technologies and products were, at best, in the early development stage and, therefore, its predictions of imminent financial success and its financial projections lacked any reasonable basis in fact.
The Commission's complaint further alleges that Nodurft was fully aware of Aerokinetic's material misrepresentations and omissions. Nodurft was associated with Aerokinetic from its inception and was a central player in Aerokinetic's fraudulent offering. He was in constant contact with the Company's president, provided recommendations concerning operations, and handled investor relations. Nodurft drafted, reviewed or approved all offering materials and the Company's two websites that contained Aerokinetic's false and misleading statements to prospective investors, and personally repeated many of these misrepresentations to prospective investors. Moreover, contrary to assurances that Aerokinetic would use investor funds to research and develop Aerokinetic's products, the complaint also alleges that Aerokinetic's president — with Nodurft's knowledge and approval — misappropriated investors' funds to pay his personal expenses, with approximately $250,000 in investor funds unaccounted for.
The Commission's complaint alleges that Nodurft violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission seeks a final judgment against Nodurft enjoining him from future violations of the foregoing antifraud and securities registration laws and assessing civil penalties.
For additional information, see Litigation Release No. 20655 (July 28, 2008)