U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18294 / August 18, 2003
Securities and Exchange Commission v. Donald John Christensen, II, Jack E. Uselton, Marc R. Tow, George W. Guttman, Joseph M. Blumenthal, and Mountain Energy, Inc., Civil Action No. H-O1-3203 (S.D.Tex.)
Court Enters Final Judgments Against Donald John Christensen, Former Mountain Energy CEO, and Marc R. Tow, a California Attorney, in Mountain Energy Case. Christensen Ordered to Pay $1.35 Million.
On August 12, 2003, the U.S. District Court for the Southern District of Texas entered final judgments against Donald John Christensen, Mountain Energy, Inc. and Mark R. Tow, concluding the litigation brought by the Securities and Exchange Commission in September 2001.
The District Court permanently enjoined Christensen and Mountain Energy, by default, from further violations of the securities registration and anti-fraud provisions of the federal securities laws, Sections 5 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 court also imposed a permanent officer and director bar against Christensen and ordered him to pay more than $1.35 million in disgorgement, pre-judgment interest and penalties. Tow, without admitting or denying the allegations in the Commission's complaint, consented to the entry of an order permanently enjoining him from violating the anti-fraud provisions of the federal securities laws.
According to the allegations in the Commission's complaint, Christensen (Mountain Energy's former CEO), Tow (a California attorney) and others participated in an illegal "pump-and-dump" scheme in the securities of Mountain Energy, Inc., a start-up energy company headquartered in Houston, Texas. In April and May 1998, Christensen and others issued three press releases that contained false and misleading statements about the ownership, nature and value of certain mineral assets that Mountain Energy had purportedly acquired. These releases caused the price of Mountain Energy stock to rise from 4¢ per share to a high of $1.75 per share on heavy volume trading. Contemporaneously with the publication of the press releases, Christensen authorized the issuance of over 10 million shares of Mountain Energy stock to certain of his associates. These individuals sold the shares in the open market and kicked back $896,000 in trading profits to Christensen. During June 1998, Mountain Energy issued three additional press releases, which fraudulently described an agreement Mountain Energy had purportedly entered that would have quadrupled the company's assets. Tow reviewed, edited and approved the last of these releases.
Three other defendants in the case, Jack Uselton, Joseph Blumenthal and George Guttman, previously settled with the Commission.
For further information about this matter, see Litigation Release Nos. 17144 (September 20, 2001) and 17787 (October 16, 2002).