U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18522 / December 23, 2003
S.E.C. v. Rocky Mountain Energy Corporation, Inc., John N. Ehrman, W. Roderick Johnson, Sr., Michael L. Labertew, and John W. Ehrman, Jr. (Defendant Solely for Purposes of Equitable Relief) Case No. H-03-CV-1133 (U.S.D.C., S.D. Tex.)
SEC SEEKS PENALTY AND INJUNCTION AGAINST SECURITIES ATTORNEY FOR HIS PART IN ILLEGAL SECURITIES OFFERING; ALSO SEEKS TO BAR HIM FROM FUTURE SEC PRACTICE
On December 19, 2003, the Securities and Exchange Commission filed to amend its complaint in a lawsuit against Rocky Mountain Energy Corporation, a Houston-based oil-and-gas company whose stock was formerly quoted on the OTC Bulletin Board, to name attorney Michael L. Labertew as a defendant. Labertew, age 39 of Park City, Utah, is the former securities counsel to Rocky Mountain. The SEC filed the original lawsuit in April 2003 in the U.S. District Court for the Southern District of Texas, alleging that Rocky Mountain, its president, and its general counsel had engaged in a fraudulent "pump-and-dump" scheme involving Rocky Mountain's stock.
The amended complaint, from June 2002 to December 2002, Labertew participated in an illegal distribution of approximately 47 million shares of Rocky Mountain stock in four unregistered share-exchange transactions. In connection with each transaction, Labertew prepared and filed a petition with a Utah state court on behalf of Rocky Mountain to obtain a court order approving the transaction pursuant to Section 3(a)(10) of the Securities Act of 1933. Section 3(a)(10) exempts from registration securities exchanged for other securities or property interests, as long as a court approves the transaction after a fairness hearing. The complaint alleges that, notwithstanding the court's approval, the Section 3(a)(10) exemption did not apply in this case because the four transactions were in fact shams forming part of a larger manipulation scheme orchestrated by Rocky Mountain's president, defendant John Ehrman. Labertew received 410,220 shares in the transactions, which he sold into the market for $62,088.
In settlement of the SEC's lawsuit against him and without admitting or denying the allegations in the complaint, Labertew has consented to the entry of an agreed final judgment, permanently enjoining him from future violations of the securities-registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933, ordering disgorgement plus prejudgment interest, and ordering a civil penalty in the amount of $25,000. In addition, Labertew, based upon the anticipated entry of the civil injunction above, has agreed to the entry of an SEC administrative order pursuant to Rule 102(e) of the SEC's Rules of Practice, permanently suspending him from appearing or practicing as an attorney before the SEC.