U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18712 / May 14, 2004
SECURITIES AND EXCHANGE COMMISSION v. NEW ENERGY CORP., TOR EWALD, GENEVA FINANCIAL LTD., MARCELINO COLT aka MARCELINO COLT VASQUEZ, MAGNUM FINANCIAL, LLC, MICHAEL S. MANAHAN, BLD TRUST, BARCLAY DAVIS, LORETTA DAVIS, BURKE T. MAXFIELD, YORK CHANDLER, AND HECTOR CAMPA ACEDO, Civil Action No. CV-02-989-MMM (CWx) (C.D. Cal.)
COMMISSION RESOLVES ACTION THAT HALTED "PUMP AND DUMP" SCHEME TO MANIPULATE THE PRICE OF A COMPANY'S SECURITIES OVER THE INTERNET
The Securities and Exchange Commission today announced that on April 30, 2004, the United States District Court in Los Angeles entered a final judgment imposing civil penalties against New Energy Corporation, based on San Diego, California, and Tor Ewald, of San Diego, California, New Energy's secretary and treasurer, for their participation in a "pump and dump" scheme to manipulate the price of New Energy securities over the Internet. New Energy and Ewald were ordered to pay civil penalties of $110,000 each.
The Commission's complaint filed on February 1, 2002 charged that New Energy, Ewald, Marcelino Colt aka Marcelino Colt Vasquez, and his firm, Geneva Financial Ltd., a Nevis corporation, and Magnum Financial LLC dba Stratos Research LLC, of Los Angeles, California, and its president, Michael S. Manahan, of San Pedro, California, were charged with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Colt and Geneva were also charged with violating Section 17(a) of the Securities Act of 1933. The complaint alleged that these defendants were part of a "pump and dump" scheme to manipulate New Energy's stock price during a one-month period ending on January 18, 2002, when the Commission suspended trading. The Commission's complaint alleged that Colt orchestrated the manipulative scheme, including the hiring of Magnum to post a false and misleading buy recommendation, the distribution of mass e-mails or spam containing fraudulent statements, issuing a false and misleading press release, and placing the release onto New Energy's website. These statements included, among other things, false and misleading claims regarding a relationship with the Los Angeles Department of Water and Power, negotiations with Coca-Cola bottlers in Mexico for thermal generators, and false claims that New Energy's partner had a "virtual lock" on the world market for high concentration solar cells.
Previously, New Energy and Ewald consented to the entry of a final judgment of permanent injunction that enjoined them from future violations of the antifraud provisions. New Energy and Ewald consented to the entry of that judgment without admitting or denying the Commission's allegations.
Colt and Geneva failed to answer the Commission's complaint. The Commission obtained a final judgment against them that permanently enjoins them from future violations of the antifraud provisions. The judgment orders Colt and Geneva to pay civil penalties of $120,000 and $600,000, respectively, and to disgorge $495,848, plus prejudgment interest. That judgment also orders another defendant who did not answer the Commission's Complaint, Hector Campa Acedo, to disgorge $120,020, plus prejudgment interest.
Previously, Magnum and Manahan consented to the entry of a final judgment of permanent injunction that enjoined them from future violations of the antifraud provisions. Magnum and Manahan consented to the entry of those judgments without admitting or denying the Commission's allegations. Thereafter, Manahan consented to the entry of a final judgment imposing $50,000 in civil penalties against him.
Finally, two other individuals named as relief defendants in the Commission's complaint, consented to the entry of final judgments of disgorgement. York Chandler agreed to disgorge $82,500 and Burke Maxfield agreed to disgorge $26,000.
The final judgment imposing civil penalties on New Energy and Ewald concludes the Commission's action in this matter.
For further information, see Litigation Release No. 17350 (February 4, 2002).