U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission


Litigation Release No. 21322 / December 4, 2009

Securities and Exchange Commission v. Nova Gen Corporation, Margaret Grey, and Paul Randall Fraley, United States District Court for the Southern District of California, Case No. 09CV2711 MMA (JMA) (filed Dec. 3, 2009).


The Securities and Exchange Commission ("Commission") today charged a purported bio-diesel fuels company with making false statements regarding its purported emissions-free coal conversion technology and financial condition.

The Commission's complaint names Nova Gen Company ("Nova Gen") of San Diego, Calif., its current CEO, Margaret Grey ("Grey"), and a sales agent, Paul Randall Fraley ("Fraley"). The complaint alleges that Grey, of San Diego, Calif. and widow of the company's founder, has continued in Nova Gen's unregistered fraudulent securities offering since she assumed control over the company in June 2009.

According to the complaint filed in U.S. District Court in San Diego, Nova Gen falsely claimed to have technology capable of converting coal into bio-diesel fuel, virtually emissions free, and even touted a plant that was up and running. The complaint further alleges Nova Gen disseminated financial statements to investors that depicted $27 million in a brokerage account and net operating income of $21 million. The complaint alleges that, in fact, Nova Gen's technology was not "ready to go," and that it did not have any plant, did not own any brokerage account, and had not generated revenue at any time. The complaint further alleges that Fraley, of Hewitt, W.Va., located potential investors and received sales commissions for his efforts, and falsely told investors that Nova Gen was about to become a publicly-traded company that would pay a guaranteed 11% dividend.

The Commission's complaint charges the defendants with violating the securities registration provisions, Sections 5(a) and 5(c) of the Securities Act of 1933 ("Securities Act"), the broker-dealer registration provisions, Section 15(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and the antifraud provisions, Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, of the federal securities laws. The Commission's complaint seeks permanent injunctions, disgorgement, prejudgment interest, and financial penalties.

SEC Complaint



Modified: 12/04/2009