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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23883 / July 24, 2017

Securities and Exchange Commission v. Andrew Farmer, et al., No. 14-CV-2345 (S.D. Tex. filed Aug. 14, 2014)

SEC Obtains Final Judgment Against Orchestrator of Pump-and-Dump Scheme

The U.S. Securities and Exchange Commission today announced that it has obtained a final judgment against Andrew I. Farmer, whom the SEC charged with orchestrating a pump-and-dump scheme involving a company that purportedly developed revolutionary technology to enable environmentally friendly oil and gas production.

The final judgment, entered on July 18, 2017 by the Honorable Keith P. Ellison of the U.S. District Court for the Southern District of Texas, orders Farmer to pay approximately $7.2 million in disgorgement and prejudgment interest and a civil penalty of approximately $2 million. The final judgment also permanently enjoins Farmer from violating Sections 5 and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder and imposes permanent penny stock and officer-and-director bars.

The court's entry of judgment, which follows an October 2015 grant of summary judgment to the SEC on all its claims against Farmer, resolves the SEC's litigation in its entirety.

The court previously entered final judgment against two individuals charged with serving as figurehead CEOs installed by Farmer - Charles E. Grob, Jr. and Baldemar P. Rios - and against Carolyn Austin, who was charged with helping Farmer profit from his scheme by dumping shares of Chimera Energy Corp., the company at the center of the alleged pump-and-dump scheme, in the midst of Farmer's promotional efforts. The SEC suspended trading in Chimera stock in 2012 and obtained a default judgment against Chimera on October 7, 2015. On October 26, 2015, the court entered a final judgment against Austin, which permanently enjoined her from violating Section 5 of the Securities act, imposed a permanent penny stock bar, and ordered her to pay approximately $59,000 in disgorgement and prejudgment interest and a civil penalty of $80,000. On August 23 and 26, 2016, the court entered final judgments against Rios and Grob, respectively. The judgments imposed a one-year officer-and-director bar on Rios and ordered Grob to pay approximately $79,000 in disgorgement and prejudgment interest and a civil penalty of $15,000.

The SEC's litigation was led by Matthew Gulde and Nikolay Vydashenko and supervised by Jessica Magee.

 

https://www.sec.gov/litigation/litreleases/2017/lr23883.htm


Modified: 07/24/2017