Litigation Release No. 17987 / February 19, 2003
Securities And Exchange Commission v. Moller International, Inc., and Paul S. Moller, Defendants (U.S.D.C., Eastern District of California, Sacramento Division, Civil Action No. 2:03-CV-261 (WBS) DAD.
On February 12, 2003, the Commission filed a settled civil fraud action against Paul S. Moller ("Moller") and Moller International, Inc. ("Moller International"), in connection with a fraudulent unregistered stock offering and the filing of a fraudulent registration statement with the Commission.
The Commission's complaint alleges that Moller International, a California company, and Moller began selling the unregistered shares of stock directly to the public via the Internet, raising approximately $5.1 million from more than 500 investors nationwide. The company was supposedly engaged in the development of a revolutionary personal aircraft, dubbed "the Skycar," that would allow a person to travel at speeds over 400 miles-per-hour above roadways for about the same price as a luxury automobile. Moller, age 64, the company's founder, chief executive office and president, made false and misleading statements about the company's imminent listing on the NYSE and the Nasdaq Stock Market, the projected value of company shares after such listing, and the prospect for Skycar sales and revenue. In September 2001, the company filed a fraudulent registration statement with the Commission that exaggerated the true scope of patents the company held for the Skycar. During the Commission's investigation, the company belatedly cooperated with the staff in an attempt to bring it into compliance with the securities laws and to resolve all outstanding enforcement issues.
In its complaint, the Commission alleged that Moller International and Moller violated the antifraud and the registration provisions of the federal securities laws. Specifically, it is alleged that the Defendants violated Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, as well as Sections 5(a) and 5(c) of the Securities Act. Simultaneously with the filing of its action, the Commission announced that each of the Defendants had agreed to a settlement in which they consented to the entry of a permanent injunction and in which Moller agreed to pay a civil penalty in the amount of $50,000.
The Commission would like to acknowledge the assistance of the Office of Securities Commissioner, State of Kansas.