According to a Securities and Exchange Commission complaint, Utah mining company misled thousands of investors with false claims of huge copper deposits and 9 figure revenue projections.
Federal regulators allege Copper King Mining issued fraudulent public statements and press releases, sold unregistered securities and prepared false stock tradability opinion letters. Copper King acquired privately held Western Utah Copper Company in 2008 to turn it into a publicly traded company.
Copper King hired Midvale public relations firm Alexander Lindale to mount a campaign to attract investors that included billboards, celebrity endorsements and infomercials. The firm and its general manager Wilford R. Blum are named in the complaint as is Stephen G. Bennett, a disbarred attorney who handled the stock opinion letters.
In March 2009, Copper King hosted a media event at its site in Milford where former CEO Mr Mark Dotson boasted of an ocean of copper that could rival the size of Kennecott's Bingham Canyon mine. He said it would employ 200 people.
According to the complaint filed in U.S. District Court, Mr Dotson posted on the company's website information such as the value of copper and silver extracted from the mine would exceed USD 1.2 billion within 5 years; the mill could process 2,500 tonnes per day and that revenues would hit USD 103 million annually.
The complaint said that Mr Dotson knew that these claims were false and misleading. In fact, Dotson knew that Copper King was permitted to mine only a single 20 acre parcel and that the productive life of the mine site was only two years, not 10 as stated on the company’s Internet website.
Copper King filed for Chapter 11 protection in May 2010 leading to Mr Dotson's departure. Mr John Bryan, who specializes in taking companies out of bankruptcy, became CEO. The alleged SEC violations occurred before he took over.
He said that "We've cooperated and worked very closely with the SEC since the very beginning of this case. We're doing everything in our power to assist them."
Mr Bryan said that the company intends to comply with all SEC regulations and that he expects an amicable resolution. We cannot have any exaggerated data ever again. That's an absolute must for the business going forward. He estimated the company drew in about 6,700 equity investors.
(Sourced from www.deseretnews.com)
