SEC sues Delray-based Geotec for fraud

By Palm Beach

DELRAY BEACH — If you’re going to pay off a promoter to pump up your stock, make sure the guy you hire isn’t a confidential FBI informant.

That’s a lesson Geotec Inc., a Delray Beach-based company that made synthetic fuels out of coal, learned the hard way, according to a suit filed in federal court by the Securities and Exchange Commission. Also named in the suit are former and current company officers William Lueck of Parkland, Bradley T. Ray of West Palm Beach and Stephen D. Chanslor of Weatherford, Texas.

The SEC alleges that Geotec gave 100,000 shares of company stock to a promoter in exchange for his efforts in touting the stock to investors. To cover up the deal, Geotec in SEC filings falsely stated that the promoter was a company employee, and the shares were paid as part of his employment agreement.

Unfortunately for Geotec, the promoter was a confidential FBI informant, according to the suit, which was filed Monday in federal court in Miami.

The SEC ‘s suit also alleges that Geotec falsely claimed in public filings that it had bought 4.7 million tons of coal from an Illinois mine and recorded it as inventory worth $18 million. The coal, however, was under state receivership because the mine from which it came had been deemed an environmental hazard. In order to gain full ownership, Geotec would have had to have paid Illinois between $12 million and $15 needed to clean up the mine.

Again, Geotec compounded the problem, according to the SEC, by falsely claiming in public filings that it had sold a portion of the coal to a company called Urban Television Network Corp. for $4.6 million. Urban Television, however, never paid for the coal.

The company, in public filings, has denied any wrongdoing.

The SEC is seeking a court order prohibiting Geotec and its three corporate from further violations of securities laws, civil fines against all defendants, and court orders prohibiting Lueck, Ray and Chanslor from serving as officers or directors of any public company.



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JULY 7, 2009 click to go home
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