Officials of Utah's Copper King Mining sanctioned
A federal judge has entered a final judgment that imposes penalties against former Copper King Mining Corp. CEO and President Mark Dotson for making false claims about the company, which operated a mill for a brief time outside of Milford.
The judgment stems from a lawsuit the Securities and Exchange Commission filed against Copper King Mining, Dotson, a disbarred attorney and a stock promoter over false and misleading claims made about the business prospects for the company's operations.
The SEC alleged Dotson made misleading statements in 2008 and on the company's website that Copper King Mining expected to extract more than 230 million pounds of copper, 11.5 million ounces of silver and 115,100 ounces of gold from its Beaver County mining property within five years.
Copper King, which built and for a short time operated a $60 million copper mill just outside Milford, filed for Chapter 11 bankruptcy in May 2010. The case is pending in U.S. Bankruptcy Court for Utah.
Dotson was enjoined from further violations of federal securities laws and permanently barred from participating in any penny stock offerings. But he was not ordered to pay a fine because he presented evidence that he did not have sufficient financial resources, according to the final judgment entered on Wednesday.
The same penalties were handed out to Stephen G. Bennett of Merrimack, N.H., who had been disbarred as an attorney in Utah. Bennett was alleged to have provided false letters about the trade worthiness of Copper King shares.
Still pending are fines against stock promoter Wilford Blum, who raised $12.3 million selling unregistered shares of the stock from 2008 through 2010. Of that amount, the SEC said Blum and his company, Alexander Lindale LLC, turned over $9 million to Copper King, while keeping $3.2 million.
Blum also has consented to entry of a final judgment against him and his company without admitting or denying the allegations in the SEC suit. He, too, was permanently enjoined from future violations of the anti-fraud provisions of the federal securities laws, permanently barred from participating in any offering of penny stock and was ordered to disgorge $3.8 million, the amount from the sales of shares that he had kept plus interest.
But Blum is disputing the SEC's attempt to impose fines and interest of about $82,500 on him and his company. Blum argued in a motion that he had not been accused of fraud or reckless disregard of securities laws and that he had been the victim of other unnamed persons who had been trading shares without his knowledge.
The SEC, however, said Blum had violated securities laws and acted as an unregistered dealer. The fine should be imposed "in order to deter similar misconduct in the future," the agency argued in a motion that is pending.
A hearing has been scheduled in February.