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http://pesn.com/2008/02/26/9500474_SEC_files_action_against_GMC_Holdings/
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26, 2008 |
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SEC Files Action On Fuelless Motor Fraud
The US Securities and Exchange Commission has filed an action
against GMC Holding Corporation and its CEO, Richard
Brace, for defrauding investors by issuing false press releases touting the
company's development of a motor technology device capable of generating
unlimited energy.
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REMAT
device by GMC Holdings Corp. (No relation to General Motors.)
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On February 22, 2008, the Securities and Exchange Commission filed an action
against GMC Holding Corporation (GMC) and its chief executive officer, Richard
Brace, for defrauding investors by issuing false press releases touting the
company's development of a motor technology device capable of generating
unlimited energy and negotiations to sell this technology for hundreds of
millions of dollars. The Commission's complaint further alleges that these false
press releases enabled GMC and Brace to raise more than $2 million from
investors through illegal unregistered offerings of the company's stock.
According to the Commission's complaint, GMC and Brace issued press releases
in 2005 falsely claiming independent tests, issued by a professional engineer,
on the motor device showed it was able to produce more energy than it
consumed. In reality, according to the complaint, the press releases
claiming that the motor device produced more energy than it consumed failed to
include the professional engineer's limitations, namely that the efficiency
lasted only a few moments and that they were unable to duplicate the results in
subsequent tests.
The complaint also alleges that GMC and Brace issued false press releases in
February and March 2006 stating that it was negotiating with unnamed S&P 500
corporations to acquire the company's technology for $300 - 500 million. These
press releases, drafted by Brace, were utterly false. GMC and Brace never
contacted, much less negotiated with, an S&P corporation, or any other
company, regarding the sale of the company's technology.
According to the complaint, GMC's false press releases artificially pumped up
the company's share price and trading volume and helped GMC raise more than $2
million from investors through illegal unregistered stock offerings, which
provided GMC's only source of revenue.
The Commission's complaint charges that the defendants violated Sections
5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) and Rule
10b-5 of the Securities Exchange Act of 1934 (Exchange Act) by conducting an
unregistered offering of securities and making material misrepresentations and
omissions to investors.
The Commission's complaint seeks a final judgment permanently enjoining
defendants from further securities laws violations, ordering defendants to
disgorge their ill-gotten gains, and assessing civil penalties. The complaint
further seeks an order barring Brace from serving as an officer or director of a
public company and from participating in any offering of a penny stock.
At odds with the tenor of this severe censure, a notice posted on the GMC
Holdings Corp website on Feb. 25, 2008 by Brace states: "We
are continuing to pursue possible merger candidates and are in discussions with
an entity which is in the environmental and alternative energy arena. This
organization could serve as a very viable candidate to assist in the ongoing
development of our electro magnetic technology."
On March 8, 2006 the Commission temporarily suspended trading in GMC's
securities (Release No. 53442) and instituted administrative proceedings against
GMC for failure to make its required periodic filings (Release No. 53448). On
April 5, 2006, the Commission issued a settled order deregistering GMC's
securities, finding the company had failed to file the required reports of a
publicly traded company (Release No. 53601). The Commission acknowledges the
assistance of the Financial Industry Regulatory Authority (FINRA) in this
matter.
The GMC Hodings website mentions these actions and has a form for shareholders
to sign up for private email notifications of additional business developments.
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Page composed by Sterling
D. Allan February 26, 2008
Last updated April 30, 2008
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