OH, UTAH: SEC Alleges Business Executives Used Bogus Press Releases — And Disbarred Attorney — To Sanitize Precious Metals Fraud Scheme

BULLETIN: The SEC has gone to federal court in Utah to seek penalties against a precious metals company and associated firms and individuals,  amid spectacular allegations that a PR firm sold the unregistered securities of its own corrupt penny-stock client and a disbarred attorney enabled the scam by issuing a bogus opinion letter.

Utah has been identified by the interagency Financial Fraud Enforcement Task Force as a hotbed of fraud, and the SEC’s allegations against Copper King Mining Corp. and its co-defendants read like a work of fiction — but the agency says they are true.

Charged along with the company was its former President and Chief Executive Officer Mark D. Dotson, 52, of Milford. Also charged were Alexander Lindale LLC, a Salty Lake City PR firm; PR executive Wilford R. Blum, 58, of Salt Lake City, and Stephen G. Bennett, 52, of of Merrimack, New Hampshire.

Bennett formerly was licensed to practice law in Utah, but was disbarred in November 2001 for commingling clients’ money with his personal bank accounts, the SEC said.

Blum is the general manager of Alexander Lindale, the PR firm.

Despite Bennett’s disbarment, he provided “stock tradability opinion letters to Copper King which stated Alexander Lindale could have unrestricted Rule 504 stock issued to it pursuant to a purported transactional exemption provided under Minnesota state securities law,” the SEC charged.

Because of Bennett’s bogus opinion letter and manipulations by Dotson and Blum, the PR firm sold unregistered securities issued by Copper King and profited handsomely, the SEC charged.

“Bennett’s stock tradability opinion letters were used as the legal authority that enabled Copper King’s stock transfer agent to issue and distribute the company’s stock pursuant to Blum’s instructions,” the SEC said.

All in all, the SEC said, the PR firm and Blum raised more than $12.2 million in proceeds from Blum’s improper sales of Copper King stock from 2008 through 2010.

Meeanwhile, “Blum provided Copper King with approximately $9,063,567 in cash or services while Alexander Lindale received approximately $3,291,352 from Blum’s sales of Copper King stock,” the SEC said.

Among other things, the PR firm is accused by the SEC of improperly paying contractors with unrestricted Copper King stock and hiring “television celebrities to appear on radio talk shows and in infomercials endorsing and touting the merits of investing in the company.”

The firm and Blum also “arranged for Copper King to be publicized on billboards throughout various Western states and to author and issue press releases that emphasized the purported value and quantity of precious metals that could be extracted and processed from Copper King’s mining and milling operations,” the SEC charged.

Dotson was accused of posting “false and misleading” information on the copper company’s website and of providing false information to the PR firm, which allegedly regurgitated Dotson’s lies and made millions of dollars by hyping the company and selling its stock .

Investors were misled by Dotson into believing the copper firm would be capable within five years of processing  2,500 tons of ore per day and extracting $1.21 billion in precious metal, including 230 million pounds of copper, 11.5 million ounces of silver and 115,100 ounces of gold, the SEC charged.

As president and CEO, the SEC said, Dotson “knew that the mill had no operational history or process to extract copper, gold, and silver from the ore.

“As a result, Dotson knew that it was misleading to assign recovery amounts and market values to these supposed recoveries,” the SEC charged. “In addition, Dotson knew the mill could not process 2,500 tons of ore per day as the mill did not have, among other things, a sufficient water supply to process the ore through the milling cycle.”

Meanwhile, the SEC charged, Dotson also knew that “Copper King was permitted to mine only a single twenty acre parcel and that the productive life of the mine site was only two years, not ten as stated on the company’s Internet website.”

Among the allegations against the PR company is that it issued issued false press releases, including one in which it was claimed that Copper King had found a single customer to purchase “all metals produced at the mine” for the life of the mine.

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3 Responses to “OH, UTAH: SEC Alleges Business Executives Used Bogus Press Releases — And Disbarred Attorney — To Sanitize Precious Metals Fraud Scheme”

  1. The ESHC is fully supportive of the SEC’s ongoing efforts to shed
    light on the past business practices of Copper King management and
    those contracted by management to help facilitate the funding of
    Copper King. We welcome the chance to expose any prior questionable
    business practices conducted by anyone associated with Copper King and
    we support the SEC’s efforts in holding those individuals who
    participated in any questionable business practices responsible for
    their actions, both civilly and criminally as the situation warrants.

    As the shareholder’s representatives in the bankruptcy case involving
    Copper King, the ESHC wants to let all shareholders know that the
    events of the past week regarding ongoing SEC investigations did not
    come as a surprise to the ESHC. The ESHC has been aware of ongoing SEC
    investigations throughout the pendency of the bankruptcy case.

    The specific allegations in the SEC’s complaint are not contested by
    the ESHC, as they pertain to events that occurred several years prior
    to the ESHC’s involvement in the bankruptcy process. However, the ESHC
    cannot stress this point strongly enough, the allegations in the SEC
    complaint do not accurately reflect the status of Copper King’s
    physical assets at the present time.

    The mill does have electricity. The mill does have water. These facts
    have been repeatedly verified by on-site inspectors that have visited
    the site numerous times on behalf of the ESHC.

    The land holdings relevant to the mining and milling operations
    greatly exceed the meager “20 acres” alleged in the SEC complaint and
    the ESHC can say this with absolute certainty. The ESHC has been
    instrumental in assisting current management with maintaining a vast
    majority of the leases that make up the Copper King mine complex. The
    “20 acres”, as alleged in the SEC complaint, references the size of
    the acreage that had been permitted for mining at the time that Mark
    Dotson is alleged to have made his questionable statements; however,
    the amount of permitted land was only a small fraction of the
    thousands of acres that make up the Copper King mining project. That
    acreage remains intact to this day and the ESHC is committed to
    maintaining the integrity of those lands for future exploration,
    mining and production for years to come. The ESHC has no reason to
    doubt that as exploration and mining continues on the property, the
    permitting process will also allow ongoing mining operations
    throughout different sections of land included in the Copper King
    mining complex.

    Again, the allegations referenced in the SEC complaint are based on
    events several years in the past and are not reflective of the current
    status of the assets controlled by Copper King.

    The ESHC also wants all shareholders to understand that the
    allegations contained in the SEC complaint do not, in any material
    way, change the ESHC’s continued belief that the Copper King mining
    and milling project is a viable business and that with the proper
    stewardship, Copper King has the potential to provide a return to all
    current and future investors.

    With an eye toward proper stewardship, the ESHC has assisted in taking
    action to remove the current board of directors and officers. The ESHC
    continues to believe that in order for Copper King to be successful,
    new leadership is critical. This is particularly true in light of the
    lack of leadership demonstrated by Copper King management during the
    course of events that substantiate much of the SEC complaint.

    The ESHC continues to work on behalf of the shareholders and we
    welcome further comments and inquiries.

  2. CPRKQ shareholders can find all the court filings and past updates from the Equity Committee and a great deal of other information here

    There is currently a vote underway to replace the Board of Directors, if you are a shareholder and have not yet received your proxy forms in the mail, please send me a email to [email protected]

    Chuck Dawson
    (Equity Committee Chairman)

  3. I made a mistake on the email address in the previous post (sorry admin)

    it should be [email protected]

    I will send my cell phone number to anyone who has any questions.