THE BIOCHAR CHARCOAL SUBSTITUTE PONZI SCHEME

FROM: U.S. SECURITIES AND EXCHANGE COMMISSION

SEC Obtains Final Judgments Ordering More Than $135 Million in Monetary Relief in "Green" Investment Ponzi Scheme
The Securities and Exchange Commission announced that on September 13, 2012, the Honorable Christine M. Arguello, U.S. District Court Judge for the District of Colorado, entered final judgments against Troy B. Wragg, Amanda E. Knorr, Speed of Wealth, LLC, Wayde M. McKelvy, and Donna M. McKelvy ordering disgorgement, prejudgment interest, and civil penalties totaling more than $135 million. The Court ordered Wragg and Knorr to pay $37,031,035.36 in disgorgement plus interest of $3,713,772.06 jointly and severally with Mantria Corporation and a civil penalty of $37,031,035.36 each; Speed of Wealth and Wayde McKelvy to pay $6,273,632.78 in disgorgement plus interest of $869,141.87 jointly and severally and a civil penalty of $6,273,632.78 each; and Donna McKelvy to pay $429,731.84 in disgorgement plus interest of $55,172.93 and a civil penalty of $214,865.92.

The parties were originally charged in a Complaint filed on November 17, 2009. The Complaint alleged that Wayde and Donna McKelvy, through their Denver-based company Speed of Wealth LLC, as well as Mantria executives Wragg and Knorr, raised funds for numerous Mantria "green" initiatives such as a supposed "carbon negative" housing community in rural Tennessee and a "biochar" charcoal substitute made from organic waste. The SEC alleged that Mantria’s "green" representations were fraudulent and that investors were falsely promised enormous returns on their investments ranging from 17 percent to "hundreds of percent" annually. Mantria’s environmental initiatives did not generate any significant cash, and any returns paid to investors were funded almost exclusively from other investors’ funds. In addition, none of the relevant offerings were registered with the Commission, nor were any of the defendants registered as a broker-dealer or associated with a registered broker-dealer.

Upon the Commission’s motion, the Court entered a temporary restraining order on November 16, 2009, and an order of preliminary injunction on December 2, 2009. After entry of the September 13, 2012 final judgments, permanent injunctions have now been entered against all Defendants.

TOOL COMPANY SETTLES CASE OF RACE-BASED HIRING DISCRIMINATION

FROM: U.S. DEPARTMENT OF LABOR

Meyer Tool will pay $325,000 to 60 African-American applicants to settle US Labor Department allegations of racial discrimination at Cincinnati plant

CINCINNATI — The U.S. Department of Labor's Office of Federal Contract Compliance Programs has reached an agreement with federal contractor Meyer Tool Inc. to settle findings of race-based hiring discrimination. Under a consent judgment approved by a Labor Department administrative law judge, Meyer Tool will pay $325,000 in back wages and interest to 60 qualified African-American applicants who were rejected for entry-level machinist positions at the company's manufacturing plant in Cincinnati. Meyer Tool also will extend job offers to at least 11 members of the original class as positions become available.

"Workers should never be denied a fair shot at employment because of factors that have absolutely nothing to do with their ability to do the job," said OFCCP Director Patricia A. Shiu. "I am pleased that we were able to reach a fair settlement with Meyer Tool — one that will provide remedies to the affected workers and guarantee that, going forward, qualified applicants of all races and backgrounds will have the opportunity to compete on a level playing field for good jobs."

Based on a compliance review of the facility, OFCCP investigators determined that Meyer Tool had failed to ensure qualified job applicants received equal consideration for employment without regard to race as required by Executive Order 11246. The department filed an administrative complaint on Nov. 19, 2010, alleging systematic discrimination on the part of the company.

Under the terms of the consent judgment, Meyer Tool not only will provide financial remedies and job offers to the affected workers, but also will maintain employment records as required by law, provide equal employment opportunity training to all employees involved in the hiring process and submit detailed progress reports on this front to OFCCP for the next two years.

Cincinnati-based Meyer Tool manufactures engine parts, primarily for the aerospace industry, and is one of the area's largest private companies. During the period of OFCCP's review, Meyer Tool held contracts worth nearly $300,000 to provide engines and engine parts to the U.S. Army.

In addition to Executive Order 11246, OFCCP enforces Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans' Readjustment Assistance Act of 1974. As amended, these three laws require those who do business with the federal government, both contractors and subcontractors, to follow the fair and reasonable standard that they not discriminate in employment on the basis of sex, race, color, religion, national origin, disability or status as a protected veteran.

ATTORNEY AND COMPANY EXECS. CHARGED IN ALLEGED $27.5 MILLION INVESTMENT SCHEME

FROM: U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C., Sept. 5, 2012 – The Securities and Exchange Commission today charged an attorney and two others living in South Florida for their roles in a $27.5 million investment scheme that led investors to believe they were purchasing securities consisting of "pre-sold" commodities contracts with a pre-determined profit. However, the supposed profits actually distributed to investors were largely taken from other investors’ funds.

The SEC halted the scheme last year when it obtained an asset freeze and a court-appointed receiver over the companies involved: Commodities Online LLC and Commodities Online Management LLC. The SEC’s follow-up charges are against the founder and former president of the company, James C. Howard III, as well as the company’s vice president Louis N. Gallo III and outside counsel Michael R. Casey, who later became the president.

"This trio teamed up to employ all the hallmarks of an investment scheme," said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. "Howard met with prospective investors at a luxury hotel to emanate a false sense of wealth and security, Gallo oversaw an in-house boiler room that drummed up investor interest, and Casey was the company’s purported legal counsel who acted anything but lawyerly."

In a parallel action, the U.S. Attorney’s Office for the Southern District of Florida today announced criminal charges against Howard, Gallo, and Casey.

According to the SEC’s complaint filed in federal court in Miami, Commodities Online offered investors the chance to participate in its purportedly profitable brokering of physical commodities via pre-sold contracts – for example, the purchase and sale of large amounts of seafood or iron ore. Investors were sold participation units in unregistered private placement offerings, each supposedly tied to a commodities transaction in which Commodities Online had already secured a buyer and a seller of the commodity. These participation units would purportedly generate predetermined profits for investors.

The SEC alleges that in reality, Commodities Online performed only a limited percentage of the commodities transactions that were promised to investors. The majority of "profits" allocated or distributed to investors were not profits from completed commodities transactions, but instead taken from the funds of other investors. Meanwhile, Howard and Gallo were dissipating millions of dollars in investor funds to largely sham companies. Through these companies, Howard and Gallo stole investor funds for their own use. For example, Howard met with prospective investors at a luxury hotel in Fort Lauderdale and offered Commodities Online membership interests. He told investors that the funds raised from the offering would be used for the company’s start-up costs such as salaries, marketing, and advertising. However, within weeks of receiving $2 million in investor funds for the purchase of the membership units, Howard siphoned $1.45 million to another entity he controlled. Furthermore, Howard failed to disclose to prospective investors that he’s a convicted felon.

According to the SEC’s complaint, Howard stepped down as the company’s president in 2010 after he was arrested for an unrelated investment fraud. He was replaced by Casey, who misled investors about Howard’s continuing control over Commodities Online while also misrepresenting the profitability, structure, and existence of the purported commodities contracts to investors. Casey also failed to tell at least one investor that the funds raised from the purchase of membership interests had previously been misappropriated by Howard.

The SEC alleges that Gallo ran an in-house "boiler room" of telephone sales agents and a network of approximately 20 regional and international sales offices. He failed to disclose to investors that he previously pled guilty to federal bank fraud and other felonies and was serving a term of supervised release while employed at Commodities Online. Gallo also misled investors about Howard’s role at Commodities Online.

The SEC’s complaint charges Howard, Gallo and Casey with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. They’re also charged with aiding and abetting violations by Commodities Online and Commodities Online Management of Section 10(b) of the Exchange Act and Rule 10b-5. Howard is further charged with a violation of Section 20(a) of the Exchange Act as a control person of Commodities Online, and the complaint alleges he is therefore jointly and severally liable for Commodities Online’s violations of Section 10(b) of the Exchange Act and Rules 10b-5. The SEC is seeking disgorgement of ill-gotten gains plus prejudgment interest, financial penalties, and permanent injunctions against Howard, Gallo, and Casey. The SEC’s complaint also names several relief defendants for the purposes of recovering investor money steered to those entities in the scheme: Sutton Capital LLC, J&W Trading LLC, American Financial Solutions LLC, and Minjo Corporation.

The SEC’s investigation was conducted by Senior Investigations Counsel Robert H. Murphy, Senior Counsel Melissa J. Mitchell, and Staff Accountant Timothy J. Galdencio under the supervision of Assistant Regional Director Eric R. Busto in the Miami Regional Office. James M. Carlson will lead the SEC’s litigation efforts.

GENDER BASED HIRING CASE INVOLVING BRUNSWICK CORPORATION SETTLED

FROM: U.S. DEPARTMENT OF LABOR

WASHINGTON — The U.S. Department of Labor's Office of Federal Contract Compliance Programs has reached an agreement with federal contractor Lund Boat Co., a wholly owned subsidiary of the Brunswick Corp., that settles allegations of hiring discrimination. In a consent judgment approved by the department's Office of Administrative Law Judges, Brunswick Corp. and Lund Boat Co. have agreed to pay $295,000 in back wages and interest to 185 female job applicants who were rejected for entry-level positions at Lund's boat manufacturing plant in New York Mills, Minn.

"I am pleased that we were able to reach a fair settlement in this case, one which will provide immediate relief to the women involved and lasting protections for all job seekers who apply to work for Lund and Brunswick in the future," said OFCCP Director Patricia A. Shiu. "OFCCP is committed to making sure that companies that hold federal contracts — profiting from taxpayer dollars — give workers a fair shot at employment and do not use gender as a factor when it comes to deciding who gets a job and who doesn't."

OFCCP investigators based in Chicago conducted a review of Lund Boat Co.'s New York Mills facility beginning in September 2007. Based on the findings, the agency determined Lund had failed to ensure that qualified female job applicants received equal consideration for employment without regard to their gender as required by Executive Order 11246. The department filed an administrative complaint with its Office of Administrative Law Judges on Nov. 30, 2011, alleging that Lund officials had systematically discriminated against female job applicants in 2006 and 2007.

In addition to the financial remedies, the agreement requires Brunswick Corp. and Lund Boat Co. to extend job offers to at least 27 women in the original class as general laborer positions open. Seven class members already have been hired. The companies also have agreed to maintain and retain required employment records, undertake extensive self-monitoring measures to ensure that all hiring practices fully comply with the law and submit detailed progress reports to OFCCP for the next two years.

Based in Lake Forest, Ill., Brunswick Corp. is a leading provider of marine, athletic and recreational products. Lund is part of the corporation's boat manufacturing division. In the past two years alone, Brunswick has held federal contracts worth more than $248 million with agencies including the U.S. Navy and the U.S. Coast Guard.

In addition to Executive Order 11246, OFCCP enforces Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans' Readjustment Assistance Act of 1974. These three laws require those who do business with the federal government, both contractors and subcontractors, to follow the fair and reasonable standard that they not discriminate in employment on the basis of sex, race, color, religion, national origin, disability or status as a protected veteran

U.S. JUSTICE DEPT. FILES EMPLOYMENT DISCRIMINATION LAWSUIT AGAINST TEXAS FARM

FROM: U.S. DEPARTMENT OF JUSTICE
Tuesday, September 11, 2012

Justice Department Files Lawsuit Alleging Employment Discrimination by Texas Farm

The Justice Department filed a motion to intervene today in a lawsuit against Jerry Estopy, d/b/a Estopy Farms, a sorghum and soy farm in McAllen, Tex., which also provides equipment and equipment operators for harvests at other farms. The Justice Department seeks to intervene in a lawsuit filed by two U.S. citizens against the farm. The department alleges that the company discriminated against one of the U.S. citizens when it refused to hire him based on his citizenship status. The Immigration and Nationality Act’s (INA) anti-discrimination provision prohibits employers from discriminating against workers based on national origin or citizenship status in the hiring or firing process.

According to the department’s complaint, the injured party, a U.S. citizen with over twelve years experience operating cotton combines and tractors, applied for a position with Estopy Farms as a cotton picker operator around June of 2010. The U.S. citizen was not hired, and Estopy Farms hired a number of seasonal foreign workers instead. The department found reasonable cause to believe that the company did not hire the U.S. citizen because it preferred to hire foreign workers under the H-2A visa program. The H-2A visa program allows foreign nationals into the U.S. for temporary or seasonal agricultural work. Employers that seek to participate in the program file an application with the U.S. Department of Labor certifying that they have actively tried to recruit U.S. workers for the jobs and that the temporary workers’ employment will not adversely affect the wages and working conditions of similarly employed U.S. workers. The U.S. Citizenship and Immigration Services is charged with approving applications for the H-2A visas.

"The Justice Department will not tolerate discriminatory hiring practices," said Thomas E. Perez, Assistant Attorney General in charge of the Civil Rights Division. "While the department does not enforce the rules pertaining to the H-2A program, we will vigorously enforce the INA’s anti-discrimination provision, which protects U.S. workers against an employer’s illegal and discriminatory preferences."

Texas Rio Grande Legal Aid filed a lawsuit with the Office of the Chief Administrative Hearing Officer (OCAHO) within the Justice Department’s Executive Office for Immigration Review on behalf of the two U.S. citizens on Nov. 14, 2011. Because a complaint has already been filed, the department seeks to intervene in the existing lawsuit. The Justice Department is represented by trial attorney Liza Zamd in this matter.

COMPANY AND EXECUTIVES CHARGED BY SEC WITH DEFRAUDING INVESTORS

FROM: U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C., Sept. 6, 2012 – The Securities and Exchange Commission today charged a solar panel manufacturer headquartered in South San Francisco and three of its former executives with defrauding investors by concealing the transfer of nearly half of the ownership stake in its Chinese subsidiary to three individuals in China who manage the subsidiary.

The SEC alleges that Worldwide Energy and Manufacturing USA Inc. (WEMU) raised nearly $9 million from U.S. investors in early 2010 in order to expand its solar subsidiary based in Rugao City, China. The Chinese subsidiary represented the bulk of WEMU’s operations and generated 77 percent of the company’s revenue the previous year. In a power point presentation at road shows and in other communications with investors, the company’s founder and chairman of the board Jimmy Wang and the company’s president Jeffrey Watson touted the solar subsidiary’s success as the primary growth area for the company and represented that the company fully owned its Chinese subsidiary. They neglected to tell investors that WEMU actually was set to transfer 49 percent of the equity in the Chinese subsidiary to its three managers. This critical ownership deal was not disclosed in the company’s filings or offering documents. Later, Wang and his wife Mindy Wang, who served as the company’s vice president, secretary and treasurer, went so far as to sign additional agreements to effectuate the transfer that were concealed from WEMU’s board and auditors.

WEMU, the Wangs, and Watson agreed to settle the SEC’s charges.

"WEMU and its executives deliberately withheld the fact that its investors would not have a full ownership stake in its largest and most profitable subsidiary," said Marc J. Fagel, Director of the SEC’s San Francisco Regional Office. "The decreased ownership interest in the subsidiary would be a key piece of information for anyone investing in a company with significant offshore operations."

According to the SEC’s complaint filed in federal court in San Francisco, because the company’s future success depended on the technical expertise and sales connections of the three Chinese solar managers, WEMU entered into a stock option agreement with them in January 2008 that included consideration for a future change in organizational structure. The Chinese subsidiary grew dramatically over the next year and quickly became WEMU’s most profitable subsidiary. In February 2009, Jimmy Wang signed two key agreements on behalf of WEMU to share 49 percent of the Chinese subsidiary’s net profits with the solar managers and to transfer 49 percent of the subsidiary’s equity to them in February 2010. Failure to disclose these agreements resulted in WEMU filing false and misleading quarterly reports for the first three quarters of 2009 and first quarter of 2010.

According to the SEC’s complaint, WEMU management began planning a capital raise in the fall of 2009 so it could expand its solar operations by building a factory in China to manufacture solar panels. When Jimmy Wang and Watson went out to raise money from investors in early 2010, there was no mention of the agreement to transfer an ownership stake. Instead, in order to avoid informing investors about the profit sharing arrangement and contractual obligation to transfer equity to the Chinese subsidiary’s managers, Jimmy and Mindy Wang traveled to China in March 2010 to secretly sign a set of side agreements that allowed the solar managers to begin the registration process with the Chinese government to effectuate the transfer. Both Jimmy and Mindy Wang concealed these side agreements from WEMU’s auditors, other executives, and its board of directors. The company’s failure to report the transfer of the solar subsidiary resulted in a material overstatement of net income to WEMU’s reported financial statements.

Without admitting or denying the SEC’s allegations, WEMU agreed to pay a $100,000 penalty and be permanently enjoined from future violations of antifraud, reporting, books and records and internal controls provisions of the federal securities laws. The Wangs and Watson consented to permanent bars from serving as officers or directors of a public company and agreed to be permanently enjoined from future violations of the antifraud and other provisions of the federal securities laws. Mindy Wang and Watson each agreed to pay penalties of $50,000. The terms of the settlement with Jimmy Wang reflect credit given to him by the Commission for his substantial assistance in the investigation and the fact that he has entered into a cooperation agreement to assist in the ongoing investigation.

The SEC’s investigation was conducted by staff accountant Adrienne F. Miller, staff attorney Alice L. Jensen, and Assistant Regional Director Jina L. Choi in the SEC’s San Francisco Regional Office.

The SEC acknowledges the assistance of the U.S. Department of Labor in this matter.

3M COMPANY ABANDONS ITS ACQUISITION OF AVERY DENNISON’S OFFICE AND CONSUMER PRODUCTS GROUP

FROM: U.S. DEPARTMENT OF JUSTICE ANTITRUST DIVISION

Resolves Antitrust Concerns and Preserves Competition in the Sale of Labels and Sticky Notes in the United States
WASHINGTON — 3M Co. abandoned its plan to acquire Avery Dennison Corp.’s Office and Consumer Products Group, its closest competitor in the sale of adhesive-backed labels and sticky notes, after the Department of Justice informed the companies that it would file a civil antitrust lawsuit to block the deal. The department said that the proposed acquisition would have substantially lessened competition in the sale of labels and sticky notes, resulting in higher prices and reduced innovation for products that millions of American consumers use every day.

On Dec. 21, 2011, 3M and Avery agreed that 3M would acquire Avery’s Office and Consumer Products Group, which includes Avery’s labels business, for approximately $550 million. The agreement specifically excluded some sticky notes assets, but left Avery without its brand or the sales and distribution system necessary to compete effectively in the sticky notes market.

"We welcome the companies’ decision to abandon this deal, which raised competitive concerns in the sale of labels and sticky notes," said Joseph Wayland, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. "As a result of the abandonment of this transaction, American customers will continue to receive the benefits of competition including lower prices and greater innovation in these basic office supplies."

The department’s investigation found that 3M and Avery have dominated adjacent spaces in the office products business for many years – Avery in labels and 3M in sticky notes sold under its Post-it Brand. 3M entered the labels market in the United States in 2009 and began competing with Avery. Avery responded to 3M’s entry by lowering wholesale prices, increasing promotions and customer rebates and accelerating innovations in labels. Avery also responded to 3M’s labels competition by selling Avery branded sticky notes. As a result of the competition between 3M and Avery for the sale of office products, customers have saved millions of dollars and benefited from innovative labels and sticky notes products, the department said.

The proposed merger would have given 3M more than an 80 percent share of both the U.S. labels and sticky notes markets, according to the department.

3M is a Delaware corporation based in Saint Paul, Minn. 3M had 2011 revenues of $27 billion, has operations in 65 countries, and is one of the world’s largest manufacturers and suppliers of office products, including tape, sticky notes, labels, flags and other office products. In 2011, 3M’s Office Supplies Division had world-wide sales of approximately $1.6 billion.

Avery Dennison is a Delaware corporation based in Pasadena, Calif. Avery had 2011 revenues of $6 billion and is a leading global manufacturer and supplier of office and consumer products, including labels, dividers, binders, note tabs, writing instruments and sticky notes. In 2011, Avery’s Office and Consumer Products Group had $765 million in world-wide sales.