SEC files complaint against U.S. Sustainable Energy

By Bryan Sims | July 14, 2008
Web exclusive posted August 6, 2008 at 10:37 a.m. CST

A civil complaint filed in U.S. District Court by the U.S. Securities and Exchange Commission alleges that U.S. Sustainable Energy Corp., a Natchez, Miss.-based biofuels company, used a "pump-and-dump" scheme to illegally make more than $721,000 on its own stock.

According to the filing, U.S. Sustainable Energy allegedly used false misleading statements, press releases and oral statements to inflate its share price between October 2006 and February 2007.

John Rivera, the defendant and company's chairman and chief executive officer, also oversees U.S. Sustainable Energy's research and development subsidiary Sustainable Power Corp. in Baytown, Texas, which also goes by the name of Baytown Green Energy Consortium. Sustainable Power claims it can produce commercially available bio-crude oil from virtually any organic and/or hydrocarbon feedstocks.

The complaint alleges that U.S. Sustainable Energy and Rivera, "violated section 10(b) of the SEC Act of 1934 and Rule 10b-5 thereunder." It states that U.S. Sustainable Energy and Rivera claimed to be able to produce biodiesel oil from soybeans for 50 cents per gallon, Rivera made claims about patents the company owned or would own that were fraudulent and that monetary values the company quoted to produce bio-crude were false.

Additionally, the SEC alleges that Alice Price, who lived with Rivera at the time, sold U.S. Sustainable Energy stock, profiting at least $721,000. She has been named a relief defendant someone who received goods or assets as a result of the illegal actions of others. The SEC said it wants all of the allegedly "ill-gotten" funds to be repaid with interest and Rivera barred from penny stocks and holding officer or director status.

Rivera vehemently dismisses the allegations, saying they are false and called the SEC's claims a "witch hunt."

"U.S. Sustainable Energy has denied all charges and we can prove it unequivocally," Rivera said. "We've already done everything they say we can't do."

Rivera said that a little over a year ago representatives from the SEC were invited to U.S. Sustainable Energy's Natchez, Miss., facility to see the biofuel production process first hand, but they later left before the demonstration could be completed.

The complaint further alleges that Rivera claimed the company had contracts with companies to sell its products to, that it had an operational plant, and when U.S. Sustainable Energy merged with another company, its immediate combined market value would be worth between $9 billion to $12 billion.

As a result, Rivera said U.S. Sustainable Energy has hired Thomas Gorman, an attorney with the law firm Porter, Wright, Morris and Arthur LLP to specifically represent the company in the case. Gorman is the chair of the firm's securities litigation practice group, co-chairman of the ABA White Collar Crime Securities Section and a former SEC senior counsel in the division of enforcement and special trial counsel in the Office of the General Counsel.

"[The SEC] is all about making money; I'm here about giving us energy independence," Rivera said. "I'm about the people; I'm not about making money. U.S. Sustainable Energy has retained Tom Gorman as its legal counsel and we deny all charges against us."

A court date has not been scheduled, though Rivera reaffirmed he intends to fight the allegations.

A fraud lawsuit was filed by an investor against Rivera last year; that suit is still pending in court.

Meanwhile, Sustainable Power announced that is has engaged Cutler Law Group as its corporate/securities legal counsel to prepare and file a registration statement on Form 10 with the SEC. Upon final review by the SEC of the registration statement, Cutler Law Group will assist the company in making an application to upgrade its stock market listing to the NASDAQ over-the-counter (OTC) electronic bulletin board, which would provide a more established trading market for its shares, shareholders and prospective investors.

Recently, Sustainable Power made its initial 7,000 gallon bio-crude delivery to Envirocompanies Inc. for blending and processing into BG100 biogas, jet fuel, gasoline, diesel and marine fuel. The company also announced it has submitted an initial application for a 523-megawatt power generation plant at its Baytown, Texas, complex, which is enough to power approximately 40,000 homes in the Houston area.

To learn more about Sustainable Power, visit www.sustainablepower.com/.
 
 
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