The Securities and Exchange Commission (SEC) announced fraud charges against two previously convicted individuals who hid their involvement in managing a publicly traded company. Charges were also filed against a former New Mexico governor and attorney general in the case, who cooperated and settled with the government.

SEC filings SEC Enforcement

Natural Blue Resources’ stock trading halted after SEC charges

Trading in the stock of Natural Blue Resources Inc (OTCMKTS:NTUR) was halted after charges were made that James E. Cohen and Joseph Corazzi secretly controlled Natural Blue while calling themselves outside “consultants.”  Cohen, of Windermere, Fla., was previously incarcerated for financial fraud. Corazzi, of Albuquerque, N.M., was previously charged with violating federal securities laws and permanently barred from acting as an officer or director of a public company, the SEC said in a statement.

Two other individuals charged in the case were Toney Anaya, former New Mexico governor and attorney general, and Erik Perry. Both were former chief executive officers at Natural Blue. The SEC’s charged the pair misled investors when they were CEOs by failing to disclose that Cohen and Corazzi were running the company despite their criminal or disciplinary backgrounds.  The SEC said Natural Blue and Perry also made material misrepresentations about the firm, its contracts, and its anticipated revenue in a February 2011 press release as well as on a website and verbally to investors.

Cohen and Corazzi’s management decisions made no revenues

While Natural Blue Resources Inc (OTCMKTS:NTUR) was ostensibly led by Anaya and subsequently Perry, management decisions made by Cohen and Corazzi resulted in no revenues or viable business operations for the company, the SEC charged.

“Cohen and Corazzi concealed their involvement through a so-called ‘consulting’ agreement, but their influence over the issuer spread much further,” Andrew J. Ceresney, director of the SEC’s Enforcement Division, said in an SEC statement.  “Investors in Natural Blue Resources Inc (OTCMKTS:NTUR) had a right to know who was running the company behind the scenes.”  Natural Blue claim to invest in environmentally-friendly companies, including an initiative to locate, purify, and sell water recovered from underground aquifers in New Mexico and other areas with depleting water resources.

“Preventing past law violators from raising money in our markets is critical to preserving investor confidence,” Paul Levenson, director of the SEC’s Boston Regional Office, said in an SEC statement.  “Natural Blue and its officers attempted an end-run around the rules designed to prevent recidivists from getting their hands on the controls of public companies.”