SEC v. Jonathan C. Gilchrist, Case No 4:13-cv-00163 (S.D. Tex.).  On January 23, 2013, the SEC announced it filed charges against Jonathan C. Gilchrist for engaging in a stock manipulation scheme in violation of the registration and antifraud provisions of the federal securities laws.  The SEC alleges that Gilchrist authorized the unregistered offer and sale of six million shares of Mortgage Xpress, Inc. which was renamed The Alternative Energy Technology Center, Inc., to himself and business he controlled.  The shares were sold at a significantly reduced price.  According to the SEC, the company could not claim a Rule 504 exemption from registration because it was a development stage company that planned to merge with another entity.  In addition, the shares issued to the two entities Gilchrist controlled should have been restricted on resale because Gilchrist was an affiliate of the company.  Based on the sale, Gilchrist effectively had control of 94% of the public float.

The SEC also alleges that Gilchrist hired promoters to tout the company’s stock and then effected 25 wash trades in the stock.  He drove up the stock’s price and made profits of more than $692,000 before the SEC suspended trading in the company’s stock in 2008.  The SEC charged Gilchrist with violating Sections 5(a), 5(c), 17(a)(1) and 17(a)(3) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rules 10b-5(a) and (c).  The SEC is seeking injunctive relief, disgorgement, a civil money penalty, a bar from participating in any penny stock offering, and a bar from serving as an officer or director of a public company.