SEC v. Falcon Ridge Development, Inc., et al., Case No. 13-cv-1101 (E.D. Pa.).  On March 1, 2013, the SEC announced fraud charges against Falcon Ridge Development, Inc. (“Falcon Ridge”) and its President and CEO, Fred M. Montano.  The SEC alleges that Montano arranged with an individual (the “Cooperator”), whom Montano thought had connections to corrupt brokers, to generate purchases of the company’s stock in exchange for cash kickbacks.  In reality, the Cooperator was secretly cooperating with the FBI.  According to the SEC, Montano paid $1,000 to orchestrate a purchase of 625,000 shares of Falcon Ridge common stock by the Cooperator.  Montano also shared inside information and a confidential shareholder list with the Cooperator, and coordinated the release of news with the illegal purchases in the stock.  Through these activities, Montano generated artificial trading activity that created a false impression of supply and demand for Falcon Ridge’s stock.  The SEC charged Falcon Ridge and Montano with violating Section 17(a)(1) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.  The SEC seeks injunctive relief, disgorgement and prejudgment interest, and civil monetary penalties, and penny stock and officer and director bars against Montano.
Montano was also charged criminally by the U.S. Attorney’s Office.