One of the defendants, Nathan B. Montgomery, was a key figure in an earlier Sharesleuth story on Mesa Energy Holdings Inc.(OTCBB: MSEH.OB). Montgomery headed a company that got 3.5 million free trading shares of Mesa Energy when, in an unusual move, executed a reverse merger with another publicly traded company. Mesa Energy announced in August that it was the subject of an SEC investigation.
The case that the SEC brought Wednesday involves Marcus Luna, a Henderson, Nev., lawyer, and Axis Technologies Inc. Inc. (Pink Sheets: AXTG.PK), a lighting company that went public through a reverse merger. The SEC says that Luna, Montgomery and two other associates shared in almost $7 million from the sale of Axis stock after Luna wrote an opinion letter falsely claiming the shares were unrestricted.
The complaint alleges that Luna arranged a sham placement of 15 million shares for Axis in connection with its 2006 reverse merger. It says he financed the $300,000 placement himself, keeping some of the shares and assigning the rest to entities controlled by Montgomery and two other men.
The SEC says Luna sold his shares for a profit of roughly $1.6 million, and got $1.7 million in kickbacks from the stock sold by his associates. The government is asking for the usual: an injunction, a penny stock bar, disgorgement of profits and civil fines. Plus, they want the court to bar Luna from serving as anyone’s lawyer in a securities transaction.