SEC wins judgements

SEC wins judgements in gold mine case

The Securities and Exchange Commission has won judgments against the CEO of a Pompano Beach-based gold mining operation and two boiler-room operators for their part in a mob-linked pump-and-dump that took place seven years ago.

Federal Court Judge James I. Cohn ordered that Warren Heminger, former CEO of Orex Gold Mines Corp. of Pompano Beach, to pay to the court $18,000 in proceeds he received from the stock manipulation scheme, plus a $7,000 civil fine. He was also barred for 10 years from acting as an officer or director of any public company, and is permanently banned from further violations of securities laws.

Cohn also ordered that Robert Vitale and Sal Puccio, former brokers at Preferred Securities Group, also in Pompano Beach, each pay to the court $40,025 in proceeds each earned from the scheme, plus $60,000 each in civil fines.

Vitale and Puccio were also barred from the securities industry and permanently barred from violating federal securities laws.

All three men agreed to settle with the SEC without admitting or denying the allegations.

In July, Cohn issued a summary judgment against John Surgent, a disbarred lawyer and convicted felon who owned a majority of Orex stock banning him from acting as an officer or director of any public company. Surgent also was convicted in federal court in New York for his part in the scheme and was sentenced to 14 years in prison and ordered to pay $1.7 million in restitution.

Cohn has yet to determine what fines Surgent should pay.

The SEC alleged that between March and July 1999, the defendants used “classic boiler-room tactics” to sell about $6 million in unregistered Orex stock. Surgent and Heminger created bogus promotional material claiming that Orex was an active mining company that had a revolutionary gold extraction technology that was environmentally safe.

Unfortunately for investors, Orex didn’t own any gold mines or any gold mining equipment.

Surgent kept secret his involvement in the company. His stock was held by various "consultants," including one who was an exotic dancer and another who didn't exist at all. Other stock allegedly was issued to a homeless man Orex listed as vice president for finance and a board member.

Orex stock rose in price from $1.50 a share in March 1999 to more than $7.50 a share in June. By August 1999, the stock traded at about a dime a share.

The Securities and Exchange Commission filed the suit in April 2004.