$4.4 Million Pump and Dump Scheme

CHICAGO (CN) - The SEC charged Zenergy International, a "purported biofuel company," with making $4.4 million in dirty money from a pump and dump scheme.

Twelve people and six associated companies also were named as defendants in two complaints, both filed Thursday, one of which was settled.

The SEC claims Bosko R. Gasich, a founder and principal shareholder, had Zenergy enter a reverse merger with Paradigm Tactical Products, a shell company. Gasich used backdated convertible debt to issue 300 million shares of "purportedly unrestricted stock" to his cronies, family, an attorney, stock promoters and cronies of Paradigm, the SEC said in a statement.

Scott H. Wilding, though already under a previous SEC cease-and-desist order, then touted the stock with others, without disclosing that they were being paid to do it, the SEC says. The misleading press releases and financial disclosures were approved by Gasich and Zenergy CEO Robert J. Luiten, the SEC says. Attorney Diane D. Dalmy, counsel for the reverse merger, issued opinion letters that her shares, and others', were unrestricted and freely tradable, according to the complaint.

As Zenergy's price rose due to all this activity, Gasich and others dumped it.

The SEC on Thursday also suspended trading in Zenergy stock.

These defendants agreed to settle the complaint:

Dale J. Baeten of Brillion, Wisc., a promoter and touter

Charles C. Bennett of Gainesville, Ga., a promoter and touter

George E. Bowker III of New Milford, N.J., a promoter and touter

Diana Bozovic of Evanston, Ill., a niece of Gasich,

Javorka L. Gasic of Evanston, Ill., a sister of Gasich

Nenad Jovanovich of Chicago, a former college roommate and friend of Gasich

Kymberly A. Nelson, Gasich's former fiancée who lived with him during the scheme.

As is customary with the SEC, none of them had to admit they did anything wrong.

The SEC said: "Gasich agreed to a partial settlement that imposes disgorgement and penalties, a penny stock bar, an officer-and-director bar, and a permanent injunction from further violations of the charged provisions of the securities laws. He neither admits nor denies the allegations. Amounts of disgorgement and prejudgment interest to be paid jointly and severally by Gasich and his company Market Ideas as well as financial penalties are to be determined by the court."

Refusing to settle were Zenergy, Dalmy, Luiten, Wilding and Ronald Martino, of Cranston, R.I., a promoter and touter.

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