LOS ANGELES (CN) — The co-founders of California-based Enviro Board Corporation raised $6 million with bogus claims they could recycle agricultural waste into environmentally friendly building materials and took $2.6 million of it in "purported compensation" though they never could do any such thing, the SEC says.
The Aug. 26 federal lawsuit makes a litany of allegations against the company and its cofounders, Glenn B. Camp, 59, of Thousand Oaks; William J. Pfeiffer, 62, of Haddonfield, N.J.; and their former fund raiser and "titular president," Joshua D. Mosshart, 43, of Malibu.
Neither Camp nor Pfeiffer was ever registered with the SEC in any capacity, but Mosshart held three securities licenses until January 2014, when he consented to a FINRA order barring him from associating with any FINRA member in any capacity — because of his referring investors to Enviro Board.
Enviro Board was founded in 1997 as the successor to a company that Camp founded in the early 1990s. The company "consistently failed, for nearly 20 years, to successfully commercialize its technology," the SEC says, but the defendants raised $6 million anyway, with a string of false promises.
that Enviro Board would make $184 million in profits in its first three years — though to do so, it would have to "successfully place ten (and later one, in subsequent projections) commercially viable mills in operation within six to 18 months — neither of which was remotely likely";
that it would earn millions of dollars in federal tax credits through complex transactions with third-party financing "which the company could never realistically obtain because, among other things, it had to be secured by Enviro Board mills that did not even exist at the time";
that it already had "mass produced" to products, using $161 million in "vendor financing" — neither of which statements was true;
and that, by the way, the "vendor financing" was to come from "a related-entity Peiffer had created and controlled," which had no way to make such a large loan.
The company never made "any meaningful operating revenue," but the defendants "personally profited from their fraud" by paying themselves $2.6 million in "purported compensation" from 2011 to 2014, the SEC says.
It seeks disgorgement, penalties and bars.
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