Dirt tracks

Countryland Wellness Resorts markets itself as a mining and electrical contracting concern and claims that it intends to establish a longevity center or health farm in Las Vegas. However, it has been named in an SEC injunction which alleges that it lied to investors about its assets in financial statements and SEC filings. The complaint also names to Fred Cruz, Countryland’s president and chairman, Luis Hidalgo and Donald Studer, the company’s auditor and attorney respectively. The SEC action alleges that Countryland and Cruz engaged in a series of misrepresentations: a warehouse which stored dirt was said to contain gold valued variously at between US$19.5 million and more than US$27.3 million; from 1997 to 2000 the company stated that it owned mining reserves worth in the range US$1.2 billion to US$2.1 billion, when, in reality, detailed analysis was needed to discover what, if any, value the deposits held; the firm was said to possess Indonesian bank guarantees worth between US$400 million and US$1.1 billion when no such facilities existed. The complaint claims that Hidalgo gave the 1996, 1997 and 1998 accounts clean audit reports stating that they complied with GAAPs and that he had carried out his audit in line with Generally Accepted Auditing Standards. The complaint also alleges that Cruz and Studer intentionally included an unauthorised audit report in a June 1999 registration statement that was filed with the SEC. All the defendants have been charged with securities fraud. Countryland was also charged with violating, and Cruz with aiding and abetting Countryland’s violations of, “the periodic reporting, record-keeping and internal controls provisions”. Cruz was also charged with falsifying books and records and lying to an accountant. Studer and Hidalgo agreed to settle by accepting a permanent injunction without admitting or denying the contentions in the complaint. Countryland and Cruz likewise agreed to a permanent injunction while neither admitting nor denying the charges. Cruz will also pay a US$55,000 penalty.