The Securities and Exchange Commission has charged Michael Bartoszek and the Laidlaw Energy Group – the original developer of the new biomass plant in Berlin - with insider trading.
In a filing Wednesday the SEC said Bartoszek failed in his obligation to publicly disclose the shaky financial state of his New-York based company before he sold his own stock.
“Throughout the Company's existence, Bartoszek employed a public relations strategy whereby he announced positive news in press releases and on Laidlaw's website, but generally refrained from disclosing adverse developments,” said the complaint filed in the United District Court for Southern District of New York.
Bartoszek did not return a telephone call from NHPR.
The complaint says between December 2009 and June 2011 Bartoszek sold more than 100 million shares of the penny stock and made more than $318,000.
That was in addition to an annual salary of $200,000.
But he concealed the company’s ongoing financial problems and poor outlook, the SEC asserts.
“In addition, beginning in 2007, Bartoszek repeatedly promised in press releases and on a Laidlaw-related internet message board to make Laidlaw's financial information more transparent for shareholders and to become fully registered with the (Securities Exchange) Commission. Despite these promises, Bartoszek never informed shareholders, among other things, that:
•The Company's auditor had issued a going concern opinion for the year ending 2006 and the first three quarters of 2007;
• The Company had no revenue from operations (until and except for the Berlin Project sale in 2010) and had yet to achieve a profit;
• Nearly all of the Company's revenues between August 2006 and January 2010 came from an illegal offering of more than 80% of its outstanding common stock to the Purchasing Entities at a deep discount; or that
• He was selling his Company shares for proceeds of over $318,000.
“As a result of Laidlaw and Bartoszek's public relations strategy, and despite repeated promises of transparency, the market lacked adequate information about the Company's finances and business prospects from at least 2006,” the complaint says.
In June 2011 the SEC ordered Laidlaw to suspend trading, citing concerns about improprieties.
The SEC is asking Laidlaw and Bartoszek be forced to “disgorge” what it describes as “their ill-gotten gains” and pay civil penalties.
Laidlaw started the effort to build a biomass plant in Berlin but in 2010 sold for about $1.4 million, according to the SEC complaint.
The project is now owned by Berlin Station LLC which is backed by Cate Street Capital of Portsmouth. It is scheduled to open late this year.