A Minnesota man criminally charged this month with securities fraud in a scheme to hijack dormant shell companies also may have recently seized control of a Florida penny-stock company, or at least tried to, court filings suggest.
Federal prosecutors and the Securities and Exchange Commission in separate criminal and civil actions filed in Minnesota federal court this month accuse Mark Miller of using bogus documents to take over inactive shell companies and falsely inflate their stock prices, before selling millions of shares for profit.
Miller, a 43-year-old general contractor, is a resident of Breezy Point, Minnesota, where he had been a Republican member of city council until resigning days after his indictment.
According to prosecutors, Miller, his criminal case co-defendant Saied Jaberian and an unidentified relative of Miller actually became the nominal CEOs and presidents of the companies targeted in the alleged scam.
Civil court documents filed in Florida starting in February show a Minnesota man with the same name, Mark Miller, engaged in efforts to take over another dormant shell company, New World Gold Corp.
New World Gold, which purports to be in the business of mining gold ore, is not one of seven companies identified as targets of Miller's purported scheme in the federal criminal case or in the civil SEC case, which are pending in Minnesota federal court.
But Florida court filings, press releases and social media activity surrounding New World Gold mirror allegations against Miller and his two co-defendants in the "pump and dump" scheme described in Minnesota court by federal prosecutors and securities regulators.
New World Gold's shares have increased in both price and trading volume in the past several months, ever since a man named Mark Miller filed the actions in Florida court seeking to control the company.
A day after CNBC broke the news of the criminal indictment against Miller on June 18, New World Gold issued a statement on Twitter claiming that "Mark Miller" is not affiliated with the company.
New World Gold did not say that the "Mark Miller" who was connected to that company in court filings is a different Mark Miller from the one who was indicted in Minnesota.
A number of people who follow the company on stock discussion boards pointed out that the company also did not explain why it would disclaim a connection to Mark Miller if that person was not the individual criminally charged in Minnesota.
Robert Lengeling, Miller's criminal defense lawyer in Minnesota, declined to comment, and his client did not respond to CNBC's requests for comment.
'Pump and dump'
Federal prosecutors in Minnesota say Miller targeted at least four shell companies in the scheme that is the subject of the indictment against him and his co-defendants in the criminal case, Jaberian and Christopher James Rajkaran.
That indictment said the men allegedly used fake resignation letters from officials of the companies to seize control of the dormant companies.
They then issued false or misleading statements via press releases and social media, as well as the SEC's own EDGAR public filing system, to claim the companies had attractive new business opportunities, according to the charges.
Miller and his alleged co-conspirators bought millions of shares of these companies, often for less than a penny, then sold those shares after pumping up the stock price with their fraudulent claims, the indictment said.
Prosecutors believe Miller and his associates made hundreds of thousands of dollars in illicit profits from the alleged scheme, a spokeswoman for the U.S. Attorney's Office in Minnesota told CNBC.
The companies were identified in the indictment as Digitiliti, Encompass Holdings, Bell Buckle Holdings and Utilicraft Aerospace Industries.
The SEC, in its civil lawsuit filed June 18 against Miller alone, identified three additional penny-stock companies also believed to be similarly targeted by Miller, beyond the four identified in the criminal case. Those three companies are Bebida Beverage Company, Simulated Environment Concepts and Strategic Asset Leasing.
Miller and New World Gold
All seven companies, like New World Gold, had been inactive before Miller got involved with them, court filings say.
The Florida Division of Corporations database indicated that New World Gold was reinstated on that database on June 4, after having been dormant for more than five years.
The company's shares trade publicly on the over-the-counter market. New World Gold is listed by OTC Markets Group on its "Pink" platform, with a "No Information" warning. The "company may not be making material information publicly available," that warning says.
The business has no record of any SEC filings, which include a company's quarterly and annual financial statements, changes in executive positions, and other documents typically used by professionals and investors to make informed decisions about whether to buy or sell shares.
New World Gold's reappearance on the Florida state corporate database came almost four months after someone identifying himself as a Minnesota resident named Mark Miller filed a lawsuit in Florida's Palm Beach County court against New World Gold, seeking an order to hold a shareholder meeting.
A Palm Beach County judge in April granted the motion and ordered a shareholder meeting to be held on May 27, court records show.
Miller said in a June 17 court filing that during that shareholder meeting, "a motion was made to remove an existing director (who is physically incapacitated) and to have Mr. Miller elected as director."
The same filing claims shareholders voted unanimously to elect Miller as director.
New World Gold claimed in a June 11 press release that it acquired a mining business in Wyoming with access to gold and lithium. Lithium is a material used in batteries for personal electronics, as well as for electric vehicles.
A week later, on June 18, a press release claimed New World Gold had identified property in Nevada and South Dakota for mining.
The company said in a press release Friday that it had "officially acquired" a placer claim in South Dakota.
Posts on Twitter, Stocktwits, Reddit and Investors Hub referenced Miller as CEO of New World Gold.
"$NWGC power hour definitely still at a buy I bought some more off this little dip!! I have trust in the new CEO Mark Miller," one Twitter user said on June 1.
"I think we get a lithium announcement with $nwgc," another user tweeted on June 3.
"I followed the CEO on twitter Mark Miller ... I expect him to drop BOMBS tomorrow!!!"
But the company tweeted on June 4 that it appointed Ohio lawyer Bob Honigford as its CEO and director.
A search for Honigford in the SEC documents database returns no results. He did not respond to requests for comment by CNBC.
"So, no Mark Miller....," a user said in a Reddit forum called NWGCShareholders.
"This is terrible news," another user chimed in.
"Mark was the guy to get investor attention and reinstatement. Bob actually does business in the field," a different user said in the same thread.
New World Gold's stock price peaked on June 3 at around 4 cents.
But by Friday it was trading at less than a penny. That still was more than 8,000% higher than its 52-week low in December, before Miller's lawsuit.
The 30-day average trading volume of New World Gold shares is more than 146 million shares changing hands per day.
New World Gold responds
Following CNBC's reporting on Miller's indictment, New World Gold tweeted that Miller was not connected to the company, despite claims to the contrary in the Palm Beach County complaint.
"Miller has no control over Corporate activity or news releases, and he is NOT involved with the future expansion of Operations," New World Gold tweeted on June 19.
David Rothstein, the lawyer representing Mark Miller in the Palm Beach County court lawsuit involving New World Gold, likewise did not respond to a request for comment.
CNBC could not reach New World Gold at the email address listed on its press releases.
The SEC did not respond to CNBC's requests for comment.
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