IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

COMPLAINT

Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint against Defendants Rocky Mountain Energy Corporation ("Rocky Mountain"), John N. Ehrman ("Ehrman") and W. Roderick Johnson ("Johnson")(collectively "defendants") and Relief Defendant John W. Ehrman, Jr. ("J. Ehrman"), alleges and states:

SUMMARY

1. The defendants are conducting an on going "pump-and-dump scheme" involving the stock of Rocky Mountain, a Commission reporting company, whose stock is quoted on the Over-the-Counter Bulletin Board ("OTC/BB"). The scheme is being orchestrated by Defendant Ehrman, the company's CEO, and Defendant Johnson, the company's general counsel. In 1991, Ehrman was permanently enjoined by this Court from violations of the anti-fraud and securities registration provisions of the federal securities laws in connection with an earlier oil and gas scheme. Johnson represented Ehrman during the Commission's previous enforcement action against Ehrman. Ehrman also was barred by the Commission from association with any broker, dealer, investment company, investment adviser or municipal securities dealer.

2. Ehrman became the chairman, president, CEO and a controlling shareholder of Rocky Mountain in May 2002; since that time Ehrman and Johnson have used four bogus share-exchange transactions to amass 30 million shares of Rocky Mountain stock that Ehrman controlled secretly in accounts held by Johnson. Johnson has publicly sold at least 7.5 million shares obtained in this manner, realizing over $664,000, and has transferred approximately 20 million shares to third parties at Ehrman's direction. As of March 24, 2003, Johnson had transferred approximately $430,000 in stock sale proceeds to Ehrman's personal bank accounts. Additionally, Ehrman has personally sold over 600,000 Rocky Mountain shares for $80,000, and he has transferred 1.4 million shares to his father, Relief Defendant J.Ehrman, who has sold or otherwise distributed the shares, realizing at least $85,000.

3. In furtherance of his scheme to manipulate Rocky Mountain's stock price and thereby enrich himself, Ehrman, through Rocky Mountain, issued numerous false press releases and created and maintains a website (www.RockyMountain.cc) that disseminates fictitious information to the investing public concerning the business operations of Rocky Mountain. For example, this website has proclaimed that Rocky Mountain's diversified production mix provides for "high cash flow with predictable production" even though the company's most recent periodic filing with the Commission reflects it has virtually no assets and has no producing oil properties.

4. A significant fraudulent aspect of the scheme is the undisclosed issuance and public distribution of over 47 million shares of Rocky Mountain common stock (approximately 60% of the company's outstanding stock) by fraudulent use of the "exchange-offer" exemption available under Section 3(a)(10) of the Securities Act of 1933 ("Securities Act"), [15 U.S.C. § 77c(a)(10)]. In connection with four purported oil-and-gas acquisitions, Ehrman and Johnson caused at least 30 million of Rocky Mountain shares to be issued to Johnson personally, or in "escrow," and then to be sold and transferred solely at Ehrman's direction. Then, through fraud and deceit, the defendants obtained "fairness opinions" on each purported acquisition from a Utah state district court. Additionally, the issuance of these shares to Johnson, and Ehrman's control over the shares, was not disclosed to the Commission or the investing public, as required by law.

5. Ehrman also caused Rocky Mountain to file with the Commission false and misleading periodic, annual and current reports, as well as three false and misleading Form S-8 registration statements offering a total of 13.4 million shares. None of these filings disclosed Rocky Mountain's issuance and public distribution of the Section 3(a)(10) exchange-offer shares. Pursuant to the most recent two Form S-8 filings (filed with the Commission on February 5, 2003, and on March 17, 2003), Ehrman and Johnson collectively received 4.4 million shares of Rocky Mountain common stock.

6. Market activity in Rocky Mountain stock reflects the success of Ehrman's and Rocky Mountain's fraudulent promotional campaign. Although the stock generally trades under $.30 per share, the price reached $.59 in August 2002, giving Rocky Mountain a market capitalization of $17.6 million. Daily trading volume recently surpassed 12 million shares (February 27, 2003), and, on March 31, 2003, the volume exceeded 10 million shares.

JURISDICTION AND VENUE

7. The Commission brings this action pursuant to Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)], and Section 21(d) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § 78u(d)], to enjoin the violative acts, transactions, practices and courses of business alleged herein, and for ancillary relief. This case arises under the laws of the United States.

8. This Court has jurisdiction over this action pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)], pursuant to Section 27 of the Exchange Act, [15 U.S.C. § 78aa], and pursuant to 28 U.S.C. §§1331 and 1337.

9. Rocky Mountain, Ehrman and J. Ehrman can be found and conduct business in, and Ehrman and J. Ehrman are inhabitants of and reside in the Southern District of Texas; Johnson, a licensed attorney, conducts business in the Southern District of Texas. Certain of the acts and practices constituting the violations alleged herein occurred within the Southern District of Texas. Venue is appropriate in the Southern District of Texas under Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)], under Section 27 of the Exchange Act [15 U.S.C. § 78aa], and under 28 U.S.C. §1391.

PARTIES

10. The Commission is an agency of the United States of America established by Section 4(a) of the Exchange Act [15 U.S.C. § 77d(a)].

11. Rocky Mountain Energy Corporation, a Nevada corporation, became a "public" company through a reverse merger with Emission Control Devices, Inc. ("ECD"), an OTC/BB shell corporation on or about May 29, 2002. Rocky Mountain has its headquarters and only known place of business in Houston, Texas. As a result of the reverse merger with ECD, the stock of Rocky Mountain is traded on the OTC/BB. Rocky Mountain is required to file reports with the Commission under Section 13 of the Exchange Act [15 U.S.C. § 78m], and claims to be a domestic oil and gas producer. Rocky Mountain currently has approximately 75.4 million shares outstanding with 213 shareholders of record. Rocky Mountain's most recent periodic report filed with the Commission, a Form 10-QSB dated on or about February 14, 2003, states that Rocky Mountain has total assets of $246,950 and total liabilities of $816,598. The filing reports that the company has generated zero revenue.

12. John N. Ehrman, age 48 and a resident of The Woodlands, Texas, was and is a shareholder, director, CEO and president of Rocky Maintain and controls its activities. In a judgment entered in SEC v. Transwestern Oil & Gas, Inc., et al., Civil No. H-90-CV-1875 (S.D. Tex., filed Jun. 26, 1990), Ehrman was permanently enjoined from violating the registration and antifraud provisions of the federal securities laws. In an administrative proceeding before the Commission, in In re Ehrman Inv. Group, Inc., Adminstrative Proceeding No. 3-7529 (SEC 1990), Ehrman was permanently barred from associating with any broker, dealer, investment company, investment adviser or municipal securities dealer. On October 11, 2002, Ehrman filed a Chapter 7 bankruptcy petition and related schedules reflecting total assets of approximately $1.4 million and liabilities of $12.2 million. Ehrman's source of income is listed as "stock sales." In re John N. Ehrman, Case No. 4-02-BK-42561 (S.D. Texas Bankr.),

13. W. Roderick Johnson, Sr., age 73 and a resident of Diamondhead, Mississippi, is an attorney licensed in Mississippi and Texas. Johnson serves as Rocky Mountain's general counsel. Since July 2002, Johnson has received at least 31.4 million shares of unlegend Rocky Mountain common stock that Johnson placed into trading accounts in his name that are styled as either trust accounts or escrow accounts. Johnson transferred many of these shares to others or sold the shares and forwarded the proceeds of the sales by wire transfer to accounts for the benefit of Ehrman and others. At Ehrman's direction, Johnson has sold at least 7.5 million shares into the market, realizing approximately $664,000. None of these share transactions has ever been the subject of a registration statement filed with the Commission.

14. John W. Ehrman, Jr., age 69 of Spring, Texas, is Ehrman's father. J. Ehrman received at least 1.4 million shares of Rocky Mountain stock from Ehrman or Rocky Mountain for no apparent consideration and sold that stock into the market for at least $85,000.

FACTUAL BACKGROUND

Rocky Mountain's Beginnings

15. On or about May 23, 2002, Ehrman caused Cavallo Energy Corporation ("Cavallo") to be organized in Texas.

16. On or about May 29, 2003, Ehrman caused Cavallo to be merged into ECD, a "shell" Nevada corporation that was publicly traded.

17. Ehrman caused ECD, the surviving corporation, to change its name to Rocky Mountain and engineered a reverse stock split.

BC&D Oil and Gas Corporation Transaction

18. On or about June 1, 2002, Rocky Mountain agreed to purchase several oil and gas leases from BC&D Oil and Gas Corporation ("BC&D"), a privately held New Mexico corporation, for $4.5 million, payable in the form of $2.5 million in cash and $2 million in restricted shares of Rocky Mountain common stock. The closing date for the transaction was to be June 28, 2002. Because Rocky Mountain had no cash, it purportedly intended to borrow $2.5 million pursuant a purported line of credit it had negotiated with Marathon Capital Corporation ("Marathon"), a privately held lender.

19. On or about June 27, 2002, the day before the scheduled closing of Rocky Mountain's purchase of the BC&D oil and gas leases, Rocky Mountain petitioned a Utah state court for a "fairness hearing" regarding the terms and conditions of the acquisition, contending that Rocky Mountain was seeking to acquire all of the issued and outstanding stock of BC&D in exchange for 10,025,000 shares of Rocky Mountain common stock, but making no mention of the agreed $2.5 million cash payment. Attached to Rocky Mountain's petition was an affidavit from two purported shareholders of BC&D who attested to the fairness of the transaction and stated that neither of the shareholders was a control person of Rocky Mountain. One of the fairness affidavits filed with the Utah state court was purportedly signed by Donnie Hill ("Hill"), BC&D's president and sole shareholder. In fact, Hill's signature on the petition was forged by Ehrman. The other BC&D shareholder affidavit was signed by Johnson, even though he has never been a shareholder of BC&D.

20. As a result of the hearing, the Utah state court issued an order in which it found that "the terms of the exchange were fair" and that "the issuance of the shares did not constitute a public offering of securities."

21. Rocky Mountain never obtained any funds from Marathon, and Rocky Mountain's acquisition of the BC&D oil and gas leases never closed.

22. On or about July 8, 2002, Ehrman directed Rocky Mountain's transfer agent to issue a total of 10,025,000 shares of Rocky Mountain common stock "without a legend" in the names of Hill (8 million), Johnson (2 million) and Rocky Mountain's Utah attorney (25,000). Ehrman provided the transfer agent with a copy of the Utah state court's order and an opinion letter from the Utah attorney that stated that the shares could "be issued without a restrictive legend." The letter stated, however, that, because Hill and Johnson were affiliates of Rocky Mountain, and/or BC&D, "they [could] not publicly resell their shares unless they compl[ied] with [Commission] Rule 144."

23. Johnson deposited the two million shares issued to him from the BC&D transaction into escrow brokerage accounts.

24. Neither Hill nor BC&D ever received any of "escrow" shares of Rocky Mountain common stock. At least two million of the eight million shares issued in Hill's name were deposited into a Johnson escrow brokerage account. The remaining six million shares were used by Ehrman and Rocky Mountain to compensate two individuals who purportedly performed public relations services for Rocky Mountain.

25. On or about July 17, 2002, Rocky Mountain and Ehrman issued a press release for dissemination to the investing public that claimed that Rocky Mountain's acquisition of the assets of BC&D had been completed and that Rocky Mountain had paid $4.5 million, 2.5 million in cash and $2 million in Rocky Mountain stock. The press release announced that Rocky Mountain financed in part through a $40 million line of credit to be made available to Rocky Mountain by Marathon and that Marathon was to receive 20 million shares of Rocky Mountain common stock in return for making the line of credit available. The press release also stated that the current production on the BC&D properties was "400 barrels of oil per day" and that, based on test results of eleven gas wells slated for completion, the property "could generate $1,000,000 net cash flow per month in the near-term." The press release contained several quotes from Hill whom the release identified as a Rocky Mountain vice president.

26. On or about August 7, 2002, Marathon's check in payment of the initial amount due BC&D "bounced."

27. On or about August 23, 2002, Rocky Mountain and Ehrman issued a press release for dissemination to the investing public announcing that "a development program will begin on the [property], which was acquired recently from BC&D." The release claimed that Rocky Mountain anticipated initial flow rates of "1MMcf per day to 2MMcf per day per well based on the tests" and that, assuming a successful completion of all eleven wells, "[Rocky Mountain] could expect to realize a net cash flow in excess of $1.5 million per month." The release also contained a quote attributed to Hill: "[g]iven these exciting prospects of the field, . . . I asked Rocky Mountain if I could take all the payment from them for the properties in the form of stock. Thus, I will take an additional 5 million shares in lieu of $2.5 million cash payment."

28. Hill never made or authorized Rocky Mountain or Ehrman to publish any quote attributed to him.

29. Hill never served as an officer of Rocky Mountain.

30. Hill never agreed to accept shares of Rocky Mountain in lieu of the agreed $2.5 million cash payment. In fact, the cash payment was critical to permit BC&D to satisfy liens on the oil and gas field.

31. Marathon never provided any funding to Rocky Mountain.

32. On or about September 11, 2002, Rocky Mountain and Ehrman announced to the investing public that development had begun on the BC&D fields and that Rocky Mountain expected $1.5 million in net revenue from the BC&D fields.

33. In fact, Rocky Mountain never purchased the BC&D gas field because it was never able to pay the agreed price.

34. There was no reasonable basis for Rocky Mountain and Ehrman's projected revenue from the BC&D field.

35. On or about January 2, 2003, Rocky Mountain filed with the Commission a Form 8-K signed by Ehrman. In the Form 8-K Rocky Mountain first disclosed publicly that the BC&D acquisition never had been consummated. The filing stated that the BC&D acquisition was "based on the transfer of 5,000,000 shares of Rocky Mountain corporate stock, which has been returned to the company."

36. In fact, as of January 2, 2003, approximately 10 million shares of Rocky Mountain common stock had been issued in connection with the purported BC&D exchange offer, none of which were cancelled and returned to the company.

United States Oil Company Transaction

37. On or about July 22, 2002, Rocky Mountain entered into an agreement with United States Oil Company ("U.S. Oil"), a Colorado-based corporation controlled by Stephen Lieberman ("Lieberman"), a director of Rocky Mountain, by which Rocky Mountain was to acquire all the issued and outstanding stock of U.S. Oil in exchange for Rocky Mountain stock.

38. The agreement recited a purchase price of $23 million, with $3 million payable in cash, the remainder payable in 20,000,800 shares of Rocky Mountain common stock. A closing date was set for August 20, 2002.

39. On or about August 15, 2002, Rocky Mountain filed a petition for a fairness hearing with the Utah state court in which it requested approval of the exchange of 20,000,800 shares of Rocky Mountain common stock for all of the shares of U.S. Oil (purportedly held by four U.S. Oil shareholders, including Rocky Mountain's Utah attorney, but failed to disclose the three million dollar cash payment.

40. Based on the "fairness" affidavits submitted by the U.S. Oil "shareholders," the Utah state court approved the exchange, finding that the exchange did not involve a public offering.

41. Marathon never provided any funds to Rocky Mountain, and according to Rocky Mountain's latest form 10QSB Commission filing, the acquisition of U.S. Oil has yet to close.

42. On or about August 29, 2002, Ehrman provided the Utah state court order and an opinion letter from the Utah attorney to Rocky Mountain's transfer agent and requested that the transfer agent issue 20,000,800 shares of Rocky Mountain common stock "without a restrictive legend" in the names of the four shareholders, including 18,725,800 shares to be issued to Lieberman, a Rocky Mountain director, and 85,000 shares to be issued to the Utah attorney. The transfer agent complied with Ehrman's directive.

43. Within a few days, Ehrman returned the certificate for 18,725,800 shares issued to Lieberman to the transfer agent with instructions that the certificate was to be divided into 250,000 shares to be issued to Lieberman and 17,475,800 shares to be issued to Defendant Johnson. The transfer agent complied with Ehrman's directive.

44. Johnson deposited the stock certificates issued to him into an escrow brokerage account.

45. Ehrman caused the 250,000 shares issued to Lieberman to be returned to the transfer agent and to be cancelled, and later caused approximately 800,000 of the shares issued to be Johnson to be cancelled.

46. On or about October 3, 2002, Rocky Mountain and Ehrman issued a press release for dissemination to the investing public under the heading "Rocky Mountain Closes Acquisition of United States Oil." The release claimed that on September 23, 2002, Rocky Mountain had closed on its acquisition of U.S. Oil Company's Wyoming properties and had paid $2.9 million for the acquisition with a $200,000 cash payment due on or before November 15, 2002, and by delivery of a $2.7 million convertible note bearing interest at two percent per annum for two years. Rocky Mountain and Ehrman claimed that U.S. Oil owned two projects, one with current production of $16,000 per month, the other producing $18,000 per month. The release touted "expected revenues" of $700,000 per month from the properties and the addition of 56.5 billion cubic feet of gas in "proved reserves." The release quoted Ehrman as saying that Rocky Mountain was "pleased to acquire the existing cash flow and the reserve potential of U.S. Oil."

47. On or about October 30, 2002, Rocky Mountain and Ehrman announced to the investing public that on September 23, 2002, Rocky Mountain had closed on its acquisition of U.S. Oil's Wyoming properties. Rocky Mountain and Ehrman also announced that it would pay for the acquisition by making a $200,000 cash payment on or before November 15, 2002, and delivering a $2.7 million note bearing interest at two percent per annum for two years, subject to a right to convert to Rocky Mountain common stock after 12 months. Rocky Mountain and Ehrman claimed that development of the properties should raise cash flow to "well over $1.2 million per month net."

48. On or about November 5, 2002, Rocky Mountain and Ehrman issued a press release for dissemination to the investing public that touted the U.S. Oil acquisition. The release contained the following quotes from Ehrman: "We have established a real and substantial value for our Company and for our shareholders through the acquisition of 59 billion cubic feet of gas reserves from U.S. Oil"; "We were fortunate to be able to purchase these properties using a convertible debt instrument for $2.9 million for two percent interest for two years"; and "The asset value of the field is estimated at $88 million future net revenue over the next 20 years discounted net PV10% value of $58 million (at current gas prices, ), or approximately $2 per share. So it is absurd for our stock to be trading in the .04 to .05 range."

49. On or about January 14, 2003, Rocky Mountain filed with the Commission a Form 10-KSB signed by Ehrman and the other directors of the company. In the filing Rocky Mountain first disclosed publicly that the U.S. Oil acquisition had not closed because Rocky Mountain had not made a $200,000 cash payment.

50. Rocky Mountain never disclosed — whether in its press release, in its Form 10-KSB or otherwise — that approximately 20,000,800 shares of Rocky Mountain common stock had been issued in connection with the purported U.S. Oil acquisition, or that Ehrman beneficially controlled approximately 17 million of these shares that were held by Johnson.

H&N, L.L.C. Acquisition

51. On or about December 1, 2002, Rocky Mountain entered into an agreement with H&N, L.L.C. ("H&N"), an Oregon limited liability company, by which Rocky Mountain was to acquire two oil-and-gas properties in Las Animas County, Colorado, and Colifax County, New Mexico, in return for "1,000,000 free trading shares of Rocky Mountain . . . common stock" valued at approximately $150,000 (based on the price of Rocky Mountain at time of closing).

52. On or about December 3, 2002, Rocky Mountain and Ehrman issued a press release for dissemination to the investing public that announced the acquisition of the H&N properties for "$150,000." The press release did not disclose that the agreement called for payment in the form of stock, not cash.

53. On or about December 17, 2002, Rocky Mountain filed a petition for a "fairness" hearing with the Utah state court, stating that Rocky Mountain was acquiring all the issued and outstanding stock of H&N in exchange for 10,150,000 shares of Rocky Mountain, the petition listed several purported shareholders of H&N; including H&N's manager, Johnson, Johnson's secretary, and the Rocky Mountain's Utah attorney.

54. Based on the sworn H&N sharehoulder affidavits and after a hearing on January 2, 2003, the Utah state court found that the shares issued in the exchange were exempt from registration and did not involve a public offering of securities.

55. Neither Johnson nor his secretary was ever a shareholder of H&N. Johnson instructed the secretary to execute the affidavit that falsely stated that she was a shareholder of H&N.

56. On or about January 6, 2003, Ehrman sent a copy of the Utah state court order, together with an opinion letter from Utah counsel, to Rocky Mountain's transfer agent, requesting the issuance of 10,150,000 "free trading" shares. Ehrman included a copy of a purported "Amended Petition for a Fairness Hearing," that increased the number of purported H&N shareholders to include Ehrman's father, another relative and three employees of Rocky Mountain. Ehrman instructed the transfer agent to issue 10,150,000 shares in the names of the shareholders, and, with the exception of H&N's manager, who received one million shares, all of the shares were to be issued without a restrictive legend.

57. On or about January 9, 2003, Ehrman returned certificates totaling five million shares that were issued to his father and the three Rocky Mountain employees to the transfer agent, instructing the transfer agent to reissue the shares to Johnson.

58. Rocky Mountain and Ehrman did not issue a corrective press release for dissemination to the investing public after Rocky Mountain issued 10,500,000 "free trading" shares in connection with the acquisition H&N on January 6, 2003.

59. After Ehrman delivered the certificate for the five million shares to Johnson, Johnson deposited the five million shares, together with the one million shares originally issued to him, into an escrow brokerage account.

Mobile Operating LLC Transaction

60. On or about February 20, 2003, Rocky Mountain filed a petition for a fairness hearing with the Utah state court, claiming the company had signed an agreement to acquire Mobile Operating, L.L.C. ("Mobile"), as a wholly-owned subsidiary, and stating that Rocky Mountain would acquire all of the issued and outstanding stock in Mobile in return for 6,150,000 shares of Rocky Mountain. Rocky Mountain submitted affidavits signed by several of the shareholders of Mobile, including Johnson, Ehrman's father, two other Ehrman relatives, and Rocky Mountain's secretary, in which each attested to the fact that the acquisition was fair and that the shares each would receive would not allow him or her "to control the actions of the company."

61. On or about February 21, 2003, the Utah state court found that the terms and conditions of the exchange were fair and that the issuance of the shares did not involve a public offering.

62. On or about February 25, 2003, Ehrman forwarded a copy of the Utah state court order, together with an attorney opinion letter, to the transfer agent and requested the issuance of 6,150,000 shares. The opinion letter (which is dated January 6, 2003) states that the shares should be issued "without a restrictive legend, other than control legends for any individuals who are officers, directors, 10% shareholders or otherwise affiliates of Rocky Mountain." Ehrman orally informed the transfer agent that none of the recipients of the shares were officers, directors, 10% shareholders or affiliates of Rocky Mountain.

63. On or about February 28, 2002, the transfer agent issued 6,150,000 shares without a restrictive legend in the names of 12 shareholders, including 580,000 shares to Johnson.

64. Within a week of their issuance, approximately 3.1 million shares issued to recipients other than Johnson were cancelled and were reissued to Johnson without a restrictive legend.

Rocky Mountain Announces $100 Million in Funding and Several Agreements to Acquire Millions in Properties

65. Following the failed BC&D acquisition, Rocky Mountain ended its relationship with Marathon and entered into an agreement with Residential Resources Financial Services, Inc. ("Residential Resources") by which Residential Resources would provide assistance to Rocky Mountain in obtaining funding to acquire oil and gas properties.

66. On or about November 12, 2002, Rocky Mountain and Ehrman announced to the investing public that Rocky Mountain had reached agreement with Residential Resources pursuant to which Residential Resources would "provide up to $100 million of acquisition and development financing for proved oil and gas projects."

67. In fact, Rocky Mountain and Residential Resources had entered into an "engagement agreement" that called for Rocky Mountain to provide certain documents to Residential Resources so that Residential Resources would be able to conduct a due-diligence investigation of all properties that Rocky Mountain sought to acquire.

68. Rocky Mountain never provided the documents necessary to conduct a due-diligence investigation, and Residential Resources was unable to and did not undertake the due-diligence investigation.

69. On or about January 10, 2003, Rocky Mountain and Ehrman announced to the investing public that that Rocky Mountain had executed an agreement to acquire approximately 24,000 acres of oil-producing properties in New Mexico for $5.5 million, stating that the closing is scheduled for March 31, 2003, and that the transaction is "expected to be financed through the company's Residential Resources credit line."

70. On or about January 31, 2003, Rocky Mountain and Ehrman announced to the investing public an agreement by which Rocky Mountain was to purchase an oil-producing property in Colorado for $8 million, stating that the closing was scheduled for March 31, 2003, and that "[t]he acquisition is expected to be funded by the company's $100 million acquisition credit facility with Residential Resources."

71. On or about February 5, 2003, Rocky Mountain and Ehrman announced to the investing public negotiations to purchase five oil-and-gas properties, stating, "[t]he company plans to use its acquisition credit facility of up to $100 million with Residential Resources to finance the acquisitions."

72. On or about February 24, 2003, Rocky Mountain and Ehrman issued a press release for dissemination to the investing public announcing that Rocky Mountain had signed an agreement to purchase a group of oil-and-gas properties in Wyoming, Colorado, and Kansas for $24.6 million and stating that Rocky Mountain planned to "utilize its credit facility with Residential Resources" for the acquisition and that the closing date for the transaction was March 31, 2003.

73. On or about February 26, 2003, Rocky Mountain and Ehrman issued a press release for dissemination to the investing public announcing that an interview with Ehrman was available at www.HotStockChat.com.

74. In the interview, available at www.HotStockChat.com, Ehrman claims that Rocky Mountain had signed agreements on three of five targeted acquisitions, using its credit facility with Residential Resources and that a fourth was imminent. The website also includes a claim from Ehrman that Rocky Mountain has cash flow of $3 million.

75. On or about March 4, 2003, Rocky Mountain and Ehrman issued a press release for dissemination to the investing public announcing an agreement to purchase oil-and-gas properties in Wyoming, Utah, Nebraska, and Colorado for $11.2 million and stating that Rocky Mountain planned to "utilize its credit facility with Residential Resources" for the acquisition and that the closing date for the transaction was April 1, 2003.

Market Impact

76. Rocky Mountain and Ehrman's stream of fraudulent press releases and other announcements has supported an artificially high share price for Rocky Mountain and has caused the trading volume of Rocky Mountain's stock to skyrocket. Rocky Mountain's shares traded as high as $.59 cents on August 2, 2002, giving Rocky Mountain a market capitalization of over $17.6 million even though Rocky Mountain had few assets and no revenues or earnings. Rocky Mountain's monthly stock trading volume increased from 382,219 shares in July to 57,135,888 shares in February 2003. Since March 1, 2003, Rocky Mountain's share price has fluctuated between $.13 to $.20 on volume of 54,541,500 as of March 25, 2003. As of March 25, 2003, Rocky Mountain's market capitalization was in excess of $11.3 million even though Rocky Mountain still had few assets and no revenues or earnings.

Johnson's Sales and Distributions of Stock at Ehrman's Direction

77. Johnson deposited approximately 27.2 million shares of Rocky Mountain common stock that he received in connection with the four purported "exchange" transactions into one of four "attorney escrow" brokerage accounts.

78. From approximately August 2003, through on or about February 28, 2003, Johnson transferred at least 16 million shares to third parties and sold approximately 7.5 million shares.

79. Ehrman controlled the Rocky Mountain stock in Johnson's "attorney escrow" brokerage accounts, and Ehrman directed Johnson to make the sales and transferred securities in the brokerage accounts.

80. As of March 24, 2003, Johnson at Erhman's instructions transferred approximately $430,000 to two personal bank accounts maintained by Ehrman.

81. Johnson transferred approximately 16 million shares to third parties designated by Ehrman, including several public relations firms retained by Ehrman to promote Rocky Mountain stock, a former director who had made a $100,000 advance to Ehrman and Ehrman's bankruptcy attorney.

82. Several million of the shares transferred to third parties, at Erhman's direction, have been sold into the marketplace.

Ehrman and J. Ehrman's Sales and Transfers of Rocky Mountain Shares

83. On or about February 14, 2003, Ehrman deposited one million Rocky Mountain shares into a personal brokerage account. As of March 12, 2003, Ehrman has sold approximately 595,000 of these shares realizing approximately $88,000.

84. On or about October 4, 2002, Ehrman caused Rocky Mountain to issue to him 490,000 shares without a restrictive legend. Ehrman then transferred the shares into the name of his father, J. Ehrman. On or about November 12, 2002, J. Ehrman deposited the shares into a personal brokerage account.

85. J. Ehrman also deposited one million shares he received in connection with the purported H&N transaction into his personal brokerage account. Almost immediately thereafter, J. Ehrman transferred one million shares from the account to an "investor and public relations" consultant to Rocky Mountain.

86. As of March 17, 2003, J. Ehrman had sold approximately 519,000 Rocky Mountain shares in his account for approximately $85,000.

Rocky Mountain's Misleading Filings with the Commission

87. On or about January 2, 2003, Rocky Mountain filed a Form 8-K with the Commission, advising that Rocky Mountain had terminated its acquisition agreement with BC&D. This Commission filing falsely recited that five million shares of corporate stock that Rocky Mountain had purportedly conveyed in furtherance of the acquisition had been received back by Rocky Mountain. In fact, Rocky Mountain used the bogus exchange transaction described in paragraph 86 above, to issue over 10 million shares in connection with the transactions. None of these shares has been cancelled and returned to the company. Instead, all of these shares have been sold or otherwise transferred at Ehrman's direction.

88. The same Form 8-K filing referred to in paragraph 87 above, stated that Rocky Mountain had "closed the U.S. Oil acquisition" in September 2002, and further stated that the consideration given for the transaction by Rocky Mountain consisted of a $200,000 short term note and a $2.7 million two-year convertible note. In fact, as of the filing, the company had yet to complete the acquisition of U.S. Oil. Moreover, the filing failed to disclose that Rocky Mountain had issued over 20 million shares in connection with the purported acquisition, including at least 17 million shares issued to Johnson in which Ehrman had a beneficial interest.

89. On or about January 14, 2003, Rocky Mountain filed with the Commission a Form 10-KSB (signed by Ehrman) in which Rocky Mountain repeated the statements from the December 31, 2002, Form 8-K concerning the terms of the BC&D and U.S. Oil acquisitions. The Form 10-KSB also stated that the consideration paid by Rocky Mountain in connection with the H&N acquisition was one million shares of the company's stock. The Form 10-KSB included (a) an audited financial statement that reflected that, as of September 30, 2002, Rocky Mountain had issued 57,983,061 shares, but that only 24,747,373 of the issued shares were outstanding and (b) notes to the financial statements that claimed that 33,235,688 million shares had been issued "to escrow," that 17,900,000 had been issued in connection with the failed Marathon credit agreement and that 15,335,688 had been issued for an undisclosed purpose.

90. In fact, Rocky Mountain had issued more than 10 million shares in connection with the H&N transaction.

91. On or about February 14, 2003, Rocky Mountain filed with the Commission a Form 10-QSB (signed by Ehrman) in which Rocky Mountain failed to disclose the number of shares issued in connection with the purported U.S. Oil and H&N acquisitions. Further, the unaudited financial statements in the filing represented that as of December 31, 2002, the company only had 26,546,373 outstanding shares. In truth, the transfer agent records reflect that as of December 31, 2002, the company had 55 million shares outstanding.

92. On or about October 24, 2002, Rocky Mountain filed a Form S-8 registration statement registering an offering of 300,000 shares issued to its Utah attorney. On or about February 5, 2003, Rocky Mountain filed a Form S-8 registering an offering of approximately 7.6 million shares issued to Rocky Mountain officers, employees and consultants, including 3.2 million issued to Ehrman. On or about March 17, 2003, the company filed a Form S-8 registering an offering of 5.5 million shares issued to various Rocky Mountain "consultants," including one million shares issued to Johnson.

93. None of the Form S-8 filings disclosed the issuance and distribution of the shares issued in the exchange-offer transactions. Moreover, the February 5, 2003 and March 17, 2003 Forms S-8 incorporate the company's previously filed misleading Form 10-KSB, and the March 17th Form S-8 also incorporates the company's prior misleading Form 10-QSB.

Ehrman's Bankruptcy Filing

94. On March 7, 2002, defendant Ehrman filed for bankruptcy protection under Chapter 7 of the Bankruptcy Code. Section 364(b)(4) of the Bankruptcy Code expressly exempts from the provisions of the automatic stay actions by governmental units like the Commission seeking injunctive relief, the fixing of the amount of disgorgement and the imposition of a civil monetary penalty. By filing this Complaint, the Commission does not intend to violate the stay provision of the Bankruptcy Code, but seeks all other relief to which it will show itself entitled.

CAUSES OF ACTION

Count One
(Violations of Sections 5(a) and 5(c) of the Securities Act)

95. The Commission realleges and restates Paragraphs 1 through 93 of this Complaint and incorporates the same by reference as if set forth herein verbatim.

96. Because of the defendants' fraud upon the Utah courts, the hearings conducted with respect to the fairness of the terms and conditions of the issuance of shares of Rocky Mountain common stock were shams and did not establish the fairness of the terms and conditions of the contemplated exchange; they were not based on bona fide claims and did not provide notice to all those to whom a distribution of stock was to be made.

97. Ehrman and Johnson caused Rocky Mountain to issue at least 47 million shares in concert with four purported share-exchange transactions, including approximately 31 million shares that were issued directly or indirectly to Johnson.

98. Rocky Mountain did not issue those shares in exchange for bona fide securities, claims or property interests.

99. The orders issued by the Utah state court could not and did not satisfy the criteria for exemption from registration established by Section 3(10) of the Securities Act, [15 U.S.C. § 77c(10)].

100. Ehrman and Johnson were "underwriters," as that term is defined in Section 2(11) of the Securities Act [15 U.S.C. § 77b(11)], with respect to their participation in the distribution of the Rocky Mountain shares issued in the purported share-exchange transactions by Rocky Mountain.

101. Rocky Mountain, Ehrman and Johnson, directly or indirectly, singly or in concert with others, offered to sell and are offering to sell, sold and are selling and delivered and are delivering after sale, securities of Rocky Mountain, and have been and are, directly and indirectly, (a) making use of the means and instruments of transportation and communication in interstate commerce and of the mails to sell securities, through the use of written contracts, offering documents and otherwise, (b) carrying and causing to be carried through the mails and in interstate commerce by the means and instruments of transportation, such securities for the purpose of sale and for delivery after sale and (c) making use of the means or instruments of transportation and communication in interstate commerce and of the mails to offer to sell such securities.

102. No registration statement for the securities offered and sold was filed with the Commission, and there is no registration in effect with respect to these securities.

103. By reason of the foregoing, Rocky Mountain, Ehrman and Johnson violated and, unless enjoined, will continue to violate Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) & 77e(c)].

Count Two
(Violations of Section 17(a) of the Securities Act)

104. The Commission realleges and restates Paragraphs 1 through 93 of this Complaint and incorporates the same by reference as if set forth herein verbatim.

105. Rocky Mountain, Ehrman and Johnson, directly or indirectly, singly or in concert with others, in the offer and sale of securities of Rocky Mountain, by use of the means and instruments of transportation and communication in interstate commerce and by use of the mails, have (a) employed devices, schemes or artifices to defraud, (b) obtained money or property by means of untrue statements of material fact or omissions to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading and (c) engaged in transactions, practices or courses of business which operate or would operate as a fraud or deceit, including, but not limited to those devices, schemes, artifices, untrue statements and omissions of material facts, transactions, practices and course of business set forth in paragraphs 1 through 93.

106. Rocky Mountain, Ehrman and Johnson acted knowingly or recklessly with respect to the activities alleged in this Count.

107. Rocky Mountain, Ehrman and Johnson were also negligent with respect to their activities alleged in this Count.

108. By reason of the foregoing, Rocky Mountain, Ehrman and Johnson violated and, unless enjoined, will continue to violate Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].

Count Three
(Violations of Section 10(b) of the Exchange Act and Rule 10b-5)

109. The Commission realleges and restates Paragraphs 1 through 93 of this Complaint and incorporates the same by reference as if set forth herein verbatim.

110. Rocky Mountain, Ehrman and Johnson, directly or indirectly, singly or in concert with others, in connection with the purchase and sale of securities of Rocky Mountain, by use of the means and instrumentalities of interstate commerce and by use of the mails (a) employed manipulative and deceptive devices, contrivances, schemes and artifices to defraud, (b) made untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading and (c) engaged in acts, practices and courses of business which operate as a fraud and deceit upon purchasers, prospective purchasers and other persons, including but not limited, these devices, contrivances, schemes and artifices, untrue statements and omissions of material facts, act, practices, and courses of business set forth in the paragraphs 1 through 93.

111. Rocky Mountain, Ehrman and Johnson acted knowingly or recklessly with respect to the activities alleged in this Count.

112. By reason of the foregoing, Rocky Mountain, Ehrman and Johnson, unless enjoined, will continue to violate Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].

Count Four
(Issuer Reporting Violations)

113. The Commission realleges and restates Paragraphs 1 through 93 of this Complaint and incorporates the same by reference as if set forth herein verbatim.

114. Rocky Mountain's common stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act [15 U.S.C. § 78l(g)].

115. Pursuant to Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)], and Rules 13a-1, 13a-11 and 13a-13 [17 C.F.R. §§ 240.13a-1, 240.13a-11 & 240.13a-13], Rocky Mountain was and is required to file periodic, complete and accurate reports on Forms 10-Q and 10-K and current, complete and accurate reports on Form 8-K.

116. Pursuant to Rule 12b-20 [17 C.F.R. § 240.12b-20], Rocky Mountain was required to include in its reports, in addition to disclosures expressly required by statute and rules, such other information as may be necessary to ensure that the statements made are not, under the circumstances, materially misleading.

117. As described in paragraphs 87 through 93, Rocky Mountain filed with the Commission a false and misleading Form 8-KXB, Form 10-KSB and Form 10-QXB. Ehrman, as the companies president, CEO and director signed and authorized each of the filings.

118. Accordingly, Rocky Mountain violated and Ehrman aided and abetted violations of and, unless enjoined, will continue to violate or to aid and abet the violation of Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)], and Rules 12b-20, 13a-1, 13a-11 and 13a-13 [17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11 & 240.13a-13].

Count Five
(Beneficial Ownership And Principal Stockholder Disclosure Violations)

119. The Commission realleges and restates Paragraphs 1 through 93 of this Complaint and incorporates the same by reference as if set forth herein verbatim.

120. Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)] and Rule 13d-1 thereunder [17 C.F.R. § 240.13d-1] require any person who acquires beneficial ownership of more than five percent of the stock of a Section 12 reporting company (such as Rocky Mountain) to file a Schedule 13D with the Commission within 10 days in which the acquirer describes the acquisition and provides other information.

121. Section 16(a) of the Exchange Act [15 U.S.C. § 78p(a)] requires that each beneficial owner of more than ten percent of any class of any equity security registered under Section 12 of the Exchange Act and each officer and director of the issuer of any such security file a statement with the Commission by the effective date of a registration statement filed under Section 12 or within ten days of becoming such, reporting the amount of all equity securities beneficially owned. It also requires insiders to file statements of changes in ownership within 10 days after the close of each calendar month, if there have been changes in their ownership during the month.

122. Section 16(a) also requires each beneficial owner of the requisite percentage of shares to file statements of changes in ownership within 10 days after the close of each calendar month, if there have been changes in their ownership during the month.

123. Rule 16a-3 [17 C.F.R. § 240.16a-3] provides that an initial statement under Section 16(a) is to be made on a Form 3 and that subsequent statements of changes are to be made on a Form 4 or a Form 5.

124. On or about May 29, 2002, Ehrman became an officer and director (an insider), and the beneficial owner of approximately 27% of the common stock of Rocky Mountain, an issuer whose common stock was and is registered under Section 12 of the Exchange Act.

125. On February 28, 2003, Ehrman filed a Form 4, stating that he had acquired 3.2 million shares on February 1, 2003, and had sold 7,420 shares on February 23, 2003.

126. In truth, Ehrman, through the shares held by Johnson in "escrow" had sold or distributed millions of shares by February 23, 2003, for which he filed no Form 4.

127. Ehrman never filed a Schedule 13D as required under Section 13(d) of the Exchange Act.

128. Although Ehrman filed a Form 3 with the Commission on or about November 26, 2002, his filing was delinquent, and his disclosure of ownership of five million shares was false in that he actually beneficially owned at least 23 million shares at the time (37% of Rocky Mountain's common stock) for which he had filed no other Form 3.

129. By reason of the foregoing, Ehrman violated and, unless enjoined, will continue to violate Sections 13(d) and 16(a) of the Exchange Act [15 U.S.C. §§ 78m(d) & 78p(a)] and Rules 13d-1 and 16a-3 [17 C.F.R. §§ 240.13d-1 & 240.16a-3].

Count Six
(Claim Against J. Ehrman As Custodian Of Investor Funds)

130. The Commission realleges and restates Paragraphs 1 through 93 of this Complaint and incorporates the same by reference as if set forth herein verbatim.

131. J. Ehrman received at least 1.4 million shares of Rocky Mountain common stock for which he provided no consideration.

132. J. Ehrman sold certain of these shares for at least $85,000.

133. J. Ehrman obtained the funds and property described above, under circumstances in which it is not just, equitable or conscionable for him to retain the funds and property.

134. As a consequence, J. Ehrman has been unjustly enriched and ought to be required to account for these funds and to disgorge them for the benefit of defrauded investors.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff Securities and Exchange Commission respectfully requests that this Court:

I.

Enter an Order temporarily restraining and preliminarily and permanently enjoining Defendant Rocky Mountain Energy Corporation from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 [15 U.S.C. §§ 77e(a), 77e(c) & 77q(a)], Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 [15 U.S.C. §§ 78j(b) & 78m(a)] and Securities and Exchange Commission Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13 [17 C.F.R. §§240.10b-5, 240.12b-20, 240.13a-1, 240.13a-11 & 240.13a-13];

II.

Enter an Order temporarily restraining and preliminarily and permanently enjoining Defendant John N. Ehrman from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 [15 U.S.C. §§ 77e(a), 77e(c) & 77q(a)], Sections 10(b), 13(d) and 16(a) of the Securities Exchange Act of 1934 [15 U.S.C. §§ 78j(b), 78m(d) & 78p(a)], and Securities and Exchange Commission Rules 10b-5, 13d-1 and 16a-3 [17 C.F.R. §§ 240.10b-5, 240.13d-1 & 240.16a-3], and from aiding and abetting violations of Section 13(a) of the Securities Exchange Act of 1934 [15 U.S.C. § 78m(a)], and Securities and Exchange Commission Rules 12b-20, 13a-1, 13a-11 and 13a-13 [17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-11 & 240.13a-13];

III.

Enter an Order temporarily restraining and preliminarily and permanently enjoining Defendant W. Roderick Johnson, Sr. from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 [15 U.S.C. §§ 77e(a), 77e(c) & 77q(a)], Section 10(b) of the Securities Exchange Act of 1934 [15 U.S.C. § 78j(b)], and Securities and Exchange Commission Rule 10b-5 [17 C.F.R. §§ 240.10b-5];

IV.

Enter an Order instanter freezing the assets of Defendants Rocky Mountain, Ehrman and Johnson, and directing that all financial or depository institutions comply with the Court's Order.

V.

Enter an Order instanter freezing the funds and assets of Relief Defendant J. Ehrman, which he received, directly or indirectly, from the activities described in the Commission's Complaint.

VI.

Enter an Order instanter that Defendants Rocky Mountain, Ehrman and Johnson and Relief Defendant J. Ehrman shall file with the Court and serve upon Plaintiff Commission, no later than 72 hours from receipt of this Order, an accounting, under oath, detailing all of their assets and also setting forth all funds or other assets received from their activities detailed in the Commission's Complaint, and from one another.

VII.

Enter an Order instanter that Defendants Rocky Mountain, Ehrman and Johnson and Relief Defendant J. Ehrman be restrained and enjoined from destroying, removing, mutilating, altering, concealing or disposing of, in any manner, any of their books and records or documents relating to the matters set forth in the Complaint, or the books and records and such documents of any entities under their control, until further order of the Court.

VIII.

Enter an Order instanter for the appointment of a receiver pendente lite for Rocky Mountain and Ehrman, for the benefit of investors, to marshal, conserve, protect and hold funds and assets obtained by these defendants and their agents, co-conspirators and others involved in this scheme, wherever such assets may be found until further order of the Court.

IX.

Enter an Order that the parties may commence discovery immediately, and that notice periods be shortened to permit the parties to require production of documents, or the deposition of any party or other person on 72 hours notice.

X.

Enter an Order requiring the Defendants Rocky Mountain, Ehrman and Johnson to disgorge an amount equal to the funds and benefits they obtained illegally as a result of the violations alleged herein, plus prejudgment interest on that amount, and requiring Relief Defendant J. Ehrman to disgorge an amount equal to the funds and benefits he received as a result of his receipt and his sale of Rocky Mountains' securities as described herein.

XI.

Enter an Order imposing civil penalties against Defendants Rocky Mountain, Ehrman and Johnson, pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)], and Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)], for the violations alleged herein.

XII.

Enter an Order barring Defendant Ehrman from acting as an officer or director of any issuer required to file reports pursuant to Sections 12(b), 12(g) or 15(d) of the Exchange Act, pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)], as a result of this defendant's violations, as set forth above.

XIII.

Enter an Order permanently barring Defendants Ehrman and Johnson from participating in an offering of penny stock, pursuant to Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)] and Section 21(d)(6) of the Exchange Act [15 U.S.C. § 78u(d)(6)]

XIV.

Enter an Order for such further relief as this Court may deem just and proper.

For the Commission, by its attorneys:

Dated this _________ day of April, 2003.

Of Counsel:
Timothy S. McCole
Rosemary K. Behan
SECURITIES & EXCHANGE COMMISSION
Fort Worth District Office
801 Cherry Street
Suite 1900
Fort Worth, TX 76102-6819

http://www.sec.gov/litigation/complaints/comp18069.htm