Southern Cross Resources Group, Inc., et al.

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23436 / December 22, 2015

Securities and Exchange Commission v. Southern Cross Resources Group, Inc., et al., Civil Action No. 15-cv-11506 (N.D. Ill.)

SEC Charges Illinois Energy Trading Company and Its Senior Officers with Fraud

On December 22, 2015, the Securities and Exchange Commission charged Vernon Hills, Illinois-based Southern Cross Resources Group, Inc., an asset-based trading company, and its CEO Michael A. Nasatir and President Andrew L. Madenberg, both Illinois residents, with orchestrating a $5 million offering fraud involving nearly 100 investors located in 12 states that lasted over two years.

According to the SEC's complaint, filed in federal court in Illinois:

• In April 2012, Southern Cross began to seek investors through offering documents that both Nasatir and Madenberg helped prepare.
   
• The offering documents falsely stated that Nasatir and Madenberg had placed between $26 million and $310 million of assets into the company, including nickel wire inventory and coal mining assets.
   
• The offering documents also referred to substantial coal reserves for which Southern Cross did not have rights or ownership interests.
   
• The offering documents also falsely represented that Nasatir and Madenberg had invested millions of dollars of their own money and assets into the company and owned a majority of the company's outstanding shares when they never owned more than a minority of Southern Cross' shares.
   
• Southern Cross also falsely informed investors that the company's shares were trading on the London Stock Exchange.

The SEC's complaint charges Southern Cross, Nasatir, and Madenberg with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against each of the defendants. Without admitting or denying the allegations in the SEC's complaint, Southern Cross, Nasatir, and Madenberg each have consented to judgments permanently enjoining them from violating the antifraud and registration provisions of the federal securities laws and ordering them to pay disgorgement, prejudgment interest, and penalties in amounts to be determined by the Court at a later date.

In a separate related action, the Commission instituted a settled administrative proceeding against two Southern Cross promoters, Willard R. St. Germain and Allen M. Perres, both Illinois residents, for acting as unregistered brokers in selling unregistered securities to investors in violation of Sections 5(a) and 5(c) of the Securities Act and Section 15(a) of the Exchange Act.

The SEC's investigation was conducted by Emily A. Rothblatt and Scott J. Hlavacek, and supervised by Anne C. McKinley in the Chicago Regional Office. The SEC's litigation will be led by Robert M. Moye.

SEC Complaint