WASHINGTON—The former president and CEO of a Florida tire pyrolysis company lied about the firm's prospects to boost stock prices and attract investors, the Securities and Exchange Commission has charged. The SEC filed a civil action against Charles D. Ledford, formerly of ECO2 Inc., in the U.S. District Court for the Northern District of Florida Feb. 12.
According to the agency's complaint, Mr. Ledford violated the antifraud statutes of federal securities laws by issuing ``false and misleading press releases'' about ECO2 between March 1995 and early 1997.
Among other things, the SEC alleges, Mr. Ledford:
Issued a press release in March 1995 saying the South Korean Environmental Protection Agency was studying a proposal to build a pyrolysis plant using the patented ECO2 technology, when in fact no discussions had ever taken place with the South Korean agency;
Sent out another release a few weeks later, falsely stating ECO2 was in serious discussions with U.S. Sugar Corp. and the Dade County (Fla.) Department of Solid Waste concerning pyrolysis facilities;
Issued releases over the next 1.5 years, fraudulently claiming to have contracts or discussions for pyrolysis plants with the Moscow Ministry of Finance, Walt Disney World and the Arizona Department of Solid Waste Management; and
Misrepresented the projected sales and earnings of his ``seriously undercapitalized'' jet ski sales subsidiary, ECO Jet.
``No tire recovery systems were ever sold by ECO2, which realized only limited income from the sale of scrap rubber and tipping fees,'' the complaint said.
The SEC seeks a permanent injunction against Mr. Ledford, unspecified civil fines and penalties and ``such other and further relief as may be necessary and appropriate.''
Pyrolysis—the breaking down of tires through high heat into their constituent oil, steel and carbon black—is a controversial process in the tire recycling community, and to date has never been commercialized successfully.
Mr. Ledford put up financial assurances late in 1992 to establish a pilot pyrolysis facility in Hawthorne, Fla., where ECO2 was headquartered.
He built the plant the next year. Later he branched into other ventures—jet ski sales, faucets, low-budget movies—to keep the company afloat while investors waited for the pyrolysis business to get going.
Finally, fed up with the lack of progress, the shareholders dumped Mr. Ledford in February 1997, leaving him with the firm's tire assets.
The non-tire assets were sold to Casinos International Inc., a Florida gambling organization.
In the firm's glory days, stock prices rose from 32 3/16 to 315 5/8, according to news reports.
ECO2 shares now trade only sporadically, and in February fetched only about 1/100 of a cent, the reports said.
Russ Weigel, the SEC attorney in Miami in charge of the Ledford case, said no court dates had been set.
Mr. Ledford could not be reached for comment.