MitoPharm Corp. (fka MTPH)

[laurap]

The Securities and Exchange Commission accused Seattle securities lawyer David Otto, three other individuals and two companies with conducting a fraudulent "pump-and-dump" scheme in which they secretly unloaded more than $1 million in penny stock of a company touting a nonexistent anti-aging product.

The civil complaint says the defendants violated antifraud and other provisions of federal securities laws. The SEC is seeking disgorgement and financial penalties.

The agency said misleading press releases and Web profiles touting beverages and nutritional supplements pushed the stock price of Seattle-based MitoPharm Corp. (MTPH) up more than four times to above $2.30 although MitoPharm's products were in the developmental stage. Two key products, "Restorade" and "Stamina Solutions," didn't exist, according to the complaint.

The SEC said Otto sold his shares for more than $1 million while public-relations executive Charles Bingham generated proceeds of $300,000 before massive selling of the stock caused the price to fall to a nickel by November 2007.

"Attorneys are supposed to function as gatekeepers in the securities industry," said Marc J. Fagel, director of the SEC's San Francisco office, referring to Otto.

The SEC's complaint, filed in federal court in Seattle, charges Otto; his associate Todd Van Siclen of Seattle, Bingham and his company, Wall Street PR Inc., along with MitoPharm and its chief executive, Pak Peter Cheung of Vancouver.

Otto's attorney, Jeff Coopersmith, a partner at DLA Piper in Seattle, said Otto committed no intentional violation of securities law.

"This is not the first time the SEC has made a mistake," he added.

Bingham's attorney, Ronald Kaufman, said his client is as much a victim of the scheme as any other shareholder. Bingham received MitoPharm stock as part of his payment for public relations work and relied on Otto's statement that the stock qualified for an exemption from registration.

Bingham said his firm lost money on the work it did for MitoPharm, adding he had no way of knowing the products, which were being manufactured in China, weren't as described.

The other defendants could not be reached for comment.

-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; [e-mail]
http://online.wsj.com/article/BT-CO-20090713-712395.html