part two/ UNITED STATES DISTRICT COURT/ Case 1:10-cv-23513-XXXX Document 1 Entered on FLSD Docket 09/30/2010 Page 1 of 16 SOUTHERN DISTRICT OF FLORIDA CASE NO. SECURITIES AND EXCHANGE COMMISSION, ) ) Plaintiff, ) v. ) ) QURI RESOURCES, INC. and ) JAIME SANTIAGO GOMEZ, ) ) Defendants. ) )
17. The press releases highlighted a report by an independent geologist stating the Wellington Project had a "probable reserve of 1,225,000 ounces of Gold" with a reserve value of slightly more than $1 billion. 18. These press releases were false and misleading. First, the geologist who drafted the report informed Gomez at the time he provided the report to him that the report was only a fIrst draft and that it would not be correct to represent the Wellington reserves were worth more than $1 billion without further, detailed exploration. 19. Moreover, as Gomez knew, Quri was nowhere near ready to conduct a drilling program at the Wellington Project because it was only in the initial stages of exploration. Quri needed at least $3 million to develop Wellington and, at the time, Quri had no funds or liquid assets, was heavily indebted, and had no reasonable expectation of receiving any funding because it had no sales or other revenues.· 2. The Emerald Isle Copper Mines Press Releases 20. On February 20, 2009, Quri issued a press release regarding its purported imminent acquisition of the Emerald Isle Copper Mines, located in Kingman, Arizona. The press release falsely represented Quri had signed a letter of intent with Copper Mesa Corp. to acquire the Emerald Isle Copper Mines, and that Quri was scheduled to close the purchase of the mines in less than a month. 21. The press release further represented that an independent appraisal had valued a mining plant on the properties at more than $1.2 million, and that prefeasibility studies gave an open pit mine on the property a life of approximately four years, assuming removal of 5.4 million pounds of copper per year. Quri issued two more press releases on February 23, 2009, repeating many of the same misstatements. Those releases also described Quri as a "U.S.-based 5 Case 1:10-cv-23513-XXXX Document 1 Entered on FLSD Docket 09/30/2010 Page 5 of 16 junior mining company with properties in various stages of exploration in Ecuador and the United States." 22. The claims about the Emerald Isle Copper Mine in theses press releases were false and misleading. First, Gomez did not sign a letter of intent between Quri and the owners of the Emerald Isle Mines until August 2009, months after issuing the three press releases. Moreover, at the time of the press releases, Quri was in no financial position to complete an acquisition or exploit the resources at the Emerald Isle mine. As Gomez knew, Quri had no funds or liquid assets, was heavily indebted, had no sales or other revenues, and had no reasonable expectation of receiving any funding. 3. The Oatman Gold Mines Press Release 23. On March 16,2009, Quri issued a press release stating it had entered into a letter of intent with G&G giving Quri the option to acquire G&G's purported mining projects in the United States and in Ecuador. The press release further stated that Quri planned to acquire "100% interest in the Oatman Gold mines" from G&G, and had informed G&G of its intent to exercise the option within the month. The press release quoted Gomez as saying Quri expected its "transformation to a producing gold company to be complete by mid-year." 24. However, the March 16 press release was false and misleading because Quri had not signed a letter of intent to acquire the Oatman mines from G&G (and never did). In addition, Quri could not have afforded to develop any mines or become a producing gold company by mid-2009. As Gomez knew, Quri had no money, owed several different vendors and creditors more than $300,000 and was unable to raise any funds because of its indebtedness and lack of any sales or revenue. In addition, the March 16 press release was misleading because it failed to disclose that Gomez controlled G&G. 6 Case 1:10-cv-23513-XXXX Document 1 Entered on FLSD Docket 09/30/2010 Page 6 of 16 4. The La Conquista Gold Mines Press Releases 25. In April and June 2009, Quri issued five press releases falsely touting its purported acquisition of the La Conquista gold mines in Ecuador, and the significant revenues Quri expected to receive from the mines. 26. In an April 17, 2009 press release, Quri falsely claimed it had acquired 40 hectares of land within the La Conquista concession. The press release claimed Quri had begun designing a new gold production plant and that once it was designed, the plant would take no more than three months to begin producing gold. 27. Three days later, Quri issued an apparently contradictory press release in which it said it had only entered into a letter of intent with G&G that gave Quri the option of acquiring the Conquista Project. The press release went on to say Quri planned to acquire a 100% interest in the Conquista Gold mines. The press release further stated "t is the intention of the company to begin production within 18 months after acquiring the Project." 28. A press release on June 23, 2009 further contradicted the April 17 release by stating Quri had merely secured the rights to acquire the 40 hectares of land to build the production plant. Two days later, Quri issued another press release announcing positive results from initial explorations ofthe mines, Quri's intent to exercise its option to acquire the mines, its discussions with an investment group to finance the acquisition, and its expectation of closing the acquisition within 30 days. 29. On June 29,2009, Quri announced it had acquired the La Conquista gold mines, it expected to "go into production with La Conquista in the next 3 months" with "a revenue stream of $100,000 per month." The press release further stated that Quri "should be able to increase 7 Case 1:10-cv-23513-XXXX Document 1 Entered on FLSD Docket 09/30/2010 Page 7 of 16 production to 10 kilos of gold per month 6 months after we begin operations, bringing revenues up over $280,000 per month." 30. These claims were false. First, Quri had not acquired the 40 hectares at the time of any of the April or June press releases. Second; as Gomez knew, there was no reasonable basis at the time of the press releases to claim Quri would be. able to develop La Conquista to produce any gold in the forseeable future, if at all, because of the financial problems set forth above. 31. In addition, the statement regarding discussions with an investment group to finance an acquisition was misleading. Gomez had signed an April 2009 "Financial Services Agreement" between Quri and a Swiss investment group, but all the group did in the agreement was to help Quri to list its stock on the Frankfurt Stock Exchange and make a stock offering to raise 1.5 million Euro. Furthermore, a listing and stock offering could not have taken place soon enough to fund Quri's development of the La Conquista project within three months. C. Quri's Misleading Website 32. Quri's website and LinkedIn company profile, which Gomez authored or approved, f~lsely represented, among other things, that: Quri's operations were ongoing, and the company had 28 employees worldwide, a geologist with a PhD on staff, and an impressive mailagement team led by Gomez, purportedly a college graduate. 33. In fact, Quri had no ongoing operations, never had any employees in its U.S. location, and employed at most a handful of low-level employees in Ecuador. Furthermore, it had no independent geologist on staff; and Gomez never graduated from college. 8 Case 1:10-cv-23513-XXXX Document 1 Entered on FLSD Docket 09/30/2010 Page 8 of 16
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