A former Salt Lake man, Larry Groover, has been indicted on federal charges of conspiracy, securities fraud, mail fraud and making false statements in connection with penny stock companies he allegedly controlled.
Groover is accused of having conspired with others to create the impression that G.C. Technologies, a company he controlled, had substantially more assets than it did.He and other, unnamed conspirators are also alleged to have worked to conceal Groover's involvement from the Securities and Exchange Commission because the SEC was already investigating Quantum Financial Services Inc., another Groover company.
According to the indictment, Groover arranged for a person who was essentially his in-house accountant to pretend to be an independent outside auditor and prepare and audit financial statements for G.C. Technologies. The financial statements are required to be filed before a company's stock can be listed for sale by the National Quotation Bureau in its so-called pink sheets for over-the-counter securities.
This supposedly independent auditor of the G.C. Technologies financial statements was actually a senior vice president, chief financial officer, treasurer and director of Groover's other company, Quantum, the indictment alleges.
Groover and the accountant valued certain oil lease interests and equipment of G.C. Technologies at $180,000 without disclosing that shortly before the date of the financial statements, the leases had been bought for $63,150, the indictment says.
And a mining claim that G.C. Technologies had purportedly acquired from yet another Groover company - a relationship not disclosed in the statements - was valued by Groover and the accountant at $1,506,105. But they didn't disclose that the other company had bought the lease interest for only $550,000, and only 30 percent of the lease interest eventually reached G.C. Technologies, the indictment says. In support of the conspiracy, Groover is also accused of helping to prepare fraudulent minutes of meetings that never took place.