The United States Attorney's Office

FORMER CEO OF ROCKY MOUNTAIN ENERGY PLEADS GUILTY TO MAKING FALSE SEC FILING

HOUSTON - The former CEO of Rocky Mountain Energy Corporation has pleaded guilty to making a false filing with the Securities and Exchange Commission (SEC) in which he misrepresented the amount of outstanding shares in the company, United States Attorney Don DeGabrielle announced today.

At a hearing on Oct. 14, 2008, before United States District Judge Lee Rosenthal, John N. Ehrman, 53, of The Woodlands, Texas, pleaded guilty to the false filing charge which was alleged as part of a 13-count indictment returned in July 2007. Ehrman’s conviction carries a maximum punishment of 20 years in prison and a fine of up to $5 million. Judge Rosenthal set Ehrman’s sentencing for Jan. 29, 2009. Ehrman will remain free on bond pending his sentencing.

During spring 2002, Ehrman was engaged in negotiations to purchase several oil and gas leases from BC&D Oil and Gas Corporation. Ehrman planned to use newly-issued Rocky Mountain shares as part of the collateral for a loan from Marathon USA Inc. to purchase the leases. The deal was scheduled to close on June 28, 2002. On June 27, 2002, Ehrman caused Rocky Mountain to file a petition in Utah state court seeking a ruling on whether the exchange of approximately 10 million newly-issued Rocky Mountain shares for the BC&D leases was fair. Attached to this petition were statements from three purported shareholders of BC&D attesting to the fairness of the transaction. Based on these submissions, the Utah court issued an order finding that Rocky Mountain’s plan to issue and exchange shares was fair. On July 8, 2002, Ehrman caused Rocky Mountain to issue 10,025,000 new shares. However, the deal to exchange the shares for BC&D assets was never consummated, because the loan fell through. 

On Jan. 2, 2003, Ehrman caused Rocky Mountain to file a form 8-K with the SEC which disclosed that the deal with BC&D was never completed, but also falsely claimed that only five million  shares had been issued in connection with the attempted transaction, when in fact 10,025,000 shares had been issued.

This investigation was conducted by the Houston office of the FBI and the SEC Regional Office in Ft. Worth, Texas. The case is being prosecuted by Assistant U.S. Attorneys Stephen Corso and Gregg Costa.

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