WILMINGTON, Del. (Aug 1, 2011)—A class action lawsuit has been filed in the U.S. against tire landfill company Magnum d'Or of Hudson, Colorado, according to U.S. law firm Rigrodsky & Long PA.
The lawsuit is on behalf of all persons or entities who purchased or acquired the stock of Magnum between July 2, 2008, and April 13, 2010, alleging violations of the Securities Exchange Act of 1934, according to a July 29 statement from Rigrodsky & Long.
The complaint names Magnum and one of the company's directors as defendants. According to Magnum's website, Rigrodsky & Long said in the statement, the company was established to deal with the problem of waste tires in a manner that is environmentally friendly and profitable. It aims to create a closed loop with rubber compounds enabling it to be used as a raw material repeatedly without compromising the quantity or properties of the compounds.
The lawsuit alleges that during the period stated, Magnum made false statements to the marketplace about its growth and operations. Specifically, the company falsely told investors, among other things, that it had $130 million in contracts for its products, and had secured $15 million in financing.
The lawsuit also claims the company failed to disclose the existence of a U.S. Securities and Exchange Commission Formal Order of Investigation into the company, Rigrodsky & Long said.
Moreover, the lawsuit alleges Magnum to have issued millions of shares of its stock as compensation to several consultants, who then sold the shares in foreign brokerage accounts, kept some of the cash proceeds for themselves, and funneled the rest—some $7 million— back to Magnum, under loan agreements.