The SEC has filed fraud charges against Indigenous Global Development Corporation (IGDC), a San Francisco outfit billed as the first public U.S. company majority-owned by Native Americans.

According to the Commission, IGDC and CEO Deni G. Leonard took in more than $2 million from investors using false statements about its entire business, but especially its natural gas interests.

In its suit against IGDC, the SEC is seeking disgorgement of ill-gotten gains, civil money penalties, and injunctive relief against the firm and Leonard. It also wants to bar Leonard from future offerings of penny stock and from serving as an officer or director of a public company.

In addition, the regulator temporarily suspended trading of IGDC securities, on the grounds that it had not filed the required periodic reports since March 31, 2005. The suspension will run until the 26th, unless the Commission’s administrative proceedings lead it to revoke the registration of IGDC's securities.

IGDC not only billed itself as the first-ever U.S. public company owned by Native Americans, but also claimed that its business initiatives would lead to a better future for Native American communities. Despite all its optimism, however, IGDC never earned any revenue, owned no assets of any significance, and couldn’t survive without continued investment. The SEC claims that the firm is now essentially bankrupt.

Among the utterly false claims the firm made were that it had built a power plant, brokered mortgages, built homes, had computer consulting clients, and distributed pharmaceuticals. In addition, the firm never sold any natural gas, except for one sale worth roughly $54,500, for which it was not paid, according to the Commission.

By March 31, 2005, IGDC had yet to earn a nickel of revenue and had accumulated a deficit of more than $14 million. Its independent auditors warned its management in 2003 and 2004 that based on the lack of revenue, working capital, and the high level of debt, there was strong reason to believe the firm would have to shut its doors.

But to keep the charade afloat, IGDC and Leonard sent out press releases and SEC filings full of falsehoods, the SEC charges. In the materials IGDC claimed it could purchase gas from indigenous tribes in Canada at cut rates, and then sell that gas in the United States at a substantial profit, by using Indian treaties to avoid taxes on the transactions.

One example of that sort of chicanery comes from 2004, when IGDC publicly promoted its agreement for a Canadian firm to buy natural gas on its behalf. According to the materials distributed by the firm, its contract allowed IGDC to buy and sell 90 billion cubic feet of natural gas in the next fiscal year.

But the Canadian firm had no gas to sell to IGDC. In 2005, IGDC embellished the terms of other agreements with Canadian indigenous groups.

That was Leonard’s modus operandi, according to the Commission. He would regularly approach established companies or indigenous groups, and talk them into signing letters of intent or memoranda of understanding. Those documents would state an interest in potentially working with or possibly investing money in IGDC. But IGDC and Leonard would then send out press releases, marketing materials, and public filings that falsely portrayed those informal documents as completed contracts and investment deals.

Of course, they never told IGDC investors when the majority of those highly informal agreements were either terminated, expired, or never pursued by IGDC management.

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