Oh, You Thought I Meant That GMC!

The bigwigs at General Motors probably didn't notice since they're busy steering the automaker through financial problems, but federal authorities said today that a Florida company "borrowed" its GMC trademark for a penny-stock fraud.

GMC Holding Corp. and its chief executive officer, Richard Brace, defrauded investors by issuing press releases falsely touting the company's motor technology development, the Securities and Exchange Commission alleged in a complaint filed last week in federal district court in Florida.

The company — based in Casselberry, Florida, which is just over 950 miles south of Detroit — raised more than $2 million from investors by claiming that it had developed a device capable of generating unlimited energy, and was engaged in negotiations to sell the technology for hundreds of millions of dollars, according to the legal papers.

Brace apparently never explicitly claimed to be related to the world's biggest automaker, but he did issue press releases in 2005 falsely claiming an independent engineer had tested the unlimited energy device.

A year later, the company issued releases claiming it was negotiating with "S&P corporations" — which it didn't name — to acquire GMC Holding's technology for $300 million to $500 million.

In reality, the one-time test lasted only a few minutes, and was never duplicated. The company never contacted — much less negotiated with — any company to buy the technology, the commission alleged.

But the fake news artificially pumped up the price and trading volume of GMC Holding's shares — shares that the S.E.C. says were illegal unregistered stock offerings.

The commission deregistered the company's stock in 2006. Now it's asking for the company and Brace, also of Casselberry, to forfeit their gains and to pay civil penalties.

by Elizabeth Olson

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