Class action lawsuit filed against Magnum d'Or

ERJ staff report (LMH)

Wilmington, Delaware - A class action lawsuit has been filed in the US against tyre landfill company Magnum d'Or of Hudson, Colorado, according to US law firm Rigrodsky & Long PA.

The lawsuit is on behalf of all persons or entities who purchased or acquired the stock of Magnum between 2 July 2008 and 13 April 2010, alleging violations of the Securities Exchange Act of 1934, according to a 29 July 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 tyres 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 company also failed to disclose the existence of a US Securities and Exchange Commission Formal Order of Investigation into the company - a fact Magnum appears to have hidden not only from investors but its own outside auditors, as well, Rigrodsky & Long said.

Moreover, Magnum is alleged to have issued millions of shares of its stock as compensation to several so-called “consultants,” who then sold the shares in foreign brokerage accounts, kept some of the cash proceeds for themselves, and funnelled the rest -- some $7 million -- back to Magnum, under sham “loan” agreements.

In April 2010, when Magnum finally told its auditor, Weinberg & Company PA about the SEC's formal investigation, the auditor withdrew its prior audit opinions for 2008 and 2009. Magnum's stock price plummeted on the news. The SEC formally charged Magnum and its former CEO Joseph Glusic. Glusic has since resigned from Magnum and has settled with the SEC.

This is an external link and should open in a new window. If the window does not appear, please check your pop-up blocking software. ERJ is not responsible for the content of external sites.

Press release from Rigrodsky & Co