LAS VEGAS (CN) - A director of Can-Cal Resources hid from shareholders and converted for himself $2 billion worth of valuable basalt in the Mojave Desert, shareholders claim in a derivative lawsuit.
"Most shareholders had come to think that the company had no value," Can-Cal CEO Ronald D. Sloan, the lead plaintiff, says in the complaint in Clark County Court.
"Unknown to the shareholders, the directors, officers and controlling persons of Can-Cal discovered that the Pisgah property contains millions of tons of volcanic basalt material that is extremely valuable as fertilizer."
The Pisgah property is a 120-acre parcel about 10 miles southwest of Ludlow, Cal., the Can-Cal company website indicates. A recent independent survey reported the property has about 13.5 million tons of volcanic cinders above the surface. The company website says Can-Cal owns the property outright and needs no permits for mining the valuable basalt. Can-Cal is traded publicly on the OTC Bulletin Board under the symbol CCRE.
Sloan and dozens of co-plaintiffs claim that defendant William J. Hogan hid the value of Can-Cal from investors and the federal government and created two Canadian companies of his own to profit from it. Hogan, formerly a Can-Cal director, persuade other Can-Cal officers to agree to surrender two-thirds of company profits to Hogan's Candeo Lava Products. In return, Candeo would act as Can-Cal's equipment supply company. Another Hogan company, the Futureworth Capital Corp., along with Candeo, became two of Can-Cal's largest creditors, according to the complaint.
"As part of his scheme, Hogan has filed false and misleading reports with the U.S. Securities and Exchange Commission," the complaint states.
It adds: "With the expectation that the material is worth billions of dollars, the defendants schemed and conspired to take the value of the Pisgah property away from Can-Cal for the benefit of William Hogan and his companies."
Defendants include former company officers Thompson MacDonald and Ronald Schinnour, whom Sloan says rubber-stamped decisions made by Hogan.
"They are controlled by William Hogan and have done nothing to protect Can-Cal's interests or the interests of Can-Cal's shareholders. They have looted Can-Cal for the benefit of William Hogan and Michael Hogan. They have wrongfully permitted William Hogan to usurp the Can-Cal's corporate identity and permitted William Hogan and Michael Hogan to become Can-Cal's biggest creditors," the complaint states.
The shareholders are represented by Suvinder S. Ahluwalia with Sklar Williams in Las Vegas. They seek an injunction and damages for fraud and deceit, conversion, civil conspiracy, breach of fiduciary duty, unjust enrichment, and aiding and abetting.