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by Mike Caswell

The U.S. Securities and Exchange Commission has ordered California's Alexander Blyumkin, the former chairman of TSX Venture Exchange listing Petroteq Energy Inc., to pay $2-million for failing to properly disclose millions of dollars in payments. (All figures are in U.S. dollars.) The SEC claims that Mr. Blyumkin withdrew cash from Petroteq for himself and directed money to his relatives. The company also failed to disclose that a $23.8-million property deal Mr. Blyumkin negotiated was with a related party, the SEC says.

The sanction against Mr. Blyumkin, 51, is contained in an administrative order that the SEC handed down on Friday, April 12. The $2-million includes disgorgement of $1.7-million in gains, plus interest. The penalties are in addition to a $450,000 fine and an officer and director ban that the SEC previously imposed. The disgorgement, fine and ban represent a negotiated settlement, in which Mr. Blyumkin has not admitted any wrongdoing.

Friday's order arises from transactions that Petroteq entered in 2019, when the company was touting an oil sands project as well as a proprietary heavy oil extraction process. Among these transactions was the company's acquisition on July 26, 2019, of the rights to oil and gas leases in Utah. According to the SEC, Petroteq did not disclose that the vendor was part of a group of companies linked to Mr. Blyumkin through an associate in Switzerland. While Petroteq valued the leases at $23.8-million, the vendor had purchased those same rights two months earlier for a promise to pay $275,000 and to issue an option to acquire 20 million Petroteq shares, the SEC said.

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