Jan. 08, 2007                                                         Contact:Lucas Hamilton

STATE AUDITOR’S OFFICE ALLEGES UNREGISTERED SECURITIES AND SECURITIES FRAUD AGAINST ROUNDUP COUPLE


      The Montana State Auditor’s office has filed a Notice of Proposed Agency Disciplinary Action against Roundup residents Gordon and Ann Walters, Havre businessman, Calvin Statelen, Turner businessman, Danny Kegel, and two Nevada corporations, Cascade Exploration, Inc. and Cascade Water Holdings, Inc., alleging the Walters, Statelen and Kegel committed securities fraud when they made material omissions and misrepresentations regarding the two companies and engaged in acts, practices and courses of business that were fraudulent when offering and selling the securities.
      Additionally, the Auditor’s office alleged the Walters, Statelen and Kegel were not registered to sell securities when they offered and sold shares in the Nevada corporations to at least sixty-six investors and that those shares represented unregistered securities. Gordon Walters is separately charged with fraud violations relating to his offering and selling securities that appear to be backed by the federal Small Business Administration.
      “Fraud is a serious matter and deceptive business people need to know that Montana has zero tolerance for fraudulent dealings,” said Morrison. “Before making any investment, Montanans are urged to check with the State Auditor’s Office to confirm that the investment does not violate Montana law.”
      The allegations indicate Cascade Exploration and Cascade Water Holdings’ securities were never registered with the Montana Securities Department, were never listed on any stock exchange and that investors received little or no information about the companies before they invested. Cascade Exploration claims to be a mineral exploration company and Cascade Water Holdings produces energized water for consumption.
      The Auditor’s office’s allegations indicate investors were provided false information about the company’s consultants, including fabricated resumes, investors were provided “surety bonds”, bonds which could only be issued and guaranteed by the U.S. Small Business Administration and investors were not told the securities were not properly registered, as required by law. The companies claim to have only raised $308,745 from investors, however, the Auditor’s office’s allegations indicates this figure is substantially understated.
      The Walters, Statelen and Kegel could be required to pay restitution, including 10% interest to each of the investors, as well as a fine of $5,000 for each alleged violation of the Montana Securities Act.
      Montanans who may have been solicited by or may have invested in Cascade Exploration, Inc. or Cascade Water Holdings, Inc. are asked to immediately notify the State Auditor’s Office by calling toll-free at 1-800-332-6148 or in Helena at 444-2040.