The SEC announced the filing of a case yesterday against Steven Misner, the former CEO of now-bankrupt Southwestern Water Exploration Co.  According to the SEC, Misner tried to inflate Southwestern's stock price by creating the false impression that Southwestern owned water of great value. 

The SEC alleges that Misner made false statements in Southwestern's July 16 and November 4, 2002 press releases, claiming that Southwestern owned rights to, and was developing, a large freshwater underground reservoir worth hundreds of millions of dollars.  The SEC alleges that in fact, however, Misner knew or should have known that  Southwestern did not own any rights to the water, that the press releases grossly overstated the value and amount of water in the reservoir, and that Southwestern had made no effort — and did not intend — to develop the reservoir.

Not helping Misner's case one bit is an email he allegedly sent 3 days before the November press release stating:

If this project blows up in our face . . . we, the company, need to ensure that we have taken every step possible to both maximize the return to the company and limit our liability. . . . [R]emember that everyone, including [our large investor] and the majority of our shareholders, think that we have at least 100 million of water for sale which is not the case . . .

UPDATE: In this article on Stockwatch.com, Mr. Misner states that the SEC has gotten its facts wrong.  He also states that the email quoted above is taken out of context.  According to the article,

Mr. Misner says he was referring to inflated figures issued by the company's then president, Tom Lenney. He claims he was trying to release accurate figures, but nobody, including Southwestern's largest shareholder, believed the engineering report.