Britain’s financial regulator told a
judge that Sinaloa Gold Plc, a Utah-based miner with operations
in Mexico, may have engaged in fraud when it sold shares to U.K.
investors.

Sinaloa has “all the hallmarks of a boiler-room fraud,” a
lawyer for the Financial Services Authority said at the High
Court in London today, referring to schemes that employ high-
pressure sales tactics and cold-calling prospective investors.

Evidence of Sinaloa’s assets “raises more questions than
it answers,” the watchdog’s lawyer, Nicholas Vineall, said at
the hearing. “It is likely that it is all make-believe — that
these documents aren’t worth the paper they’re written on.”

The regulator seeks to extend a Dec. 17 court order
freezing as much as 890,000 pounds ($1.42 million) of Sinaloa’s
assets. The FSA claims Sinaloa improperly raised the money from
investors and can’t say how most of it was used.

The FSA’s complaint also names one of Sinaloa’s three
directors, Glen Lawrence Hoover, 45, and Frankfurt-based PH
Capital Invest, which was added in October to the agency’s list
of firms that can’t conduct regulated activities in the U.K.

Sinaloa and Hoover’s lawyer, James Dingemans, said the FSA
alleged fraud without providing sufficient facts.

“The pleading of fraud in such a way has infected the
whole legal process against Sinaloa and Mr. Hoover,” Dingemans
said in a Jan. 19 court filing.

“None of the directors of Sinaloa, including Mr. Hoover,
had any idea that unauthorized methods would be used to obtain
funding,” Dingemans said in the filing. Hoover “believes that
there is a good underlying business” at Sinaloa.

The company, which explores for gold in Mexico, was founded
in Layton, Utah, incorporated in London in May 2010 and later
listed in Frankfurt, according to its website.

Lawyers for Barclays Plc, where Sinaloa has an account,
asked the court today for permission to seek damages in the case
arising from costs associated with the freezing order. The bank
isn’t accused of any wrongdoing.

To contact the reporter on this story:
Erik Larson in London at
elarson4@bloomberg.net.

To contact the editor responsible for this story:
Anthony Aarons at aaarons@bloomberg.net.