DEBRA A. VALENTINE
General Counsel

CONNIE WAGNER
SARAH L. KNAPP CA BAR # 200694
Federal Trade Commission
Division of Enforcement
600 Pennsylvania Ave., N.W.
Washington, D.C. 20580
(202) 326-3309 voice 326-2558 fax

Attorneys for Plaintiff

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF CALIFORNIA

FEDERAL TRADE COMMISSION, Plaintiff,

v.

SELKET PRECIOUS METALS INC., and PAUL H. BYUS, Defendants.

CIVIL ACTION NO.

COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF

Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), by its undersigned attorneys, allege:

1. The FTC brings this action under Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C.  53(b), to secure a permanent injunction and other equitable relief against defendants for their deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a).

JURISDICTION

2. This Court has subject matter jurisdiction over this matter pursuant to 15 U.S.C. 45(a), 52, and 53(b) and 28 U.S.C. 1331, 1337(a) and 1345.

VENUE

3. Venue in this district is proper under 15 U.S.C.  53(b) and 28 U.S.C.  1391(b) and (c).

THE PARTIES

4. Plaintiff, the FTC, is an independent agency of the United States government created by statute, 15 U.S.C. 41-58. The FTC enforces Section 5(a)of the FTC Act, 15 U.S.C.  45(a), that prohibits, among other things, deceptive acts or practices, in or affecting commerce. The FTC may initiate federal district court proceedings to enjoin violations of the FTC Act and to secure such equitable relief as is appropriate in each case. 15 U.S.C.  53(b).

5. Defendant Selket Precious Metals, Inc. ("Selket"), is a Nevada corporation. Its principal place of business is 322 S. Sunland, Ridgecrest, CA 93555. Its registered office in Nevada is located at 1350 East Flamingo Rd., #405, Las Vegas, NV 89119. Selket purportedly is engaged in the development, mining and sale of precious metals from the Herculean Mine located in Baker, Oregon. Selket transacts business in the Eastern District of California.

6. Defendant Paul H. Byus is president of Selket Precious Metals and has an ownership interest in the company. Individually, or in concert with others, he directs, controls, formulates, or participates in the acts and practices of Selket, including the acts and practices complained of below. He transacts or has transacted business in the Eastern District of California.

COMMERCE

7. At all times material to this complaint, defendants' course of business, including the acts and practices alleged herein, has been and is in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. 44.

DEFENDANTS' COURSE OF CONDUCT

8. Since at least January of 1995, and continuing thereafter, defendants have maintained a substantial course of trade in the offer and sale of unregistered stock in Selket Precious Metals, Inc., a precious metals mining company. Defendants represent that they are seeking to raise $1,375,000, purportedly to finance equipment necessary to bring the Herculean Mine into commercial operation. Defendants require a $10,000 minimum stock purchase per consumer.

9. Defendants market their investments to consumers across the country, making initial contact over the Internet, via a web page that provides an email address and telephone number to consumers. Consumers who contact defendants by telephone and/or email are provided with written promotional materials. Defendants also promote investments in Selket with telephone sales pitches.

10. Defendants tout investments in Selket by claiming that an investment offers low risk and high returns in a short time. Defendants base this claim, in part, on the anticipated increase in demand for tangible assets resulting from fears about Year 2000 computer problems. Illustrative of the defendants' claims about the profitability and low risk of an investment in their mining ventures are the following written and oral claims:

(a) "Gold and Silver is being bought in record amounts. The reason is the worrisome subject of the 'Y2K computer bug.' It matters little whether it is going to be catastrophic or comparatively mild, the price of gold and silver is going to climb at an exponential rate as we approach the year 2000 because of peoples(sic) fear of a calamity!"

(b) "We have made a conservative evaluation of the precious metals content of the ore reserves available to us and have determined that the total amount to be gained, before taxes, is $200,000,000. This is the amount on which our company stock evaluation is made."

(c) "The gold is there and processing equipment is available and it would take me about two months to start pouring out gold. . . and you can't beat that."

(d) "Our production schedule should yield . . . about 334 Troy ounces of gold. At $300 per ounce this is about $100,000 per week or $400,000 per month. Part of this will be expenses but the NET should be quite impressive."

11. In addition, since at least February of 1999, and continuing thereafter, defendants have offered for sale "gold certificates" redeemable for gold obtained from the Herculean Mine. Defendants market these gold certificates to consumers across the country over the Internet, via a web site, and through written promotional materials and telephone sales presentations.

12. Defendants promote the sale of gold certificates to consumers by capitalizing on fears about impending disaster and financial collapse that the Y2K computer bug will allegedly cause on January 1, 2000. Defendants represent to consumers that an investment in gold certificates will be safe notwithstanding the Y2K breakdown. Illustrative of defendants' claims about the safety of this investment in gold certificates are the following written representations:

(a) "Read the enclosed file concerning the millennium bug. The only defense you have is to have something that is spendable like gold, silver, gold certificates, tradeable merchandise or human labor."

(b) "WARNING. There will be a tremendous rise in armed robbery, looting, food raids and many other types of 'survival crimes'. When people get hungry, ethics, morality and good-sportsmanship go out the window."

(c) "These certificates are just like money . . . they cannot be stolen or confiscated as gold could be. If this happens we will cancel the ones which were stolen or confiscated and they become worthless."

(d) "They can be redeemed for real gold at your discretion. These certificates are in effect REAL MONEY."

13. Defendants promote the sale of gold certificates to consumers by promising a 100 percent return on their investment. Illustrative of defendants claims about the profitability of this investment in gold certificates is the following written statement:

(a) "NOW FOR THE GOOD PART! . . .We will give as a bonus an amount of gold equal to the amount of your original purchase!! That is a 100 percent gain! That is exactly what every broker and venture capitalist that I approached wanted! I would much rather give it to you, my friends and customers than I would to them!

14. Defendants, individually or in concert with others, have used the above representations, or others like those described above, to induce consumers to invest in their mining venture by purchasing stock or "gold certificates."

DEFENDANTS' VIOLATIONS OF THE FTC ACT

15. Defendants represent, expressly or by implication, that an investment in Selket or its gold certificates, is likely to yield a substantial short term return with minimal risk. In fact, an investment in Selket or its gold certificates is not likely to yield a substantial short term return with minimal risk.

16. Defendants represent, expressly or by implication, that the Herculean mine will be fully operational within a few months. In fact, the Herculean mine will not be fully operational within a few months.

17. Defendants represent, expressly or by implication, that the Herculean Mine is likely to profitably produce at least 300 troy ounces of gold per week. In fact, the Herculean Mine is unlikely to profitably produce at least 300 troy ounces of gold per week.

18. Therefore, defendants' representations as set forth in Paragraphs 14 through 16 above, are false and misleading, and constitute deceptive acts or practices in violation of the FTC Act, 15 U.S.C.  45(a).

CONSUMER INJURY

19. Defendants' violations of Section 5(a) of the FTC Act have, in fact, injured and will continue to injure consumers. Because of defendants' misrepresentations about their mining ventures, consumers have made and will continue to make investments that are likely to lose money and cause substantial financial injury absent injunctive relief.

THIS COURT'S POWER TO GRANT RELIEF

20. Section 13(b) of the FTC Act empowers this Court to issue injunctive and other relief against violations of the FTC Act and, in the exercise of its equitable jurisdiction, to award redress to remedy the injury to consumers, to order disgorgement of monies resulting from defendants' unlawful acts or practices, and to order other ancillary equitable relief.

PRAYER FOR RELIEF

WHEREFORE, plaintiff requests that this Court:

(1) Award plaintiff all temporary and preliminary injunctive and ancillary relief that may be necessary to avert the likelihood of consumer injury during the pendency of this action, and to preserve the possibility of effective final relief, including, but not limited to, temporary and preliminary injunctions, appointment of a receiver, and an order freezing each defendant's assets;

(2) Enjoin defendants permanently from violating Section 5(a) of the FTC Act, including such violations that occur in connection with the offer and sale of investments in mining ventures;

(3) Award plaintiff such relief as the Court finds necessary to redress injury to investors resulting from defendants' violations of Section 5(a) of the FTC Act, including, but not limited to, the rescission of contracts or refund of money, and the disgorgement of unlawfully obtained monies; and

(4) Award plaintiff the cost of bringing this action as well as such additional equitable relief as the Court may determine to be just and proper.

Respectfully submitted,

Debra A. Valentine
General Counsel

CONNIE WAGNER
SARAH KNAPP CA BAR # 200694
Federal Trade Commission
600 Pennsylvania Ave., NW
Washington, DC 20580
(202)326-3309
(202)326-2558 (facsimile)
Attorneys for Plaintiff
Federal Trade Commission

Date: ____________