U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19469 / November 17, 2005

SECURITIES AND EXCHANGE COMMISSION v. SAVE THE WORLD AIR, INC., JEFFREY ALAN MULLER, AND BILLY BLACKWELDER, Civil Action No. 01 Civ. 11586 (GBD) (FM) (S.D.N.Y.)

COURT ORDERS $7.5 MILLION IN DISGORGEMENT, $100,000 IN CIVIL PENALTIES, A TWENTY-YEAR OFFICER AND DIRECTOR BAR AND A PERMANENT INJUNCTION AGAINST JEFFREY ALAN MULLER, FORMER PRESIDENT AND CEO OF SAVE THE WORLD AIR, INC.

The Securities and Exchange Commission announced today that on November 15, 2005, the U.S. District Court for the Southern District of New York, in a decision by Magistrate Judge Frank Maas, granted the Commission's motion for summary judgment in its case against Jeffrey Alan Muller, ordering Muller to pay $7.5 million in disgorgement and $100,000 in civil penalties, barring Muller from serving as an officer of a public company for a period of twenty years, and enjoining Muller from future securities law violations. The Commission's Complaint, filed in the case on December 19, 2001, alleged that Save the World Air, Inc. ("STWA"), Muller, and Billy Blackwelder ("Blackwelder"), the company's marketing consultant, engaged in a fraudulent scheme to manipulate the market for stock in STWA, a public company controlled by Muller. Muller, who is an Australian citizen and resident, served as the president and CEO of STWA during the relevant time period.

The Court found that, beginning in February 1999, Muller carried out a fraudulent worldwide promotional campaign to disseminate false and materially misleading information about STWA's product, the "Zero Emission Fuel Saver Device" ("ZEFS Device"), a device Muller claimed would reduce toxic exhaust emissions and improve fuel economy in motor vehicles. Among other things, the Court found that Muller made materially false claims about the testing, compatibility, and marketing of the ZEFS Device. At the same time, Muller privately sold millions of shares of restricted STWA stock at substantial profits to himself. The Court further found that Muller misrepresented a purported licensing deal and caused STWA to falsely record and report revenues of $125,000 in connection with that deal. Also, Muller failed to report his sales of company stock in required filings with the Commission.

The Court held that Muller violated the antifraud and reporting provisions of the federal securities laws and ordered him permanently enjoined from future violations, barred for twenty years from serving as a director or officer of a public company, and liable for $7.5 million in illicit gains (plus prejudgment interest) and $100,000 in civil penalties. The Court also ordered the disgorgement of any STWA stock currently owned by Muller and directed STWA to cancel any issued and outstanding shares of STWA stock currently owned by Muller.

Previously, on June 27, 2002, the Court entered a final judgment against STWA, which consented to a permanent injunction against violating the antifraud and reporting provisions of the securities laws. On November 25, 2003, the Court entered a final judgment against Blackwelder, who consented to a permanent injunction from violating the antifraud and antitouting provisions of the securities laws and was ordered to disgorge his illicit profits.

In a related proceeding, on December 19, 2001, the SEC issued a cease-and-desist order on consent against former STWA promoter Dennis Wilson. Wilson, whom the Commission found to have made Internet postings touting STWA without making required disclosures concerning his compensation for such activity, agreed, without admitting or denying the Commission's findings, to cease and desist from committing violations of the antitouting provisions of the securities laws.

http://www.sec.gov/litigation/litreleases/lr19469.htm