Law enforcement officials in Virginia and Pennsylvania have taken legal steps against two firms suspected of improperly wooing investors with promises of high profits from the booming East Coast coal industry.

The Virginia State Corporation Commission yesterday ordered the North American Coal Exchange Inc. of 2304 Wilson Blvd., Arlington, to halt temporarily phone bank activities aimed at potentially unwary customers.

The SCC charged that North American and Capital First Financial Corp., a selling agent with offices in Fredericksburg, violated state laws requiring that agents and their sales be registered with the commission.

The head of North American, Lawrence Morris, was charged in a 28-count indictment made public Monday in Pittsburgh with defrauding investors nationwide of more than $1.5 million through a related coal brokerage, American Coal Exchange.

Prosecutors there accused Morris of running little more than a room full of telephone solicitors who persuaded potential investors to buy contracts for the future delivery of coal.

William Allsbrook of the Virginia Bureau of Criminal Investigations said yesterday that postal authorities armed with a search warrant seized records of the Arlington-based phone bank within the last three months. Shortly after that, the operation resurfaced in Fredericksburg, Allsbrook said.

Allegedly bogus brokerage firms, citing increased foreign demand for coal to investors, have sprouted throughout the Appalachian region in the last 18 months, several law enforcement officials said.

A seven-state federal and local task force code-named Leviticus, which includes Virginia officials, has tracked several such operations suspected of involvement in coal field corruption. Allsbrook, a task force member, said yesterday that North American is among the brokerages under investigation by Leviticus.

Kentucky Attorney General Steve Beshear, another task force member, said yesterday that state officials there have cited 16 corporations and about 30 individuals in the past four months for coal securities violations following a six-month Leviticus probe.

"It's a boiler room operation, and they sell like hot cakes," Beshear said of the alleged selling schemes.

He said coal futures deals in Kentucky typically involved losses of between $10,000 and $20,000 by individual investors who were solicited by telephone.

"You might buy a coal contract for $65 a ton, hoping it will be worth $75 or $80 a ton a year from now," Beshear said. "You probably wouldn't know it's available now on the Kentucky spot market for $30 a ton. You won't find many (knowledgeable) people in the Kentucky coal fields who'd take that deal."