Thursday, December 16, 2010

The SEC Accuses AEHI of Fraud

payettesite A year or so ago, I wrote:

It may just be that AEHI is trying everything it can to find and develop a market and interest enough venture capital to help it stay afloat until it makes a sale – either in Idaho or China. Certainly not unusual (if a bit unusually far flung), often not successful, but that’s how it works. All one can really do from the outside is speculate. Let’s keep half an eye on AEHI and see how it goes.

Well, both eyes open beats half an eye:

The SEC [Securities and Exchange Commission] alleges that Alternate Energy Holdings Inc. (AEHI) has raised millions of dollars from investors in Idaho and throughout the U.S. and Asia while fraudulently manipulating its stock price through misleading public statements that conceal the secret profits reaped by its CEO Donald L. Gillispie and Senior Vice President Jennifer Ransom.

It gets worse:

The SEC’s complaint charges AEHI, Gillispie, and Ransom with violations of the anti-fraud provisions of the federal securities laws, and names as relief defendants two companies controlled by Gillispie and Ransom (Executive Energy Consulting LLC and Bosco Financial LLC).

As usual in cases like this – that is, that involve alleged misuse of funds -there are alarming details:

Gillispie enriched himself using the proceeds of these nominee sales. Ransom transferred at least $200,000 of the $675,326.14 in proceeds from her sales of AEHI stock to Gillispie. Ransom wrote a check to Bosco (her limited liability company) for the majority of the $200,000, but the check was deposited in Gillispie's Energy Executive bank account, which Gillispie uses for personal expenses, such as jewelry, cruises, and his Maserati sports car. Thus, Gillispie's statement that he never sold AEHI shares was false in light of his use of Ransom and Webb as his nominees for stock sales.

Now, being accused of something and being guilty of it are two different things and the SEC hasn’t yet proven anything. However, if nothing else, this episode reinforces that it’s always wise, regardless of the business, to research any company one wants to invest money in.

The Idaho Statesman has more here.

AEHI’s proposed site in Payette County, Idaho.


gunter said...

Is there a difference between being bamboozled by a "penny stock" company and corporate lobbists scamming the federal taxpayer through bogus federal loan guarantees?

Anonymous said...

Gunter, where in the world did you read anything about federal loan guarantees in this article? Are you trying to extrapolate this alleged (note that in the US they are innocent until proven guilty, no matter how much evidence is against them) fraud to the federal loan guarantee that has been issued? If so, please explain how this you can bridge the gap between the two, because I don't see it.

D Kosloff said...

Yes Gunter, there is a difference. The difference is, as it often is, between the real world and your imagination.

Anonymous said...

Is there a difference between an anti-nuclear campaigner's arguments and deceptive cheap-shot rhetoric?

Rod Adams said...

It is still too early to declare that Gillispie, Ransom and all of the other people associated with AEHI are simply crooks with no real business plan worthy of investing some risk capital.

As an AEHI stockholder, I am most troubled by the fact that several press releases issued by the company have loudly proclaimed that none of the company officers had sold any of their stock. That is apparently not true and leads to many other legitimate questions.

On the other hand, there should also be no doubt in anyone's mind that AEHI has had some powerful and well organized opponents who have been working hard to engineer a fall from grace. The Snake River Alliance is not the only group that did not want them to succeed. AEHI has also attracted some of those bottom dwellers called "naked shorts" that engage in the very lucrative practice of selling stock they do not own in a speculative enterprise. They can make a killing if the stock price tanks, allowing them to cover their sales with much cheaper shares bought after the fact. One of the really scary things about "naked shorts" is that they can actually sell more stock than the company has issued - creating an oversupply and a price drop out of thin air.

I have no idea how this saga is going to end up. The SEC action to "protect" me has already caused the value of my shares to fall from 58 cents on the day they announced their action to about 8 cents on the day they allowed trading to occur again. Somehow that does not feel very protective.

Just imagine how Apple shareholders would have felt if the SEC response to an allegation that Jobs backdated options to create a several hundred million payout was to halt trading in Apple for several weeks.