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PDFRMCP: The Tiny Syringe Maker Stings Investors Again
by Melissa Davis - 10/21/2010 1:09:18 PM
Less than four years after changing its name in an effort to put its checkered past behind it, Revolutions Medical (OTC:RMCP.OB) is suspected of engaging in the same sort of stock-boosting activities that led regulators to crack down on the company in the first place.
Ever since RMCP filed the paperwork last month to clear the way for massive sales of its stock, the company has been issuing a flurry of press releases containing increasingly upbeat news. RMCP kicked things off with a couple of announcements about its MRI technology in mid-August, which proved effective enough to push the company’s stockfrom 28 cents to 40 cents a share. When RMCP shifted its attention to the company’s new “safety syringes,” however, the stock really started to fly. By Sept. 13 – less than a month after RMCP began churning out its steady stream of good news – the briskly trading stock had soared to an all-time high of $1.74 a share.
Three announcements, issued over a one-week span this month, fueled most of that surge.
The first two celebrated a manufacturing deal, calling for the production of 5 million safety syringes, inked with an obscure firm led by an apparent insider of the company itself. (As noted in more detail below, that firm does not seem to exist.) The third, even more powerful, announcement hinted at a looming syringe order from none other than the federal government.
With RMCP plummeting back below $1 last week, however, some investors clearly wonder – perhaps with good reason -- if those deals will turn out to be real. After all, Internet records show, RMCP announced a similar manufacturing deal for its syringes years ago but has never generated 1 cent of revenue since that time. Moreover, despite its recent announcement, RMCP has apparently yet to land a formal order from the federal government.
“It’s kind of a long process,” Deborah White, strategic communications director for the Naval Health Research Center, told TheStreetSweeper last week. But “it’s my understanding that the contract has not yet been awarded.”
The Post and Courier, a major newspaper based in RMCP’s home state of South Carolina, received a similar responsefrom yet another government official. The newspaper also fielded an odd explanation from RMCP itself when asked about the deal. Interestingly, CEO Ron Wheet claimed that the company had “made a decision to err on the side of caution” when announcing the government contract due to suspected leaks about the powerful news.
If anything, however, that report now looks optimistic at best – and misleading at worst – to critics who suspect that the company is engaging in a familiar pattern of deceit.
During his recent interview with The Post and Courier, Wheet tried to blame RMCP’s rapid stock plunge on abusive short sellers – who’ve “been saying all kinds of crazy stuff” – rather than nervous investors who might be reacting to possible risks. In its own regulatory filings, however, RMCP had already warned that massive dilution – triggering potential sales by short sellers and regular investors alike – could hammer the company’s stock.
Timothy Sykes, a self-made millionaire who specializes in shorting overhyped penny stocks, took heavy aim at RMCP last week in a detailed investigative report on the checkered background of the company and its leaders. By then,TheStreetSweeper had already launched its own exhaustive review of RMCP and uncovered some of the same red flags identified by Sykes – in addition to others worthy of attention – when preparing for this story.
RMCP failed to respond to a list of questions for this article. The company’s stock, which opened at 91 cents on Monday, quickly plunged 25% to 69 cents a share following TheStreetSweeper’s inquiry.
Permanent Stains
Despite its lack of revenue, regulatory filings show, RMCP is actually an older company (particularly by penny-stock standards) that launched operations back in 1996.
According to the U.S. Securities and Exchange Commission, the company – then known as Maxxon – began misleading investors about its operations the very next year. Initially, the SEC claimed, Maxxon falsely stated that the company had already started manufacturing its syringes and fielding orders from interested customers. Shortly afterwards, the SEC said, then-CEO Gifford Mabie pocketed more than $1.5 million by selling the company’s overinflated stock.
A few years later, the SEC said, Maxxon began misleading the public once again. This time, the SEC claimed, Maxxon predicted imminent regulatory approval for its safety syringes even though its application had been placed on hold. All told, another seven years would pass before the U.S. Food and Drug Administration actually cleared the company’s syringes for sale.
Meanwhile, in late 2004, a federal jury found Maxxon and Mabie liable of securities fraud following a two-week trial. Four months later, the Daily Oklahoman reported, a federal judge barred Mabie – still the company’s CEO at that time – from serving as an officer or director of any publicly traded companies for the next five years.
Maxxon finally replaced Mabie with Wheet, already a company director, at that point. A longtime player in the penny-stock world, Wheet worked for at least three tainted investment firms – Cohig & Associates, Fortress Financial and Richmark Capital -- before joining the company.
Back in the 1990s, Internet records show, Cohig employed several brokers who wound up convicted on fraud charges for fleecing investors who purchased penny stocks. The Denver-based brokerage house later changed its name to Global Capital Securities, the Rocky Mountain News reported, but the firm – which once employed more than 250 stockbrokers across the country – ultimately went out of business in 2002 despite efforts to reinvent itself. (Interestingly, as outlined in more detail below, Maxxon would later set out to reinvent itself with help from a name change as well.)
More recently, in early 2006, the SEC filed charges against Fortress Financial for allegedly bilking investors who sank millions of dollars into private-placement deals. Two years later, the SEC followed up by temporarily banishing the firm’s CEO from the investment industry. By then, the National Association of Securities Dealers had already taken aimat Richmark Capital – yet another past employer of Wheet’s -- for allegedly using “fraudulent tactics” to sell risky penny stocks to the public.
Another apparent RMCP insider worked for one of those firms as well. According to a background report prepared by the Financial Industry Regulatory Authority (FINRA), Bryon Scott Key – who appears to be the same “Scott Key”currently handling investor relations for RMCP – spent two years at Richmark Capital before he was later barred from the industry. Key now operates an outfit known as “Stock Watch Alert,” regulatory filings show, which registered to sell 500,000 shares of RMPC stock just weeks before the big rally began.
Piggy Bank
Together with dozens of other investors, a recent prospectus filing shows, RMCP plans to sell up to 9.18 million shares of company stock – potentially increasing its share count by some 25% -- going forward.
RMCP itself could rank as the biggest seller in that group. The company has arranged to sell Auctus, a firm that specializes in funding deals for microcap companies, millions of shares of discounted stock in exchange for up to $10 million in cash.
With less than $300 left in the bank, regulatory filings show, RMCP clearly needed some money.
“As of March 31, 2010, the company did not have – and continues to not have – sufficient cash to pay present obligations as they become due,” RMCP stated in a regulatory filing last month. “Because we do not currently generate any cash from operations and have no credit facilities available, our only means of funding is through the sale of our common stock.”
Before turning to Auctus, records show, RMCP relied on the Wakabayashi Fund – a firm allegedly run by past targets of securities regulators – to help the company land a financing deal last year. According to a recent article by Reuters, Wakabayashi leaders Jeffery and Janette Stone still owe regulators almost half-a-million dollars for a previous pump-and-dump scheme. Although Jeffery Stone has already landed in prison once for securities fraud, Reuters said, he refuses to pay the 2009 judgment levied against him for allegedly engaging in a second penny-stock scam.
“They’ll have to beat it out of me,” Stone told Reuters this spring from his current base in Tokyo. “We did nothing wrong. We took profits – and I would do it again, for crying out loud.”
Since then, RMCP has chosen Auctus as its new financing partner. To date, filings show, RMCP has registered to sell 4 million shares of stock to Auctus under its funding deal with the firm. However, RMCP has previously estimated that it could wind up selling Auctus a total of 33.3 million shares – which would almost double its existing share count – in order to secure the entire $10 million in funds being offered under that deal. (RMCP’s share count, which shrank to 7.273 million following a reverse split less than four years ago, currently stands at 36.1 million.)
Auctus has inked similar financing agreements with more than a dozen other microcap companies over the course of the past 18 months. Still, RMCP stands out from the pack. While RMCP’s stock fetches almost 70 cents a share – even after its huge plunge – most of the companies financed by Auctus trade for less than a nickel a share if they even trade at all.
Due to its higher share price, RMCP could provide Auctus with more room for sizable returns Under a deal struck this spring, regulatory filings show, RMCP agreed to sell Auctus company stock at 97% of the recent closing price recorded for the shares. If Auctus chooses to resale that stock and pocket its built-in gains, RMCP itself has cautioned, ordinary shareholders – already diluted by a huge slug of newly issued shares – could suffer major losses in the process.
“Auctus has a financial incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price,” RMCP admitted in its prospectus filing last month. “If Auctus sells the shares, the price of our common stock could decrease.
“Moreover, the perceived risk of dilution and the resulting downward pressure on our stock price could encourage investors to engage in short sales,” RMCP continued. “By increasing the number of shares offered for sale, material amounts of short selling could further contribute to progressive price declines in our common stock.”
Notably, RMCP indicated that potential dilution – making more shares available to borrow – could fuel short sales of the company’s stock. Since then, however, RMCP has blamed more sinister forces (such as “crazy” rumors) for any spike in the stock’s short interest. Moreover, the company has essentially reversed course by suggesting that short sellers could actually help its stock price instead.
“The short position has grown substantially and has been a significant part of the volume on the way up,” Wheet stated when touting the company in an interview with the Wall Street Reporter earlier this month. “Now, these shorters have become more and more desperate – bringing up all kinds of negative rumors and the like – so, from a technical standpoint, the stock could see a significant short squeeze.”
RMCP announced its questionable government contract – triggering a buying frenzy in the company’s stock – the very next day.
Dress Rehearsal
RMCP has publicized other impressive deals, which never went anywhere, in the past. In November of 2003, RMCP said that it had hired an outfit called Globe Tech Medical to manufacture millions of its safety syringes. One year later, RMCP followed up by announcing that Globe had landed purchase orders – for a total of 6 million syringes – from four unnamed foreign companies.
Shortly after that, the SEC successfully convinced a federal jury that RMCP and its CEO had engaged in securities fraud by misleading investors about its business operations in the past. The company, then known as Maxxon, decided to reinvent itself as RMCP the very next year.
“For the past several years, under prior management, we were involved in various litigation-related matters, all of which have been concluded in a manner satisfactory to the company,” RMCP stated in a regulatory filing in late 2006. “Nevertheless, our board of directors believes that it would be preferable for the company to disassociate itself from these events and to mark the beginning of a new management era by changing our corporate name.”
RMCP resurfaced under its current name in early 2007 and began pursuing a new business strategy. This time, RMCPannounced a manufacturing deal with a firm led by Richard Theriault – later described as the company’s own chief technology officer – following a “long, careful review.” RMCP never generated any sales from the previous deals it touted and, shortly after hiring Theriault’s firm (the vaguely named Strategic Product Development), filed a lawsuitagainst Globe in an effort to sever ties with its previous manufacturer.
Meanwhile, RMCP purchased a company known as Clear Image – where its own executives served as boardroom directors – with ambitious plans to branch out into the lucrative MRI business. Back in 1999, filings show, Clear Image had secured exclusive rights to a color MRI technology from the University of South Florida Research Foundation (USFRF). By 2002, however, USFRF had decided to terminate the agreement because Clear Image had allegedly not used its “best efforts” to pursue the opportunity.
RMCP bought Clear Image five years later, anyway, and continues to tout opportunities in the MRI arena.
“Although the current stage of the company’s technology uses color MRI technology, the company believes that it is sufficiently separate from the technology licensed to it by USFRF to permit it to proceed regardless of the status of the license from USFRF,” the company stated in a regulatory filing earlier this year. “The company believes that its color MRI technology does not rely on the license; however, the legal implications are uncertain.”
Meanwhile, RMCP began chasing a new opportunity in the imaging business. Last year, RMCP obtained the exclusive rights to a breast biopsy localization system – which it secured from Theriault’s firm – and began touting the technology as a major scientific breakthrough. Specifically, RMCP predicted that its new technology could be deployed “in the vast majority of more than 50,000 mammography machines that are currently in use worldwide.”
This month, RMCP turned to Theriault – now operating another vaguely named firm called Medical Investment Group – once again. On Sept. 7, RMCP announced that it had inked a binding five-year agreement with Theriault-led MIG to manufacture 5 million of the company’s safety syringes a month. When doing so, RMCP described MIG as a “Massachusetts limited liability company” with an established presence in the medical device industry.
According to corporate records compiled by the Massachusetts secretary of state, however, no LLC under that name even exists. An LLC carrying that name does show up in RMCP’s home state of South Carolina, but that firm operated as a different company – known as Big Slick Enterprises – until early last year.
Nevertheless, RMCP claims that the mysterious firm will be equipped to ship out millions of its syringes within the next six months. Moreover, the company has suggested that it will satisfy much larger orders for its syringes on down the road.
“Our RevVac syringe is the best safety syringe in the world and will eventually be the replacement of the standard high-quality syringe, in my humble opinion,” Wheet stated in his recent interview with the Wall Street Reporter. “We should be shipping – before the end of the first quarter – our first 5 million syringes, and we are very excited about the demand so far.”
In a regulatory filing issued less than a month before that interview, however, RMCP offered a far more cautious view. Specifically, RMCP stated that “it could be several more years before the company can expect to have sales.”
Royal Treatment
RMCP has treated its insiders well despite the company’s ongoing lack of success.
Several years ago, for example, RMCP awarded Wheet 1 million shares of preferred stock that left him in control of 98.8% of the shareholder votes for the entire company. Wheet owns 4.31 million shares of RMCP’s common stock as well – or 12% of the shares outstanding -- and holds options, with a strike price of just 8 cents, to purchase millions more.
Meanwhile, since 2005, RMCP has raised Wheet’s salary from $150,000 to $225,000 a year despite the company’s lack of sales and limited cash supply. The company also pays $4,500 a month to lease an office from Osprey South, a firmcontrolled by Wheet, although it does not disclose the arrangement among its related-party deals.
RMCP has rewarded its president, Thomas O’Brien, with a generous compensation package as well. Back in 2003,regulatory filings show, O’Brien served as the CEO of a company called Medical Online. That same year, the SECcracked down on an outfit known as Pre-IPO Financial Group for allegedly obtaining stock in Medical Online and selling it at higher prices to its own clients. The SEC barred Pre-IPO’s leader, Charles Bayne (also known as Charles Taylor), from future association with any brokers or dealers as a result of his alleged misconduct.
O’Brien later joined forces with Wheet at Clear Image, regulatory filings show, before selling the firm to RMCP and becoming president of the surviving company. Last year, RMCP awarded O’Brien 500,000 shares of preferred stock – allowing him to join Wheet in controlling shareholder votes for the company – and promised him a generous six-figure salary for his services. The company granted O’Brien 2 million stock options, carrying a strike price of 8 cents a share, as well.
Counting Wheet and O’Brien, filings show, RMCP employs a total of three people and has no plans to hire additional workers over the course of the next year. Despite its tiny staff and limited resources, however, RMCP has announced ambitious plans to replace the standard safety syringe and deploy its imaging technology in the vast majority of mammography machines currently in use around the world. For now, however, RMCP has basically made a name for itself by issuing questionable press releases – and triggering huge volatility in its stock – instead.
“We haven’t done that much P.R. work,” Wheet insisted during a Sept. 9 interview with the Wall Street Reporter, which followed a steady string of bullish news announcements. “We have just been minding the store, getting things done fundamentally, and now we are starting to run.
“We started getting the word out there, and I think the stock has just started to move recently. So I do think,” he added presciently, “we are starting to get more eyes on us.”
* Note: No member of TheStreetSweeper’s staff or advisory board has ever taken a financial position in RMCP or received any compensation from others who have positions in the stock. As editor of the site, Melissa Davis will never take a position in any of the stocks that she covers. To contact Ms. Davis, the author of this story, please send an email to editor@thestreetsweeper.org.
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Jammin Java (JAMN): Hot Stock ... Bitter Aftertaste?
It’s time to wake up and smell the coffee! That’s exactly what Jammin Java (OTC: JAMN.OB), a heavily promotedcoffee company, and – for very different reasons – TheStreetSweeper would like investors to do.
Since the beginning of the year, JAMN has miraculously risen from the ashes of the “Grey Market” graveyard to become one of the liveliest – and richest – stocks in the entire microcap arena. JAMN has seen its stock shoot straight toward heaven, soaring from 55 cents to peak above $6 a share on massive daily volume, with its market value nowtopping $355 million despite the company’s limited resources and operating history. (As covered in more detail below, two of the Internet tout sheets pushing JAMN the hardest effectively vanished -- disabled by their Internet servers -- on the day the stock’s trading volume exploded past 20 million shares.)
JAMN stands out for its powerful connections, the first loudly celebrated by the company and the second – involving a notorious stock promoter – carefully hidden from view.
more...
Powerful Warrior Joins Fight against Fraud
TheStreetSweeper is proud to formally introduce Janice Shell, one of the most experienced – and feared – investigators of penny-stock fraud in the country, as the newest member of its decorated editorial team. Shell most recently worked for StockWatch, where she focused on covering dubious microcap companies with ties to Canada: a notorious haven for shady stock promoters.
Heralded as “the unofficial queen of cybervigilantes” by Fortune magazine more than a decade ago, Shell boasts a long and impressive record of exposing fly-by-night microcap companies – and warning investors away from their stocks – well before their shares ultimately collapse. She has attracted a devoted group of followers, which includes some topnotch financial journalists, along the way.
“It wasn’t called ‘Internet sleuthing’ when Janice and a small band of colleagues at Silicon Investors invented it,” saysRoddy Boyd, a former stock-market reporter for both the New York Post and Fortune who now runs a hard-hittinginvestigative news site of his own. “Yet, starting in the ‘90s, Janice and her cyber-partners did what the SEC, the FBI and frankly the media could not or would not do: They asked questions. They dug into files, found the forgotten postings and buried press releases and, slowly but surely, began to nail one fraud and witless promotion after another.
“In a just society, Janice and her partners would get medals,” Boyd adds. “We don’t live in a just society. But thankfully, Janice has found a roost at TheStreetSweeper to deliver well-reported, crisply written justice upon the sundry sleazebags of the capital markets.”
more...LEXG: The Biggest Snow Job of the Year?
They can still be promoted and played, of course, as veterans of the shady penny-stock world well know. And companies promising to search for lithium, which powers the batteries used in new and increasingly popular electric cars, rank among the clear favorites in this risky space.
Today, LEXG stands out as the biggest star by far. The company generates no revenue, corporate filings show, and will likely need years to do so if it manages to survive that long. It had no cash on hand at the end of 2010, either, and it managed to raise a mere $250,000 through a private placement deal earlier this year. But thanks to a $3.3 millionpublicity campaign – possibly record-breaking in price – LEXG has skyrocketed from 12 cents to almost $4 a share in barely a month and now boasts a market value that’s approaching $200 million.
If history serves as any guide, however, LEXG will fail to hold onto even a fraction of those remarkable gains. A year ago, TheStreetSweeper scrutinized three similar companies in a detailed report entitled “Can the Batteries Last on Overcharged Lithium Stocks?” That question has long since been answered, alas, with all three stocks sinking from impressive highs to increasingly miserable lows.
more...HHWW: Another Hyped-Up Stock That's Dressed to Kill?
The corporate headquarters for Horiyoshi Worldwide (OTC: HHWW.OB), located within blocks of several Los Angeles homeless shelters servicing Skid Row, looks rather modest for a high-end fashion company that recently sported a market value approaching $200 million.
Earlier this month, TheStreetSweeper sent some locals to HHWW’s home office after watching the company’s stock rocket from $1 to $3 a share on a blizzard of paid promotions. They found a tiny operation, manned by a single staffer (focused on investor relations), that housed little more than two clothing racks containing about 20 T-shirts apiece.
Based on prices supplied in HHWW’s regulatory filings, those T-shirts represent an estimated $6,000 worth of inventory for the company. While meager, that figure nevertheless eclipses the $912 in total sales reported by HHWWfor the second quarter of this year.
To be fair, HHWW has yet to release third-quarter results that might reflect an uptick in sales following the company’s adoption of an aggressive growth strategy. Still, corporate filings show, HHWW actually saw its quarterly revenue plummet – sinking from $152,175 to less than $1,000 – in the months leading up to that grand plan.
Even so, stock promoters – paid huge sums to tout HHWW – have painted an incredibly rosy picture of the company. Last month, for example, Eric Dickson of Breakaway Stocks predicted that HHWW could soar more than 4,500% by the end of this year. The stock, currently trading at $1.63, must somehow find a way to reach $45.38 a share over the next few days for that wild forecast to come true
more...Regulators Turn up the Heat on Alternate Energy
Two months after TheStreetSweeper began sounding alarms about Alternate Energy (OTC: AEHI.PK), federal regulators have officially filed charges against the company and two of its officers for allegedly fleecing investors through a long-running pump-and-dump scheme.
In a formal complaint this week, issued just days after halting AEHI’s stock, the U.S. Securities and Exchange Commission flatly accused the company and two senior executives – CEO Donald Gillispie and his girlfriend Vice President Jennifer Ransom – of scamming investors while secretly enriching themselves. Since it went public four years ago, the SEC says, AEHI has raised millions of dollars by promising to build a nuclear power plant even though the company has “no realistic possibility” of ever achieving that goal. Meanwhile, the SEC says, AEHI insiders have quietly dumped big chunks of stock while publicly expressing strong confidence in the company.
“The company has made multiple misrepresentations, including claims that its executives had such confidence in AEHI that they had not sold a single share of company stock,” the SEC stated on Thursday. However, “records obtained by the SEC show that Gillispie and Ransom have instead secretly unloaded extensive stock holdings and funneled the money back to Gillispie.”
more...HHWW: Another Hyped-Up Stock That's Dressed to Kill?
The corporate headquarters for Horiyoshi Worldwide (OTC: HHWW.OB), located within blocks of several Los Angeles homeless shelters servicing Skid Row, looks rather modest for a high-end fashion company that recently sported a market value approaching $200 million.
Earlier this month, TheStreetSweeper sent some locals to HHWW’s home office after watching the company’s stock rocket from $1 to $3 a share on a blizzard of paid promotions. They found a tiny operation, manned by a single staffer (focused on investor relations), that housed little more than two clothing racks containing about 20 T-shirts apiece.
Based on prices supplied in HHWW’s regulatory filings, those T-shirts represent an estimated $6,000 worth of inventory for the company. While meager, that figure nevertheless eclipses the $912 in total sales reported by HHWWfor the second quarter of this year.
To be fair, HHWW has yet to release third-quarter results that might reflect an uptick in sales following the company’s adoption of an aggressive growth strategy. Still, corporate filings show, HHWW actually saw its quarterly revenue plummet – sinking from $152,175 to less than $1,000 – in the months leading up to that grand plan.
Even so, stock promoters – paid huge sums to tout HHWW – have painted an incredibly rosy picture of the company. Last month, for example, Eric Dickson of Breakaway Stocks predicted that HHWW could soar more than 4,500% by the end of this year. The stock, currently trading at $1.63, must somehow find a way to reach $45.38 a share over the next few days for that wild forecast to come true.
more...Regulators Pull the Plug on Alternate Energy
Four years after Alternate Energy (OTC: AEHI.PK) went public, courting investors with grand plans to build a multibillion-dollar nuclear power plant, the U.S. Securities and Exchange Commission has finally suspended trading in the controversial penny stock.
This week, the SEC halted AEHI due to questions about “the accuracy and adequacy of publicly disseminated information” about the company. When cracking down on AEHI, the SEC cited concerns about several issues – including company finances, executive compensation and insider sales – examined by TheStreetSweeper in its recent coverage of the company. (Click on these three links to access those stories and the backup documents used to prepare them.)
AEHI critics, who have been sounding alarms about the company for years, expressed clear relief at the long-awaited news.
“It was a scam from the beginning,” declared Joe Weatherby, a former planning and zoning commissioner in AEHI’s home base of Idaho. “This has been a long time in coming.
“I didn’t think it was ever going to happen,” he added. “So it was a great Christmas present.”
more...Alternate Energy: Another Radioactive Stock Pick?
Alternate Energy (OTC: AEHI.PK) investors might want to take a closer look at some of the outfits that have embraced the company’s stock.
Just last month, two different firms – both known for risky microcap picks -- rushed to defend AEHI with bullishrecommendations after TheStreetSweeper raised legitimate concerns about the company. The first one, Pinnacle Digest, owns AEHI’s stock and admitted in a disclaimer that it plans to “sell every share” for its own profit without advance notice to its followers. The second one, WallStreetCorner.com, regularly collects cash and/or stock from the companies it endorses and has directed investors into some notorious losers along the way.
Years ago, for example, WallStreetCorner’s Larry Oakley touted a company known as Accident Prevention Plus that served as the vehicle for an illegal pump-and-dump scheme. The so-called “mastermind” behind that scam wound up sentenced to 10 years in prison last month – just three days before Oakley issued his ringing endorsement of AEHI – as punishment for his crimes.
Oakley has embraced other ill-fated stocks, such as eMax Holdings (OTC: EMXC.PK) and Hathaway Corporation, as well. In certain ways, AEHI now resembles both of those doomed companies.
more...AEHI: The Story, the Holes and the Secrets They Hide
Alternate Energy (OTC: AEHI.PK) has spent the past four years selling investors an incredible – if incomplete – story.
The basic plotline goes something like this: AEHI will somehow secure the funding and approval necessary to build a multibillion-dollar nuclear power plant in Idaho that’s virtually guaranteed to deliver eye-popping profits for investors. That version of the story contains some gaping holes, however, filled with pesky secrets that threaten to ruin this fairy-tale ending.
Take the first chapter in this ongoing saga, just for starters. Initially, AEHI CEO Donald Gillispie said the company would build its nuclear power plant in Owyhee County – touting a deal inked with “prominent Idaho landowner and businessman” James Hilliard -- and spent the next year portraying that site as a suitable location for such a project. In the spring of 2008, however, AEHI suddenly announced that it had abandoned that site due to troubling fault lines and shifted the project to nearby Elmore County instead.
In a sworn deposition that surfaced last month, however, Gillispie offered far different reasons for that abrupt change of plans.
“There were two things going on,” he states in that document. “First of all, we had not received funding because we lost our silent partner there … The other thing going on was that Hilliard would not – he had been extending the contract whenever it came up, like a six-month contract – and in early ’08, he didn’t extend it.”
more...Alternate Energy: Power Stock or Toxic Waste?
Four years ago, Alternate Energy (OTC: AEHI.PK) CEO Donald Gillispie arrived in one of the poorest counties in Idaho and began selling company stock to local investors impressed by his grand plans.
Although AEHI had spent just $1,000 on research and development during the previous two years, regulatory filings show, the company boasted all sorts of remarkable inventions. AEHI claimed that it had developed a breakthrough fuel additive that could slash the costs of natural gas-powered electricity, for example, and that it was also creating mini reactors that would “revolutionize nuclear power in an urban setting.” Even better, the company said that it was poised to become “the first company to harness the natural energy delivered in a bolt of lightning” – a goal later portrayed as “hopeless” by a national lightning expert interviewed by The New York Times.
While ambitious, however, those projects ranked as mere side shows for the young public company. If possible, AEHI had even bigger plans. Despite its minimal resources, skeptics say, AEHI promised to build a multibillion-dollar nuclear power plant – the first project of its kind for decades -- in a rural Idaho desert that lacked the vast water supply and available transmission lines normally required to make such projects work.
“They have no money; they have no plans,” a county commissioner told the local Owyhee Avalanche newspaper at the time. “Most (locals) think that it’s … a daydream or a fairy tale.”
Since then, records show, AEHI has announced funding deals with at least three obscure financial firms – including one whose leader would later be charged with alleged securities fraud – but still lacks the money required for even the equivalent of a down payment on a nuclear power plant. AEHI also keeps changing the planned location for its proposed plant, local news coverage reveals, currently settling on an Idaho county already ruled out by Warren Buffett’s MidAmerican Nuclear Energy because it made no economic sense.
Nevertheless, AEHI has still managed to sell its own investors on the massive project. The company’s volatile stock, which once fetched mere pennies, currently trades for 87 cents a share. With a share count of 320 million, up from about 40 million a few years ago, AEHI now boasts a market value of $280 million.
more...Clicker 'Body-Slammed' after Tout by Pro Wrestler
Shawn Ambrosino may have retired from professional wrestling, but as a penny stock promoter – touting the likes of Clicker (OTC: CLKZ.OB), Clenergen (OTC: CRGE.OB) and Enhance Skin Products (OTC: EHSK.OB) – he can still inflict an awful lot of pain.
This month, Ambrosino delivered his latest knockout blow with a powerful recommendation of CLKZ that has since left investors reeling. With CLKZ sitting at $1 a share, Ambrosino urged investors to buy the stock before it surged past $20 as the company – a cash-poor outfit with just a handful of employees – conquered Craigslist to become the new heavyweight leader of the online classified advertising world. CLKZ did march higher on that paid tout, ultimately reaching $1.37 a share on Wednesday, but never approached even Ambrosino’s $5 short-term target before staging a remarkable collapse.
The stock, hammered by a sudden selling spree that began the same day it peaked, now fetches just 53 cents a share. Even at that lower price, however, CLKZ still boasts a market value of $31.2 million that looks rather lofty for a company that – just six weeks ago – cautioned that it lacked the funds necessary to finance its operations for more than 30 days.
more...Tradeshow, Skymark Kicked off the Stage
Canadian regulators aren’t buying the story that Tradeshow Marketing (OTC: TSHO.PK) and Skymark Research – a paid promoter led by the son of TSHO’s founder – tried so hard to sell.
The Alberta Securities Commission has issued a cease-trading order for TSHO’s stock, while banning Skymark from trading or recommending any securities, after uncovering tell-tale signs of a classic pump-and-dump scheme. When explaining its move on Monday, the ASC cited concerns originally raised by TheStreetSweeper in a detailed investigative report almost six months ago. (Click here for the original story, complete with links to backup documents.)
Specifically, the ASC claimed that TSHO had soared on bullish Skymark forecasts secretly generated by relatives connected to the company. The ASC also noted that John Kirk, the sole director of Skymark and the son of TSHO’s founder, “held a significant number of shares” in the company – as did TSHO founder Bruce Kirk himself – at the time of the stock-boosting promotions. It pointed out that Ben Kirk, another son of the founder, worked for Skymark during the publicity campaign as well.
more...LIqiudmetal: Keeping Mum about Apple and Far More
This year, Liquidmetal Technologies (OTC: LQMT.PK) has kept some telling – and arguably material – secrets from its investors.
Take LQMT’s recent deal with Apple (Nasdaq: AAPL) as an obvious example. In a cryptic 8-K filing on Aug. 9, LQMT suddenly announced a contract with Apple that – on the surface – seemed to warrant a full-blown press release. Specifically, LQMT revealed that it had signed a “master transaction agreement” that would allow Apple to commercialize its technology for future use in its consumer electronics products.
LQMT never disclosed the terms of that licensing contract, however, allowing hopeful speculation to fuel the company’s shares instead. LQMT’s stock, which fetched just 13 cents a share a month ago, rocketed to a multiyear high of $1.76 last week before swiftly crashing on the lack of details associated with that high-profile deal. The stock, down another 10.6% on Wednesday, has now lost most of its Apple-related gains and currently trades for just 76 cents a share.
This spring, in the months leading up to that dramatic deal, LQMT kept quiet about another important development as well. In an even shorter 8-K filing on March 8, LQMT quietly disclosed that longtime Chairman John Kang had left the company without giving any reason for his departure. One week earlier, Kang was convicted at trial on fraud charges – carrying a potential five-year prison sentence – for inflating the financial results of another company he had previously led.
more...Ecosphere: A Clean Energy Company with a Dirty CEO?
Either Ecosphere Technology (OTC: ESPH.OB) CEO Dennis E. McGuire simply shares a lot in common with a twice-convicted drug felon – a coincidence of remarkable proportions – or he is the former jailbird himself.
Based on public records and news stories gathered by TheStreetSweeper, supplemented with a 63-page personal background report, the CEO and the ex-con look very much the same. The names and birth dates match. The names of multiple relatives come up as matches, too. Other key identifying traits – including addresses, business ties and even partial social security numbers – correspond as well.
McGuire’s original corporate bio, published in regulatory filings, hints at further parallels. That bio begins when McGuire graduated from community college in 1974 and, following a long and unexplained hole, picks up in detail when he invented his first cleaning technology (armed with a mere associate’s degree) more than 15 years later. The mysterious gap in between corresponds with the very period when the convicted McGuire operated a drug business, news reports show, and twice served time in jail.
more...Why Can't Ecosphere Score a Deal with BP?
Maybe Ecosphere Technologies (OTC: ESPH.OB) should have added Kevin Costner, the celebrity backer of a competing water-treatment device, to its star-studded team.
Despite ringing endorsements from its own superstars – including a big-name environmentalist and two retired professional athletes – ESPH has so far failed to secure an order from BP (NYSE: BP) for machines that, it says, can effectively address the company’s massive oil spill. Costner’s company, Ocean Therapy Solutions, fielded an order from BP for 32 of its machines almost two full weeks ago. ESPH is still waiting on an order, however, even though the company claims that it offers a superior device.
more...Junior Mining Companies and the 'Temple of Doom'
Ever since AmeriLithium (OTC: AMEL.OB) purchased some mining assets from GeoXplor -- a Vancouver outfit led by the so-called “Indiana Jones” of the lithium trade -- the company has taken investors on a wild and, at times, thrilling ride. If history repeats itself, however, AMEL investors better not count on a happy ending to their journey.
After all, GeoXplor has sold mineral claims to several other microcap companies that met with rather ugly fates. Even worse, government records show, GeoXplor founder Clive Ashworth has been previously banned from the securities industry for an alleged scam – which resulted in criminal convictions for two stock promoters – involving yet another resource company.
Nevertheless, Ashworth continues to win over junior mining companies and those who promote their risky stocks alike
more...Putting Together the Puzzle at Big Bear Mining
If Big Bear Mining (OTC: BGBR.OB) would risk hiring a bankrupt CEO with a checkered past to serve as the “public face” of the company – and essentially give him $30 million worth of stock for the favor – then investors might want to search for even darker secrets that the junior gold miner is still trying to keep.
They could start by examining BGBR’s original address. That address, listed in past BGBR regulatory filings as 1728 Yew St. in Vancouver, shows up in filings for several other penny stock outfits as well. Those companies share at least one glaring trait: They count Shane Whittle, a busy Vancouver stock promoter, among their top executives.
Armed with credible outside leads about Whittle’s connection to BGBR, TheStreetSweeper decided to call him and politely ask about his ties to the company. Whittle’s response came across as nothing short of violent.
He immediately claimed “no involvement” with BGBR and then warned of possible legal action for the “harassing” phone call. Specifically asked if he was making a threat, he replied with this: “Yeah, 100% … Take your phone call and shove it up your ass.”
more...Fearing Risks, Big Bear Promoter Tells Investors to Flee
Big Bear Mining (OTC: BGBR.OB) has scared off one of its most powerful fans.
James DiGeorgia, editor of the Gold and Energy Advisor newsletter, this week suddenly reversed his “strong buy” recommendation on BGBR and started urging his followers to sell the stock instead. His abrupt about-face came just one day after The Street Sweeper raised serious questions about BGBR’s true value and the paid promoters – including DiGeorgia himself – who have been touting the heavily traded stock.
“Based on new information I received in the last 24 hours that I was not presented with when I initially reviewed and recommended the stock, I believe it would be in the best interest of any investors holding shares in this company to sell them,” DiGeorgia stated in an official press release on Tuesday. “It doesn’t matter if you’ve made money or lost money holding BGBR.OB. Everyone who has based their purchase of shares on my recommendation should sell their shares.”
more...With China Tel, Has Tobin Smith Been 'Outfoxed' Again?
Tobin Smith, co-star of Fox News Channel’s popular “Bulls & Bears” investment show, recently declared a challenging new “mission in life.” In an upbeat message to his 2,700-plus followers on Twitter last week, Smith promised to helpChina Tel Group (OTC: CHTL.OB) – a penny stock company he has been touting for months – secure the financing it needs in order to survive.
To be sure, CHTL could use some assistance. More than a year ago, CHTL agreed to pay $195 million for a 49% stake in Chinacomm – an Asian broadband wireless company that ranks as its primary asset – but it still lacks the money required to actually pay for that deal. Although CHTL has inked plenty of financing agreements in the meantime, most recently with two mysterious firms known as Excel Era and the Isaac Organization, the company never seems to collect promised cash from those backers in the end.
more...Does the NanoLogix Rally Make Any Sense?
The NanoLogix (OTC: NNLX.PK) stock chart featured on a YouTube video – set to the catchy “Money Song” tune from Monty Python – looks rather outdated following this spring’s incredible, if inexplicable, spike in the company’s share price.
When that video first surfaced in the fall of 2007, NNLX was still focused on increasing hydrogen production with the help of grape juice while allowing Nutra Pharma (OTC: NPHC.OB) – the company’s former partner – to pursuebreakthroughs in its current business of diagnostic technology. (NPHC’s own volatile rally, staged late last year, has already come to an end.) Back then, NNLX’s stock had almost doubled in a month but still fetched only 15 cents a share. Since moving into the medical arena and converting a barn-like structure into a “clean room” for producing diagnostic testing kits (with the construction project captured in yet another YouTube video), however, NNLX has seen its stock rocket more than 200% in recent weeks to pass $1 a share.
Even Bret Barnhizer – NanoLogix’s own CEO – cannot explain that move.
more...Has Atlantic Wind and Solar Been Fueled by Hot Air?
Atlantic Wind and Solar (OTC: AWSL.PK) is suspected of blowing a lot of hot air in an effort to inflate the company’s stock price.
A year ago, AWSL supposedly acquired a 47.5% stake in Hybridyne Power Systems – later touting Hybridyne’s “best-in-class” technology and its access to an expansive research team – for $2 million worth of its own stock. After publicizing a string of stock-boosting projects secured by Hybridyne, however, AWSL suddenly announced this month that it had canceled its acquisition of the company due to an “unfortunate default by the vendor” that rendered the transaction “null and void.”
Notably, Hybridyne itself now claims that the acquisition never took place at all.
more...Can the Batteries Last on Overcharged Lithium Stocks?
Lithium Corporation (OTC: LTUM.OB) sure looks a whole lot prettier in paid tout sheets than it does in its regulatory filings.
In recent months, stock promoters have treated LTUM – a company with no revenue and just $855 in the bank – like a surefire winner that’s poised to supply giant automakers with the lithium they will need to power tomorrow’s battery-operated cars. The promoters offer similar reasons for their incredible confidence, led by soaring demand for lithium and LTUM’s ready access to lithium mines, while carefully excluding their compensation for touting the stock from its list of key attractions.
To some, however, even LTUM’s most “legitimate” selling points look suspect. They point to a recent article in The New York Times, entitled “The Lithium Chase,” as evidence.
more...Is IMGG's CEO Pulling the Plug on His Company?
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To some, Imaging3 (OTC: IMGG.OB) CEO Dean Janes appears to be giving up on his own company.
On Feb. 11, exactly one month after IMGG announced the latest in a series of regulatory setbacks, Janes reportedly began pitching a new investment opportunity to his 1,000-plus “friends” on Facebook. In his biggest insider transaction on record, Janes then sold 2.6 million shares of IMGG stock the very next day. more...
Tradeshow Marketing Knows How to Sell Its Stock
Give Tradeshow Marketing (OTC: TSHO.PK) some credit. For a company riddled with so many ugly conflicts, TSHO sure knows how to put on a pretty face for investors.
TSHO can thank SkyMark Research – a promotional firm operated by the apparent son of TSHO’s own founder – for reshaping its public image. For years, TSHO looked like a failed business with limited appeal to even speculative investors willing to place bets on high-risk penny stocks. After SkyMark launched favorable coverage of TSHO late last year, however, the company saw interest in its long-overlooked stock suddenly skyrocket. more...
AENY: Look What's Hiding beneath that Former Shell
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Americas Energy Company (AENY.OB) exposed some ugly flaws when it emerged from its corporate shell.
Following its heavily hyped reverse merger, AENY now counts CEO Christopher Headrick – a longtime dealmaker with a history of failure – as its sole officer, director and member of its staff. Although AENY has announced plans to expand its senior management team, the company aims to do so by hiring leaders who have benefited handsomely from a series of generous related-party deals. One of those potential executives, already identified as a company vice president in the past, has agreed to plead guilty to felony tax evasion charges and could face up to five years in prison for his crime. more...
IMGG Fails to Paint a Pretty Picture for Investors
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The picture at Imaging3 (IMGG.OB) just got a whole lot uglier.
IMGG dropped a bombshell on investors this week, when it revealed a major setback in its lengthy battle to secure regulatory approval of its Dominion 3-D scanning device. For months, IMGG has indicated that the company simply needed to resolve one minor issue – involving the Dominion’s label – in order to satisfy reviewers at the U.S. Food and Drug Administration. During a conference call with shareholders on Tuesday, however, IMGG reported that it has now fielded more than a dozen questions from FDA staffers who are evaluating the company’s device. more...
PennyStockChaser Hides Profits, Secrets from Investors
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This June, shortly after PennyStockChaser announced that it had become the most popular website for “hot penny stock tips” in the business, the Internet-based tout sheet began dropping a familiar name that once carried considerable weight on Wall Street.
It listed Mike Schonberg – a name formerly attached to such legendary investment firms as Dreyfus and UBS – as its official contact person. Keeping with its secretive nature, however, the website stopped well short of offering any details about Schonberg’s professional background. more...
Convicted Swindler Touts Risky Penny Stocks
Rich Roon had already served time in prison for swindling investors when he decided to reenter the securities business as a penny stock promoter.
In 2003, just 16 months after his release from jail, Roon quietly established a consulting business that targets obscure microcap companies desperate for publicity. Roon’s firm, known as Oceanic Consulting, aggressively promotes penny stocks on its OTC Reporter website in exchange for shares of the companies being touted. Over the years, Oceanic Consulting has collected – and promptly sold – billions of free shares of penny stocks that have lost money for average investors. more...
