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PDFJust 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.
Initially, the local Owyhee Avalanche reported, AEHI surprised some Idaho officials with its grand plans to build a multibillion-dollar nuclear power plant in their corner of the state. Similarly, The Denver Post reported in the past, eMax also caught Colorado authorities off guard by promising to construct a major resort – immediately dismissed as “unrealistic” – in their own area.
By then, the Post observed, eMax had already seen its stock rocket from 2.5 cents to 75 cents a share on the news. The stock, still touted by Oakley six years later, now trades for less than a penny a share and looks basically worthless today.
Meanwhile, AEHI has relied on the same strategy once employed by Hathaway in an effort to protect its falling stock. In a move repeated last month by AEHI, Hathaway touted Oakley’s endorsement of the company and blamed its plunging share price on possible stock manipulation. Hathaway nevertheless continued to plummet, with the company later reinventing itself under at least two different names, and – like eMax -- now trades for a fraction of a penny a share.
Even after embracing such dangerous picks, however, Oakley continues to express complete faith in the companies he endorses while portraying their critics – particularly short sellers who profit when a stock price declines – as the real enemies of the market.
“The problem occurs when some shorters tell vicious lies to achieve their gains,” Oakley proclaimed when defending AEHI’s stock last month. “In my opinion, they should be put into jail right alongside those that have been convicted of murder, child molesting and other bad crimes.
“I call what they do an act of terrorism,” he added, “because they hurt large numbers of shareholders.”
With stock recommendations like those illustrated above, however, Oakley himself has caused some real investor pain. Meanwhile, he has failed to identify – let alone disprove – any so-called “lies” told by AEHI skeptics. Instead, he has simply attacked those critics while repeating the upbeat claims made by the company and its fans.
Oakley’s followers are now paying the price for his latest bullish call. AEHI’s stock, which fetched as much as $1.45earlier this year, has fallen 29% to 55 cents a share since his last report.
Because Pinnacle Digest and WallStreetCorner offer no phone numbers on their websites, TheStreetSweeper could not call to seek their input for this story. Pinnacle Digest does allow the public to contact it by email, but TheStreetSweeperreceived no response to the message it sent last week to the firm.
For its part, AEHI ignored a request seeking contact information for the two firms and has clearly indicated that it will answer no questions from TheStreetSweeper itself.
AEHI trades on the lowly Pink Sheets, a longtime breeding ground for penny-stock scams, despite efforts to secure listings elsewhere. The company originally unveiled plans this summer for a reverse stock split that might push its shares toward the $3 minimum required by the American Stock Exchange but then abandoned that strategy – boldly predicting that its stock would soar without it – less than two months later. The company then proclaimed that it had resumed trading on the OTC Bulletin Board shortly after that, even though the stock -- last quoted on the Bulletin Board back in May – remains on the Pink Sheets to this day.
Rap Sheet
AEHI attracted support from troubling characters long before Pinnacle Digest and WallStreetCorner started touting the company’s shares.
Just a few months after AEHI went public in 2006, records show, the company teamed up with an apparent violator of securities laws when first pursuing its ambitious plans to build a nuclear power plant. At the time, the Owyhee Avalanche reported, AEHI indicated that it had won the support of an entire group of local farmers interested in partnering with the company on its big power project.
“They had formed a co-op, but … it was just in name only,” AEHI CEO Donald Gillispie later admitted in a sworn deposition that recently surfaced on the Internet. “The only guy I really knew – it was the guy that I remember – is Bob Sparrow.”
Gillispie went on to describe Sparrow as a former Idaho farmer who had since relocated to Salt Lake City. Years earlier, the U.S. Securities and Exchange Commission identified Robert D. Sparrow of Salt Lake City as a “previously enjoined securities violator” when sanctioning him for alleged transgressions once again. In that case, the SEC accused Sparrow of deceiving investors – through misleading financial statements and forged audit reports – and permanently barred him from ever serving as an officer or a director of any publicly traded company again.
A few years after that SEC crackdown, court documents show, Sparrow pleaded guilty to wire fraud and received a two-year prison sentence (followed by another three years of supervised release) as punishment for his crime.
Since then, several locals have portrayed that man as the same one who originally partnered with AEHI just after the company went public. AEHI listed “Robert Sparrow” as a 2007 recipient of free company stock in a past filing, Internet records show, but otherwise stopped mentioning his name long ago.
AEHI forged deals with other parties tainted by criminal records as well. For example, regulatory filings show, AEHI repeatedly sold big chunks of discounted stock to Rainmaker Ventures – a firm linked to a pair of reported felons – the same year that it awarded Sparrow his free shares.
Hunter Carr and Paul Thayer, identified as ex-cons by at least two different publications, have both surfaced as limited partners at Rainmaker Ventures in the past.
The Toronto Star reported that Carr and Thayer had been sentenced to prison for financial-related crimes in a story that appeared in 2002, while The New York Law Journal covered those convictions in a review of the case five years later. The latter report surfaced in 2007, the very year that Rainmaker Ventures -- where Carr and Thayer had served as limited partners -- kept buying AEHI stock and established a big financial stake in the company.
Piggy Bank
Rainmaker Ventures operates out of Idaho, the firm’s website shows, a rural state far better known for its home-grown potatoes and great fly fishing than its activities in the financial arena. But Idaho is also the state that AEHI and many of its shareholders call home. In fact, AEHI recently estimated that roughly half of its stockholders reside in its home state.
According to local reports, AEHI can thank Jason Sells – a local broker licensed to sell hay rather than stock – for much of the stock’s popularity in its home base. For its part, AEHI has portrayed Sells as little more than an enthusiasticshareholder who recommended the stock to others but never actually sold any stock himself. AEHI also indicated that Sells has played no official role at the company, however, despite convincing evidence to the contrary.
Specifically, records show, both Gillispie and Sells have signed contracts on behalf of AEHI’s key business division (Idaho Energy Complex) in the past.
On at least two separate occasions in 2007, records show, Gillispie and Sells co-signed extension agreements for a land deal pursued under IEC’s name. In the second instance, records show, Gillispie wrote a $50,000 personal check to hold the land – a 410-acre plot, too small for a nuclear plant, reportedly intended for a non-company project – while he searched for the funds to actually buy the property.
A few months later, records show, Gillispie and Sells signed a contract extension on that deal once again. But this time,records show, AEHI itself footed the $50,000 bill.
“I personally started the company (AEHI) … and I often get it funds when it needs fund,” Gillispie explained in a partial deposition now posted on the Internet. “And in this case, I took some funds out.”
Interestingly, records show, Jennifer Ransom – described by locals as Gillispie’s new girlfriend – signed that AEHI check. Ransom still worked as an insurance agent at that time, corporate filings indicate, and did not officially join AEHI as vice president of administration until four months after signing that check for the company.
To AEHI critics, that $50,000 payment – reportedly covering a non-AEHI project and signed by someone who had yet to join the firm – raises questions about AEHI’s management of corporate funds. Since AEHI generates no operational revenue, they note, the company relies entirely on investors who keep buying its stock to cover all of its bills.
In an interview with TheStreetSweeper last month, Gillispie estimated that AEHI had raised $20 million through stock sales since the company went public four years ago. According to its latest financial statements, however, AEHI has less than half of those funds left.
Meanwhile, critics stress, AEHI has yet to even purchase the land needed for a nuclear power plant and keeps announcing different finance partners – several of them tainted by checkered backgrounds – that have, so far, failed to come up with any notable funds for the company’s multibillion-dollar project. Nevertheless, critics say, AEHI has managed to provide a comfortable lifestyle for its top executive. Gillispie drives fancy sports cars (a Porsche and aMaserati), locals say, and relies on AEHI to cover living expenses that totaled roughly a quarter-million dollars for the past two years alone.
Paper Chase
AEHI has also issued huge amounts of stock to Gillispie, corporate records show, who filed the paperwork this August to sell 3 million of those shares. Gillispie told TheStreetSweeper that he simply lifted the trading restrictions on that stock – worth roughly $2.5 million at the time – so that he could use it as collateral for a home loan. If a bank would actually accept penny stock as security, Realtor.com listings indicate, that sum would buy one of the most expensive houses in AEHI’s entire hometown.
Although Gillispie told TheStreetSweeper that he was the only insider to file papers for future stock sales, Ransom filed similar papers just two weeks after he did. They made their move with the stock lifted by its second powerful surge in months.
The first time, back in May, AEHI rocketed from the 20-cent level – where it had languished for months – to a record $1.45 a share on a bullish report by a newsletter writer who (according to Gillispie) heard about the company in a bar. While AEHI fetched less than half that price by the end of the day, the stock enjoyed a lasting bounce that has kept it comfortably above its pre-promotion price to this day.
That enthusiastic recommendation immediately raised some eyebrows, however. Issued by an outfit known as Angel Publishing – a firm apparently riddled with the same sort of potential conflicts disclosed by Pinnacle Digest and WallStreetCorner – that upbeat AEHI report sparked concern long before TheStreetSweeper ever took a hard look at the company.
“Unlike some investment newsletter publishers, the folks at Angel Publishing note in their disclaimer that their writers, editors and employees can own the stocks they write about and trade them at any time – which would be a real motivation to pick penny stocks” and then profit from the resulting surge, the Stock Gumshoe observed after reviewing that powerful AEHI tout. “Of course, that would be unethical, in my opinion. But it seems that it’s often perfectly legal as long as you disclose it.
“You can get away with a remarkable amount of chicanery,” the Stock Gumshoe added, “as long as you tell people that you’re treating them badly.”
On that note, TheStreetSweeper would like to point out that it has never taken a financial position (short or long) in any of the companies it has covered – including AEHI – or received compensation from those who have. (Nor does it recommend that investors buy or sell any stocks, for that matter.) Based on its track record, however, TheStreetSweepercould have profited handsomely by betting against the stocks it flagged because of their potential risks.
Of the 30-plus companies investigated by TheStreetSweeper since its launch a year ago, all but two have fallen in price. Every single one of the penny stocks has taken a hit. Some of those – such as Americas Energy (OTC: AENY.OB), Big Bear Mining (OTC: BGBR.OB), Imaging3 (OTC: IMGG.OB) and NXT Nutritionals (OTC: NXTH.OB) – originally traded at much higher prices than AEHI itself. Over time, however, those stocks have lost most of the value they once boasted when conflicted promoters – like those now fawning over AEHI – were happily touting their shares.
