A 17 page complaint alleges firm’s CEO enriched himself by secretly selling stock in the firm
The U.S. Securities & Exchange Commission (SEC) filed a complaint in U.S. Federal District Court in Idaho against Alternative Energy Holdings Inc. (AEHI). The action alleges alleges that 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. Full text of SEC complaint
The SEC said Gillispie has touted the company as a tremendous investment opportunity that could rival Exxon Mobil in profitability, despite the fact that AEHI has essentially no revenue and minimal operations.
“In light of AEHI’s ongoing efforts to raise funding while promoting itself through a daily deluge of press releases, we needed to take immediate action to get to the bottom of the company’s misleading statements,” said Marc Fagel, Director of the SEC’s San Francisco Regional Office. “Documents we have obtained to date indicate a scheme to personally enrich the CEO at the expense of investors.”
Press releases pumped stock
According to the SEC’s complaint, AEHI’s fundraising was facilitated by a scheme to drive up the company’s stock price, both through frequent press releases (at least 87 in 2010 alone) and efforts of paid stock promoters to manipulate the stock price.
The SEC alleges that 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. Records obtained by the SEC show that Gillispie and Ransom have instead secretly unloaded extensive stock holdings and funneled the money back to Gillispie.
The SEC’s complaint also alleges that AEHI reported to the SEC and investors that Gillispie’s compensation was $133,000. However, Gillispie has actually reaped approximately six times that amount in 2010.
The SEC’s complaint charges AEHI, Gillispie, and Ransom with violations of the anti-fraud provisions of the federal securities laws, and names as defendants two companies controlled by Gillispie and Ransom (Executive Energy Consulting LLC and Bosco Financial LLC).
In a motion filed simultaneously with the enforcement action, the SEC seeks emergency relief for investors including an asset freeze and a temporary restraining order enjoining the defendants from further violations of the securities laws.
Reaction is mixed
AEHI officials have not yet issued a statement in response to this latest action by the SEC. Earlier this week the SEC ordered a halt to trading in the firm’s stock. AEHI confirmed on its website the initial action has taken place and said it would cooperate with the regulatory agency.
According to the Idaho Statesman, AEHI spokesman Dan Hamilton said he had just heard of the latest allegations and had no comment. He said Don Gillispie, the company's CEO, was unavailable for immediate comment.
At the Snake River Alliance (SRA), analyst Liz Woodruff said that "victories in our business don't come often, but this one counts."
At Nuclear Town Hall, editor Bill Tucker defended AEHI saying, "The SEC may also discover that AEHI’s ambitions are not as impractical as they might seem."
In an email message to members, Lane Allgood, Director of a pro-nuclear business group in Idaho Falls, said the SEC action against AEHI's CEO did not come as a surprise.
"I think we’ve all been expecting this. Sure doesn’t help with our cause to advocate for nuclear power in Idaho. I feel sorry for the folks that invested in the firm."
The complaint against AEHI is the first step in a long and complex legal proceeding which may or may not go to trial.
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At Nuclear Townhall, we're not so down on AEHI. The Snake River Alliance, which has opposed the reactor from the start, initiated the SEC inquiry and is boasting about it. AEHI obviously isn't going to build a $5 billion reactor itself but if its gets to the point of applying to the NRC for a license, it could easily attract the interest of an Areva or a KEPCO. Don't think we should give up on these entrepreneurial efforts so easily.
ReplyDeleteSeems that regardless of who "initiated" the inquiry, the most pressing question is to what extent the allegations of the complaint are true, and said "entrepreneurial efforts" were fraudulent.
ReplyDeleteIf you check out the NRC's regulations regarding the financial qualifications required for nuclear power plant license applicants, you will see that there is no way that AEHI could have met those requirements, even if it was a legitimate enterprise.
ReplyDeleteOf course, Gillispie and Ransom are entitled to the presumption of innocence until the charges are proven, but the evidence the SEC has collected seems pretty solid. Regardless of who initiated the inquiry, the facts are the facts.
And I think if you check with both AREVA and KEPCO, you'll find that they've already been around the block with AEHI and have no further interest. I think you can file this one in the "dead as a doornail" folder.
Anonymous is right. Doesn't matter who filed the original complaint. What's going to count here is what comes out in the wash -- and it doesn't sound good.
ReplyDeleteWith regulators like the NRC and SEC watching, and with groups like the Snake River Alliance and others watching as well, any company looking to do nuclear in Idaho has got to be above board. Anything that smacks of illegality is going to be used to bludgeon the company, even if allegations are proved groundless.
From the NEI Blog quoting the action:
ReplyDeleteGillispie 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.