Can the Batteries Last on Overcharged Lithium Stocks?

by Melissa Davis - 4/1/2010 10:06:49 AM

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.

For starters, the Times noted, industry experts have dismissed the popular theory that current lithium demand exceeds available supply. In fact, the Times said, lithium prices have actually fallen 20% below their five-year average in recent months. Moreover, the Times said, few mainstream analysts view Nevada -- where LTUM leases its mines -- as a promising area for large-scale lithium production.

“There are a lot of people throwing money into this,” an industry consultant told the newspaper. “And a lot of people are going to lose their money” in the end.

For now, at least, investors continue to place big bets on some high-risk lithium stocks. Less than a year after transforming itself into a lithium company – and opening at less than a penny under its brand-new trading symbol – LTUM now commands $1.25 a share. As a result, it now boasts a lofty market value of $75.7 million despite its lack of revenue and its troubling connections to some dubious penny stocks.

American Lithium Minerals (OTC: AMLM.OB), which leases lithium mines that resemble LTUM’s own, enjoyed asimilar run last year. The stock, which began trading at 31 cents a share in May of last year, more than tripled in just four short months. 

After stock promoters began touting the company last fall – picking up an estimated $1.8 million for their services – AMLM rapidly soared toward $3 a share. The stock has since lost roughly two-thirds of its value, however, falling from $2.99 in late October to $1.02 this week. Even so, AMLM still sports a market capitalization of $51.5 million that – based on the company’s lack of revenue – looks quite generous to some.

Meanwhile, yet another lithium penny stock is still chasing similar gains. Li3 Energy (OTC: LIEG.OB) began trading in November at 45 cents a share and more than doubled – reaching the coveted $1 mark – over the course of the next two months. Despite increasingly expensive promotions, however, LIEG has since fallen back below $1 and now trades for just 68 cents a share. 

As a result, LIEG now sports the lowest share price of the group. Ironically, when LIEG still fetched around $1 earlier this year, one big-name mining analyst -- Fox News commentator David Morgan – portrayed LIEG as the safest lithium pick in the entire penny stock crowd.

“As lithium demand continues to soar, companies have been coming out of the woodwork, operating on a wing and a prayer, just dreaming about making a big lithium discovery,” he wrote in “The Morgan Report” back in February. “I fear those dreams will turn to nightmares for many investors, which is why I made sure Li3 Energy was the real deal before I began recommending it.”

According to a fine-print disclaimer, a third party also paid $13,800 to cover the costs associated with creating and distributing Morgan’s LIEG report. In a recent interview with The Street Sweeper, Morgan said that he personally received no money for the recommendation – and owns no stock in LIEG yet – although he hopes to benefit through increased exposure and new opportunities down the road.

Meanwhile, other stock promoters have already pocketed huge sums for touting competing lithium penny stocks. They have embraced LTUM in particular, picking up millions of dollars in cash along the way. 

Born Again

LTUM originally launched operations as Utalk Communications, promising to offer telephone call-back services, several years ago.

After its original business plan failed, the company arranged to lease some lithium mines owned by a Nevada family – which has since leased similar mines to AMLM – and quickly followed up by adopting its current name and trading symbol during the second half of last year.  It also relocated its headquarters to a Reno office building that’s housed some rather suspicious tenants – including a recent target of government prosecutors – and hired a law partner who counts several troubling penny-stock outfits, such as Americas Energy Company (OTC: AENY.OB), among his clients.

Calls to LTUM from The Street Sweeper went unanswered on Wednesday.

According to its regulatory filings, LTUM pays $199 a month to lease an office on the eighth floor of a building located at 200 S. Virginia St. in Reno. Several other microcap companies – including AdtomizeESL Teachers (another new mining venture) and NetVentory Solutions – list the very same address. Their stocks barely trade, if they trade at all.

Apex Closing Services/Apex Professionals, a firm that supposedly repurchases timeshare leases, used to claim the same address as well. After state prosecutors sanctioned Apex for allegedly scamming timeshare owners last year, however, the firm suddenly announced that it had relocated to Wyoming because of its “exceedingly business-friendly environment.” 

According to the Better Business Bureau, Apex never actually maintained a physical presence in the Reno office complex at all. Rather, the BBB noted, Apex simply operated a so-called “virtual office” from the location instead. 

Meanwhile, LTUM has retained a law firm that’s linked to some questionable microcap companies. In a recent regulatory filing, LTUM identified Vancouver-based Macdonald Tuskey – where Gerald R. Tuskey ranks as a named partner – as special counsel to the company. A longtime figure in the murky world of penny stocks, Tuskey doubles asoutside counsel for AENY – a dubious mining venture that’s lost half its value in recent months – and has surfaced as a major player at similar outfits over the past decade as well. 

Outside of promotional newsletters, LTUM looks like an unlikely stock-market winner. According to its latest quarterly report, LTUM has generated “nil” revenue since its inception while investing little – including $412 for a cheap website – to bolster its operations. In fact, that filing indicates, LTUM would need to sell almost $500,000 worth of stock simply to cover its routine business expenses for another year.

Nevertheless, stock promoters have managed to pocket huge payouts for touting this cash-poor company. Less than two months after LTUM issued its dismal quarterly update, for example, “The Small Cap Investor” scored $478,000 – enough to cover LTUM’s estimated expenses this year – for its bullish recommendation of the stock. Since then, several other promoters have collected six-figure paychecks for touting the stock as well.

Based on a fine-print disclaimer, the so-called “Intelligent Investor Report” appears to fall into that category. The newsletter, published by California stock promoter Jarret Wollstein, predicted that LTUM could jump by 900% over the course of the next year. In recent months, Wollstein has issued similarly enthusiastic projections for several penny stocks – including AENY, Jayhawk Energy (OTC: JYHW.OB) and NXT Nutritionals (OTC: NXTH.OB) – that have plunged in value following close scrutiny by The Street Sweeper and other skeptics. 

This time around, however, James Rapholz – identified in press reports as a past target of securities regulators – may rank as the loudest promoter of all.

Disaster Zone

Rapholz first ran into trouble in the mid-1980s, a Florida newspaper indicates, when he raised almost $900,000 for a penny stock mutual fund without securing permission from regulators first. At the time, the newspaper said, the U.S. Securities and Exchange Commission responded by ordering Rapholz to return the funds to investors and briefly suspending his professional license.

In 1991, the South Florida Business Journal revealed, the SEC cracked down on Rapholz much harder. This time, the newspaper reported, the agency banned Rapholz and his firm Economic Advisors from the securities industry for 10 years for allegedly following “a course of business which would and did operate as a fraud or a deceit.”

After that decade ended, Rapholz surfaced with a new business carrying a similar name – “Economic Advice” – that served as a tout sheet for high-risk penny stocks. He has attracted regular media attention for his stock picks since that time.

In October of 2006, for example, The Wall Street Journal took a critical look at Rapholz after he touted Premiere Publishing Group (OTC: PPBL.OB) as “the closest thing (he’d) ever seen to a sure thing” in the stock market. With Premiere trading for around 50 cents a share, the Journal reported, Rapholz confidently predicted that the stock would jump to $5 and deliver investors generous gains. The stock steadily lost ground, however, and now sells for a fraction of a penny a share.

In mid-2007, Dow Jones followed up with a story on another Rapholz tout. This time, Dow Jones noted, Rapholz was promoting Sun Cal Energy (OTC: SCEY.PK) as “a ‘sitting duck’ with a takeover price of at least $90” a share. The stock, which fetched less than $3.50 a share at the time, now trades for just 15 cents on the lowly Pink Sheets.  

Less than five months after Dow Jones took aim at Rapholz, The Boston Herald followed suit. In the fall of 2007, theHerald reported, Rapholz named Pure Biofuels (OTC: PBOF.OB) his “energy stock of the year” and predicted that it would jump from $1 to $3.50 by early 2009. With the company itself dismissing such claims, the Herald labeled Pure Biofuels its “Stupid Investment of the Week.” The stock began 2009 at 7 cents a share, missing Rapholz’s bullish target by a long shot, and remains near that price to this day.

The media continued to monitor Rapholz in the meantime, with The Vancouver Sun slamming his promotion of CellCyte Genetics (OTC: CCYG.OB) following a surge in the stock – which gave the company a temporary market value of $450 million – in 2008. Notably, the newspaper pointed out, Rapholz had collected almost $500,000 from a tainted Vancouver stock promoter for issuing “outrageous forecasts” about the company.

Last fall, the SEC filed civil fraud charges against CellCyte and its leaders for allegedly endorsing false publicity about the company. Two years after Rapholz reportedly cashed his six-figure paycheck for touting CellCyte, the stock has long since plummeted from its 2008 highs to just 3 cents a share.

Meanwhile, earlier this year, Rapholz began highlighting LTUM as his next big winner. According to his official disclaimer, a third party paid $300,000 to finance that LTUM promotion. 

“I’ve been making subscribers rich for two decades by focusing on stocks of still-undiscovered energy and natural resource companies like Lithium Corp,” Rapholz wrote in his newsletter last month. “And I’m the only major financial newsletter editor who’s actually started TWO mining companies.

“So listen up,” he continued. “LTUM is about to surge.”

After Rapholz first ran into regulatory trouble in the 1980s, Internet records show, he did in fact attempt to launch an unlikely mining venture. Specifically, the Sun Sentinel of Florida reported in 1987, Rapholz sought $500,000 from investors to search for silver on a Colorado claim that had not been mined for decades. Even then, the newspaper noted, early prospectors extracted just 25 ounces of silver and 6.5 ounces of gold – from eight tons of ore – that would be worth a combined $2,800 some 80 years later.

Whether Rapholz successfully launched that particular mining project remains unclear. He did manage to take a silver company public, however, which was deleted from the OTC Bulletin Board as an “inactive issue” in 2006. His other resource company, identified as a gold-mining venture, has mysteriously vanished with little evidence that it ever existed at all.

The Street Sweeper tried to contact Rapholz on Wednesday but could not reach him by telephone.

Kissing Cousins

Meanwhile, AMLM – another lithium company favored by stock promoters – has already seen some of its biggest gains disappear.

AMLM began trading around 30 cents a share last spring and went on to triple over the course of the next four months. By the time that promotional websites began aggressively touting AMLM in September, the stock had already climbed above $1 a share. 

Between Sept. 10 and Oct. 12, StockPromoters.com figures show, those websites collected more than $1.5 million for recommending AMLM’s shares. Lifted by those touts, AMLM rallied hard and ultimately peaked on Oct. 22 near $3 a share.

With AMLM reversing course in the weeks that followed, however, Dow Jones decided to take a hard look at the company – and its ties to BG Capital founder Bobby Genovese – in early November. Notably, Dow Jones pointed out, AMLM had hired two BG Capital associates to help run its operations and listed a phone number in its regulatory filings that appeared to belong to BG Capital itself. In the past, Dow Jones cautioned, BG Capital has displayed “a knack for acquiring big stock positions in struggling companies on the cheap and securing large fees for its consulting services” in deals to that tended to be highly dilutive for ordinary shareholders.

To illustrate, Dow Jones highlighted BG Capital’s past involvement in two companies -- Spectrum Sciences and Software and Clearly Canadian Beverages (OTC: CCBEF.PK) – as examples. In the first case, Dow Jones stated, BG Capital wound up paying $3.25 million to settle a lawsuit filed by a Spectrum shareholder who lost money on the company’s stock. In the second, Dow Jones added, BG Capital achieved only fleeting gains on its “turnaround” of Clearly Canadian – despite hype from a TV reality show – before the stock crashed to its current 6-cent range.

Prior to launching BG Capital, Internet records show, Genovese worked as a Vancouver stock promoter who embraced several other doomed companies as well. Nevertheless, The New York Times revealed in 2005, Genovese himself enjoys the life of a multimillionaire. At the time, the newspaper noted, Genovese owned a $7.5 million summer “cottage” on the Muskoka shoreline near Toronto – a favorite haunt of Hollywood celebrities – along with a place in the Bahamas and 10 other residences.

Meanwhile, investors who purchased AMLM near its $2.99 peak have suffered massive losses. The stock closed at just 51 cents a share on the first trading day of this year, although it has climbed back above the $1 mark since that time. Even though AMLM has secured access to lithium mines near those that have fueled LTUM’s share price, however, the stock has failed to stage a full comeback.

Neither AMLM nor BG Capital returned phone calls from The Street Sweeper seeking comments for this story.

Third Wheel

By now, a few stock promoters have already moved on to LIEG as their next big lithium pick. Morgan, the commentator for Fox News, helped kick off the campaign last month by portraying LIEG as a “potential $1 billion-plus big-time player” in the lithium arena. He tried to separate LIEG from the pack by pointing to the company’s balance sheet – which actually shows more than $3 million in cash – and its “rock-solid” management team.

Morgan praised LIEG CEO Luis Saenz in particular by highlighting his past experience in the investment-banking and metals-trading industries. He overlooked Saenz’s more recent jobs, however, including his leadership posts at two other microcap mining companies – Genco Resources (OTC: GGCRF.PK) and Loreto Resources (OTC: LRTC.OB) – that are still hunting for success.

According to regulatory filings, in fact, Saenz still serves as CEO of the latter company.  Moreover, he made big promises at LRTC that sound eerily similar to the claims he has since made as the leader of LIEG.

When announcing a private placement for LRTC in September of 2008, for example, Saenz stated the following: “This financing represents the first, very small, sign to our investors that we have begun operations. Over the next few months, we will be investigating possible corporate property acquisitions and joint-venture opportunities, and we are optimistic that we will soon be in a position to complete our first transaction.”

When assuming the top post at LIEG as the stock began trading last November, Saenz said almost the very same thing.Specifically, he stated: “These corporate actions represent the first steps in our new operations and will aid us in our focus to identify corporate and/or property acquisitions and joint-venture opportunities … We are optimistic that soon we will be in the position to announce and complete our first transaction.”

For LRTC, at least, those predictions never came true. In a January regulatory filing, LRTC disclosed that it had abandoned a mining plan in Peru and begun searching for other opportunities. The company’s stock, which appears to be stuck at 50 cents a share, has not traded since that time.

In contrast, interest in LIEG has remained quite strong. During its brief four-month life, LIEG has enjoyed healthy volume – with more than 1 million shares changing hands on some days – but no lasting strength in its stock price. Although LIEG topped $1 on early publicity, the stock has since lost one-third of its value and hovers well below the lofty targets (of $2.50 to $8.90 a share) established by Morgan a couple of months ago.

In an interview this week, Morgan said that he feels somewhat concerned that LIEG has been underperforming other lithium penny stocks that seem to carry more risks. He continued to express confidence in LIEG, however, while admitting that he has made some mistakes in the past.

“I always say that serious money goes into serious companies” with solid balance sheets and complete financial reports, Morgan stressed. Still, “everyone loves to speculate … I try to find value, but that can be tough.

“I’ve made some really good calls,” he added. “But I’ve made some boo-boos, too.” 

* To contact Melissa Davis, the author of this story, please send an email to editor@thestreetsweeper.org.

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.


 

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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.”

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LEXG: The Biggest Snow Job of the Year?

With oil prices on the rise worldwide, and nuclear reactors leaking in Japan, alternative energy stocks continue to soar, especially in Pennyland. Green may be good, but many of the “green” companies trading in the microcap arena – particularly highflying Lithium Exploration Group (OTC: LEXG.OB) – could burn investors if they run out of fuel and crash.


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.

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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

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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.”

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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.

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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.” 

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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.

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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.”

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Alternate Energy: Power Stock or Toxic Waste?

Four years ago, Alternate Energy (OTC: AEHI.PKCEO 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 penniescurrently 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.

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RMCP: The Tiny Syringe Maker Stings Investors Again

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.

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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.

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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.

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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.

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Ecosphere: A Clean Energy Company with a Dirty CEO?

Either Ecosphere Technology (OTC: ESPH.OBCEO 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.

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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.

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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

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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.” 

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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.”

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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.

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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.

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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.

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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...