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HHWW: Another Hyped-Up Stock That's Dressed to Kill?

by Melissa Davis - 1/11/2011 8:25:36 AM

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.

Inspired by the financial analysis of some astute HHWW skeptics, TheStreetSweeper decided to evaluate the company using the tools commonly employed to value regular stocks. The results of that exercise proved rather telling.

Based on a generous price-to-earnings ratio of 15, HHWW would need to generate more than $180 million in annual profits in order to justify Dickson’s lofty target. At this point, however, HHWW cannot even muster the $6 million in annual profits that might justify its current share price. Assuming an estimated profit margin of 10% (like that attached to luxury clothing retailer Giorgio Armani in the past), HHWW would need to increase its annual sales by almost 2,000% -- obliterating the 30% growth rate posted by rapidly expanding Netflix (Nasdaq: NFLX) – in order to clear that kind of profit.

Stock promoters, as a group paid millions for their bullish calls on HHWW, clearly overlooked such harsh realities when issuing their reports. Instead, they have basically ignored HHWW’s actual results and focused on other matters – such as the company’s ambitious expansion plans – that are much more difficult to measure.

“With the launch of their new street-wear line coming within the next six months, the time to get into this company is now – before the tidal wave of profits sends shares of (HHWW) through the roof!” Dickson gushed when touting HHWW in his Breakaway Stocks newsletter. “With Horiyoshi’s design already boasting an impressive multimillion-dollar track record, this buying frenzy is a virtual lock …

“Call your broker or log in to your online trading account,” Dickson urged, “and snatch as much HHWW as you can.”

According to the fine-print disclosure that follows its screaming HHWW tout, Breakaway Stocks does not actually analyze a company’s financial performance – or technically recommend buying its stock – when issuing such reports. The newsletter instead reveals that it pockets a fee, in this case supplied by Capital Financial Media (or CFM), for publicizing the company. A notorious manager of big-budget penny-stock campaigns, which often end horribly for long-term investors, CFM received a whopping $2 million for orchestrating the massive promotion that triggered HHWW’s explosive run.

TheStreetSweeper officially flagged HHWW as a risky stock, placing the company on its “Caught on Radar” list the day it hit its $3.25 peak, earlier this month. Since then, TheStreetSweeper has gone on to thoroughly investigate HHWW – including its insiders and those promoting its stock – and compiled its findings in the detailed report below.

HHWW did not respond to telephone and email messages requesting information for this story.

Fashion Makeover

Until mid-2010, records show, HHWW had spent years toiling among a crowd of junior Canadian mining stocks with little cash and no real prospect of future revenue.

Originally known as Kranti Resources, regulatory filings show, the company gave up on its first mining claim within months of pursuing it and engaged in little activity – other than expanding its share count – in the three years that followed. This February, filings indicate, Kranti made its final move in the mining business by amending an old contract that called for the company to spend $275,000 on exploration activities over the course of a four-year period. But just months later, filings show, Kranti suddenly decided to double its share count and radically shift its focus from mining to fashion apparel instead.

Under its new strategy, the company explained in its filings, Kranti would become Horiyoshi Worldwide – a firm named after legendary Japanese tattoo artist Horiyoshi III – and attempt to mass-market apparel featuring its namesake’s famous designs. Up to then, filings show, Horiyoshi had operated as a private company selling only high-end apparel on a “limited-run” basis since launching its young brand the previous year. 

During 2009, filings show, Horiyoshi generated $30,633 in revenue – while racking up $255,798 worth of expenses – by selling most of its clothing to just three luxury retailers. Although those stores accounted for 85% of its revenue,filings show, Horiyoshi boasted that it had sold its clothing to more than 30 other retailers around the world as well. Based on prices supplied in its regulatory filings, however, those retailers would have sold an average of just $150 worth of Horiyoshi merchandise apiece – the equivalent of a single T-shirt – over the course of last year.

Nevertheless, both HHWW and its promoters have regularly portrayed the company as an established force with a far-reaching presence in the worldwide fashion arena. At last count, HHWW estimated that it was now selling its merchandise at 45 luxury boutiques located in 25 cities around the globe. Meanwhile, paid promoters have indicated that big-name retailers – such as Neiman Marcus – cannot stock enough HHWW apparel to meet soaring customer demand.

“From Paris to Palm Beach, from Los Angeles to London, you can walk into any of these boutiques and view Horiyoshi’s collection for yourself,” Dickson proclaimed in his Breakaway Stocks newsletter. “High-end retailers like Neiman Marcus, Fred Segal and Harvey Nichols are gobbling up as much Horiyoshi as they possibly can.”

As noted previously, however, Horiyoshi actually saw its sales plummet by 99% to less than $1,000 during the last quarter that it operated as a private company before deciding to sell itself. In the months that followed, filings show, Krantis officially changed its name to Horiyoshi Worldwide and began trading under its current symbol – with its stock priced around 60 cents a share – as the company prepared to gain control of the luxury apparel firm.

Legal Accessories

This September, about two months before HHWW began trading, the company inked a formal agreement to buy Horiyoshi through a share-exchange deal.

Under the terms of that original contract, HHWW promised to issue Horiyohsi 64.87 million shares of stock (later reduced to 30 million shares or half of the shares outstanding) in exchange for the private company. In official corporate filingsMacdonald Tuskey – a Vancouver law firm connected to a number of dubious microcap companies – shows up as the legal adviser to HHWW on that merger deal.

By now, TheStreetSweeper has linked Macdonald Tuskey to at least three risky penny stocks over the course of the past year alone. First, during its early coverage of Americas Energy (OTC: AENY.OB) in January, TheStreetSweeperclosely examined one of the firm’s named partners – Gerald Tuskey – after uncovering his checkered track record. With Tuskey serving as its legal advisor (and occasionally listed among its largest shareholders), AENY saw its stock rocketfrom $1.50 to $5.50 before later crashing to its current price of just 46 cents a share.

Two months later, TheStreetSweeper spotlighted Macdonald Tuskey as the legal advisor to Lithium (OTC: LTUM.OB) after paid promoters fueled a major rally in that penny stock. In that case, reports show, CFM – the same firm that wouldlater manage HHWW’s seven-figure publicity campaign – had hired Untapped Wealth, a sister publication toBreakaway Stocks, to recommend LTUM using funds from a $2.4 million advertising budget. While Breakaway Stocks predicted that LTUM would hit $5 in the short term before rocketing past $17 on down the road, inspiring MarketWatchto declare it the “Stupid Investment of the Week,” the stock instead peaked at just $1.41 and has since tumbled to 26 cents a share.

More recently, this May, TheStreetSweeper found itself again examining Macdonald Tuskey after the law firm surfaced as the legal advisor to Big Bear Mining (OTC: BGBR.OB) during one of the most notorious penny-stock promotions of the entire year. That stock, which rapidly soared from 75 cents to $1.75 on massive volume, now trades for less than a dime a share.

This October, after connecting Macdonald Tuskey to crowds of doomed microcap companies, The Vancouver Sunpublished an entire three-part series on Bill Macdonald – the firm’s other named partner -- as part of its ongoing coverage of the shady penny-stock arena.

“Over the years, Macdonald has helped dozens of questionable companies register their shares on the OTC Bulletin Board, a well-known watering hole for stock-market predators,” the newspaper wrote. Indeed, “Macdonald’s clients include some of the most untrustworthy people in Vancouver’s junior securities market.”

TheStreetSweeper called Macdonald Tuskey on Wednesday seeking input for this story. The receptionist placed this reporter on hold and, shortly afterwards, came back with news that both of the law firm’s partners had left for the holidays.

Ugly Record

For its part, HHWW has found itself connected to some other penny-stock players that might raise a few eyebrows as well.

Take its CFO Ray Catroppa, just for starters. When announcing his appointment last month, HHWW portrayed Catroppa as an accomplished finance veteran who had spent the past six years advising “numerous public companies” that trade on major stock exchanges. But HHWW never mentioned Catroppa’s most recent employer, Cameron Associates, or the fact that it primarily caters to microcap companies by providing them with investor relations services.

Just one day before joining HHWW, records show, Catroppa was still managing investor relations for a penny-stock company known as Falcon Oil & Gas (OTC: FOLGF.PK). That stock, which peaked near 60 cents about 18 months ago, currently trades for 15 cents a share.

As a group, it appears, Cameron’s other clients have fared no better. Here is a sampling of companies, followed by their stock performance, featured on Cameron’s official client list: several current and former Nasdaq stocks – including Applied Energetics (Nasdaq: AERG), Celsius Holdings (Nasdaq: CELH), Encorium Group (OTC: ENCO.PK) and Vaughan Foods (OTC: FOOD.OB) – that have plummeted in recent years and now trade for less than $1 a share; and numerous penny stocks – such as 30DC (OTC: TDCH.PK), MediaNet Group (OTC: MEDG.OB) and, of course Falcon Oil & Gas (OTC: FOLGF.PK) – that have lost serious ground as well.

Initially, at least, HHWW enjoyed huge gains with Catroppa added to its team. Just weeks after hiring Catroppa as its CFO, in fact, HHWW announced a $5 million financing deal – albeit with an obscure Milan-based firm known as Zyndy Trade Corp. -- that helped spark an explosive rally in its shares.  Although Zyndy surfaced out of the blue, withno obvious record of past clients or similar financing deals, investors hastily rushed to celebrate the promise of much-needed funds.

Barely a week after HHWW announced that it had received the first $2 million of those funds, raised by issuing Zyndy almost 2 million shares of stock priced at $1.03 apiece, the stock was trading at a record high of $3.25 a share. By the time that HHWW reported that it had collected the remaining $3 million this week (following a smaller grant to Zyndy of 1.58 million shares), however, the stock had fallen by almost half and actually lost additional ground following the good news.

While still hovering above $1.60 at this point, HHWW already reminds some investors of other once-hot penny stocks – touted by the same promoters – that ultimately collapsed in the end.

Permanent Stains

Long before CFM launched its multimillion-dollar publicity campaign for HHWW, records show, the firm arranged expensive – and temporarily effective – promotions for numerous penny stocks that later met with ugly fates.

As a young firm in 2003, Dow Jones reported, CFM managed a $1 million advertising campaign for a microcap company known as SHEP Technologies. With SHEP promoters touting valuable business deals with the likes of Ford (NYSE: F) and Eaton (NYSE: ETN), Dow Jones noted, the stock quickly soared to almost $3 a share. But those deals later proved to be bogus, Dow Jones indicated, and the stock quickly fell by half over the course of one short week. (Since then, SHEP has apparently disappeared for good.)

Undeterred, CFM soon moved forward with other stock promotions. In 2004, The Vancouver Sun reported, CFM managed a $700,000 advertising campaign for a company known as Aberdene Mines. Armed with that generous budget, the newspaper said, CFM hired James DiGeorgia of the Gold & Energy Advisor – who would later push BGBR before backing off when TheStreetSweeper spotlighted that risky call – to recommend Aberdene in his widely distributed newsletter. Although Aberdene rapidly soared to almost $4.50 a share following that report, the newspaper said, the stock had already lost half of its newfound value just a few days later. (Like SHEP, Aberdene now seems nonexistent save for the investor pain it left behind.)

When tapped to manage a new six-figure promotion for Eden Energy (OTC: EDNE.OB) the following year, Dow Jones revealed, CFM turned to DiGeorgia and his powerful newsletter once again. With DiGeorgia celebrating EDNE as “the second Saudi Arabia,” Dow Jones reported, the penny stock rocketed to almost $10 a share. Five years later, however, EDNE barely fetches a nickel and can sometimes go an entire session without a single share changing hands.

Meanwhile, StockPromoters.com records showSmall Cap Fortunes – identified in its own disclaimer as a division of CFM – has gone on to pocket huge sums of money for touting a slew of other ill-fated penny stocks as well. 

One of those, a controversial company known as Planktos (OTC: PLKT.PK), caught the attention of The Vancouver Sun after its soaring stock gave the cash-stripped firm a market value of more than $100 million for a while. Less than a year after Small Cap Fortunes pocketed $250,000 to promote Planktos, however, The Vancouver Sun was reporting that the company had run out of money and decided to wind down its operations with the stock – previously touted as a $30 winner – trading on the lowly Pink Sheets for just two pennies a share. Like other stocks featured in expensive CFM campaigns, Planktos appears to be worthless now that all of the powerful hype has long since disappeared.

With Planktos fast sinking toward obscurity by the spring of 2008, records show, CFM soon received $300,000 to promote a notorious company known as Aussie Soles (OTC: AUSE.OB) in another big publicity campaign. This time,records show, CFM hired Untapped Wealth – a sister publication to the one that would later promote HHWW – and attracted some unwanted attention as a result.

Shortly afterwards, the Stock Gumshoe blasted Untapped Wealth for disguising its paid promotion of Aussie Soles as a credible stock pick and urged his followers to cancel their subscriptions to the newsletter.

“After their decision to participate in this particular ad, I’m much more suspicious of everything they do,” the Stock Gumshoe wrote back in May of 2008. “Recommending and touting a stock in exchange for money from that company puts you down at the bottom of the pile in my opinion … There’s a lot of company at the bottom of the pile, sure, but it doesn’t mean it’s where you want to be.”

Two years later, those who followed Aussie Soles still remember that promotion and the pain it would soon cause. With the former $2.50 stock fetching mere pennies (before volume completely disappeared), the Vancouver Sun recentlyslammed Untapped Wealth because it had “shamelessly touted” Aussie Soles in “one of the rattier made-in-Vancouver stock deals floated on the OTC Bulletin Board.”

Trinity Investment Research, the publisher of both Untapped Wealth and Breakaway Stocks, did not respond to messages seeking comments for this story. CFM ignored requests for information as well.

Laundry List

Despite its dismal long-term record, StockPromoters.com records show, Small Cap Fortunes has regularly commanded six-figure payouts for touting a bunch of other losing penny stocks as well.

TheStreetSweeper reviewed all of those stocks in detail and originally planned to document their performance until the list grew too long and the results too monotonous. In a nutshell, records show, almost every penny stock promoted by Small Cap Fortunes before this year has lost the vast majority of its past value and – in some cases – no longer even trades at all. In contrast, records show, only a tiny handful has emerged from massive plunges with any notable value still intact.

Otherwise, StockPromoters.com records show, only the firm’s two latest picks – First China Pharmaceutical (OTC:FCPG.OB) and none other than HHWW – still look like relatively “healthy” stocks with lasting volume and share prices above the crucial $1 mark. The first, touted by Small Cap Fortunes at 85 cents in October, rocketed to almost $6by early December but soon reversed course and now fetches less than one-third of that price. Meanwhile, HHWW itself soared from 80 cents to $3.25 – with the stock peaking just one day after FCPG did – before following a similar path to its current price of $1.63 a share.

To be fair, Small Cap Fortunes had plenty of company when touting HHWW for pay. According toStockPromoters.com records, more than a dozen other firms – including TheSUBWAY.comTopGunStockPicks.com,EpicStockPicks.com and DailyProfit.com (another outfit paid by CFM) – collected money for joining in the chorus. That list does not even include newsletters like Breakaway Stocks, either, the tout sheet hired by Small Cap Fortunes parent CFM that may have delivered the most effective promotion of all.

Based on the track records of Breakaway Stocks and other firms hired by CFM in recent years, however, that powerful HHWW endorsement might spark less confidence than fear. In its paid tout, Breakaway Stocks repeatedly portrayed HHWW as the next True Religion Apparel (Nasdaq: TRLG) – a favored example among penny-stock promoters eager to showcase a rare fairy-tale microcap ending – when pushing investors to buy the shares. But if history serves as any guide, HHWW could easily wind up in the growing pile of worthless stocks – littered with tainted names like Planktos and Aussie Soles – long ago abandoned by those who once labeled them as surefire winners instead.

* Note: No member of TheStreetSweeper’s staff or advisory board has ever taken a financial position in Horiyoshi Worldwide (HHWW.OB) 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.


 

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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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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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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.

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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...