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LEXG: The Biggest Snow Job of the Year?

by Janice Shell - 5/11/2011 6:51:06 PM

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.

Even so, notoriously optimistic junior mining companies seem as enthusiastic about lithium as ever. So do paid promoters who pump the lifeblood into – and almost invariably out of – penny-stock plays of all kinds.

LEXG arrived on the scene in late 2010, but the stock went largely ignored until it suddenly caught fire about a month ago. That’s when LEXGimmediately followed by promoters, started broadcasting the company. 

Although LEXG became a fully reporting company late last year, it waited until March 24 to issue its first press release. With remarkable timing, an outfit known as “PrePromoStocks” took note of LEXG that same day and brought the company to the attention of its Twitter followers.

“My back hurts,” the tweet declared, “from all these 3rd tier stock promoters piggybacking my $LEXG trade.”

At that point, however, no promoters had even started talking about the stock. But they were well prepared to do just that and, in short order, would soon begin shouting the name.

LEXG failed to respond to a detailed list of questions for this story.

‘The Next Exxon’

On March 29 -- after a few more days and press releases – the campaign began in earnest, as QualityStocks profiled the company in its Daily Newsletter and put out an alert on its QualityStocks Twits site. QualityStocks is an extremely active promotional firm located in Scottsdale, Ariz., where – by some handy coincidence -- LEXG operates as well. Both firms even share an address on the same street, North Hayden Road, about a block or two apart.  

QualityStocks publishes multiple tout sheets, holds conferences, makes videos and offers a variety of other services. The firm boasts a large “team,” only four of whom appear to have surnames. That small group includes Michael McCarthy, the managing director, who presumably controls the firm’s self-proclaimed “multimillion-dollar brand.” Although QualityStocks discloses compensation payments, it reported none from LEXG.

"We have not been paid a penny by LEXG or any third party for the articles or posts we did on LEXG," McCarthy has since confirmed.

The really big LEXG promotion began right after QualityStocks first touted the name. The very next day, a website called TheStockDetective.com produced a long and elaborate “report” boldly entitled “The Next Exxon.” The report’s overblown rhetoric proved misleading from the start, stating that “a massive reserve of what may be the new ‘super fuel’ to replace ordinary gasoline – lithium – has been discovered in America.” Investors would need to read all the way to page four before learning that you don’t put lithium in your tanks; you put it in your batteries. 

That’s obviously not the main point, of course. The bigger point comes on page 10, when investors – by now desperate to score some LEXG stock – discover how simply they can do that: “Go to your online account,” the report states, “and place an order for shares of Lithium Exploration Group, OTCBB: LEXG.”

The report then sets a $10 price target for LEXG after highlighting other lithium stocks that have risen hundreds – even thousands – of percentage points in the space of months.

In typical fashion, the report uses a disclaimer buried on the final page to reveal arguably the most important information of all. That fine-print notice vaguely explains that The Stock Detective is working with and for “Circuit Media,” which has received a “total production budget” in the amount of $3,296,800 – a stunningly high figure for a promotional campaign – and has paid The Stock Detective $50,000 of that as an “editorial fee.”

The moneybags that bankrolled that seven-figure campaign is uselessly identified as “Gekko Industries,” a mysterious firm that holds restricted LEXG stock. While plenty of companies share that name, none of them seems like the type that would take a deep interest in some junior lithium miner let alone spend millions promoting its stock.

In fact, both Circuit Media and Gekko Industries appear to have no meaningful existence outside of that report and its disclaimer. 

On April Fool’s Day, a second and very similar promotion – its disclaimer almost exactly the same – then followed, this one on a website impressively called “Stock Market Authority.” Though a bit shorter and more restrained in design than the original tout, the message remained consistent. Publisher Elliott Dobbs (who resembles a twentysomething trying hard to look older) declared lithium a “wonder element” and poured on the hype from there. He went on to make the confident if puzzling claim that “ONE company sits on a multibillion-dollar bonanza… (because) this dynamo firm controls a considerable portion of the world market for lithium.”

Treasure or Trash?

LEXG was originally established in 2006 as Mariposa Resources, filings show, which billed itself as an “exploration stage company to be engaged in the search for mineral deposits or reserves.” Over the course of the next few years, Mariposa did a little exploration and obtained an option to acquire an interest in some claims in the Clinton Mining District of British Columbia. For the most part, however, Mariposa was basically just a public shell. 

Late last year, Mariposa suddenly reinvented itself. On Nov. 17, it merged with Lithium Exploration Group – a brand-new company incorporated that same day – and began trading under its current name and symbol a few weeks later.

Meanwhile, on the same day as that merger, a Canadian by the name of Guy Robineau also incorporated a brand-new company called Lithium Exploration VIII. LEXG struck a deal with that new outfit, which would provide the company with one of its core assets, one month later. Specifically, corporate filings reveal, LEXG acquired an option to purchase “certain mineral permits” to some lithium mines in Canada from the second similarly named company.

Lithium Exploration VIII had just purchased that option itself from a Vancouver company known as First Lithium Resources (OTC: FLNTF.PK) a couple of months earlier. Although LEXG has yet to supply that option agreement in its corporate filings, First Lithium has disclosed enough information in a past quarterly report to offer some clues about the value of those assets.

First Lithium sold that option for an upfront cash payment of $90,000 and the promise of additional payments every year – except this one – through 2014. In addition, it mandated that the new owner keep making “such property payments as may be required to maintain the mineral permits in good standing.”

First Lithium owned a total of 41 permits granting it access to lithium mines collectively known as the “Valleyview properties” before it negotiated that deal. The company held onto all but five of those, which represent those that LEXG now controls.

If either company scores big on Valleyview’s lithium, logic suggests, First Lithium – not LEXG – stands the far better chance. It holds eight times as many permits as LEXG does, but its stock (with a similar share count) trades at a fraction of the price. 

First Lithium sells for just 9 cents a share on the Pink Sheets and the TSX Venture Exchange, giving the company a market value of less than $5 million. LEXG opened for just a few cents more, with the market assigning it a slightly higher value, barely a month ago. But it instantly began soaring on massive volume – soon exploding on fuel from thesix-figure publicity campaign – and now boasts a $4.02 stock price and $191.5 million market value that looks downright enormous in comparison.

The promoters touting LEXG have portrayed those lithium claims in Canada, together with the company’s remaining claims in Argentina, as some of the richest in the entire world. But the exercise above makes the Canadian claims look almost worthless, while a review of the Argentine claims – based upon the limited information available – cannot even begin to support all the hype.

Early this year, filings show, LEXG signed a definitive agreement with a company called Salta Water to purchase 60% of the company’s “Salta Agua” claims located in the Salta province of Argentina. Under the terms of that deal, LEXG simply needed to pay $75,000 within 30 days – supplemented with 250,000 shares on its increasingly valuable stock – and then come up with another $300,000 and 750,000 restricted shares over the course of the next three years. If LEXG successfully satisfies those payments, the company can then acquire the remaining 40% interest in that property for $6 million.

Salta Water is based in the Cayman Islands, a location as well known for its shadowy financial deals as it is for its sun-drenched beaches, so it operates under its own set of rules. But it originally optioned those same mining claims to a North American company, which has dropped a potential hint or two about the value of the assets.

That Vancouver company, snappily named Electric Metals (TSX: EMI.V), struck a deal with Salta in late 2009 tooption the Argentine claims that LEXG now controls. Electric Metals evidently later called off that deal, however, andno longer includes the project among those now discussed on its website. The company could have simply lacked the required cash to move forward, in fairness, but it could have just as easily decided that the project looked unattractive instead.       

Either way, those Argentine properties never seemed to spark the level of interest – let alone outright bidding war – one might expect for claims to some of the most valuable lithium mines in the world. 

The Smartest Guys in the Room?

LEXG hardly looks like the sort of company that can outsmart big miners by finding prize assets that can be purchased for a song, either. In fact, neither the founder of the shell corporation that merged with LEXG nor the leader who now runs the company it became appears to have any relevant experience in the field.

Mariposa was established by Nanuk Warman, an accountant who works as a “self-employed consultant.” He resigned from the company on Nov. 4, two weeks before the merger, with Alexander Richard Walsh assuming the titles of president, secretary, treasurer and member of the board.

No miner himself, Walsh has instead spent his career working in sales, marketing and business development. In hisofficial bio on the LEXG website, he importantly packages himself as “a seasoned professional whose extensive experience on Wall Street included raising capital and forming strategic partnerships for young operating companies.”

According to brokerage records compiled by the Financial Industry Regulatory Authority (FINRA), however, Walsh’s real “Wall Street” career was rather brief. He passed the low-level Series 6 exam in 2004, giving him a license to sell mutual funds and insurance, and spent just four years working in the field. After that, records indicate, Walsh started a consulting company in the same state that LEXG – like its promoter down the block -- now happens to call home.

Two of the other firms promoting LEXG, The Stock Detective and Stock Market Authority, share some common traits of their own. Both websites were created last spring, for starters, but never featured any notable promotions until LEXG came along.

Other connections, though somewhat tangled and hidden from view, further link the pair. The Stock Detective isregistered to Agora Multimedia – a name resembling those taken by well-known promoters Agora Publications of Baltimore and Agoracom of Toronto -- while Stock Market Authority is registered under its own name but lists none other than Agora Multimedia as its technical contact. Both Agora Multimedia and Stock Market Authority are young limited liability companies incorporated in Delaware, records indicate, the first in May of 2010 and the second just eight months later right in time for the big LEXG publicity campaign.

Agora Multimedia’s own website helps complete the picture. On its homepage, the firm claims to be a “leader in online, broadcast, and corporate video productions.” On its disclaimer page, rendered almost illegible by the use of gray text on a black background, the firm goes on to make clear that its business is stock promotion. Based upon the evidence presented above, Agora apparently both created The Stock Detective and Stock Market Authority and used the sites to pump LEXG.

As the managing director of QualityStocks, McCarthy has been following publicity campaigns in the microcap arena for the past five years. During that period, he has never seen one as expensive or effective (based on dollar volume) as the LEXG promotion has been. Although he tracks a number of newsletters and financial websites, McCarthy has never heard of the mysterious players -- such as Agora Multimedia, Circuit Media, The Stock Detective and Stock Market Authority -- that surfaced along with the LEXG campaign, either. 

Agora itself did not respond to a request from TheStreetSweeper seeking input for this story.

Progressive Jackpot Winners

The big LEXG promotion, organized and executed incredibly well, has worked wonders for the stock. Company management looks like it played an important role, too, by waiting months to issue its first press release just days before the promotion began and then suddenly opening the floodgates. 

(Despite that striking pattern, Walsh reportedly informed a curious investor that he and his colleagues “have not hired nor are involved in any stock promotion campaigns at this time.” Notably, however, he stopped short of denying advance knowledge of the multimillion-dollar publicity campaign.)

Meanwhile, LEXG appointed two new directors – Brandon Colker and Jonathan Jazwinski – ahead of that big promotion. Colker operates several businesses near San Francisco, including one called Sustainable Venture Capital. That firm specializes in raising capital, a resource that LEXG will certainly need in the expensive mining arena if it expects to survive, let alone thrive. Colker has apparently raised no money for LEXG yet, but his firm could arguably land some business from the company – which has already heralded his access to capital as “instrumental” to its growth – on down the road.

Jazwinksi, the other director, stands out as an actual mining engineer. While LEXG clearly welcomed the arrival of its token miner, portraying him as a valuable player “in its global acquisition and exploration efforts,” Jazwinkski is awfully young – at 30 – to be considered a mining pro just yet. (He also secured his MBA from the University of Phoenix, a for-profit college derided by some as an online diploma mill.)

Neither Colker nor Jazwinski has received any cash or stock from LEXG, records indicate, but Walsh wound up with a mountain of shares in February that are worth a fortune on paper right now. According to corporate filings, Walsh acquired a total of 25 million shares – the same number that the company’s original founder held before him – which were transferred to him “pursuant to an assignment of debt.”

That LEXG stock, representing 52% of the shares outstanding, has soared in value to $100 million in a gravity-defying act rarely pulled off without the force of the most powerful – and expensive – of stock-promotion campaigns.

As noted earlier, before the press releases and the promotional hype, LEXG barely traded for months. That suddenly changed on March 22, two days before the initial tweet about LEXG appeared, when the stock more than quadrupled in price to 51 cents and an astounding 3.4 million shares changed hands. (Only five LEXG trades took place on that day, four very large ones at 12 cents and a final buy of just 1,000 shares that accounted for the big explosion in the company’s share price.) LEXG then jumped to open at 85 cents the following morning and has kept marching higher, recording only a handful of down days, on a virtually unbroken path straight north to $4 a share.

LEXG has so far acted like a jackpot stock, showering those who play it – and promote it – with a fortune in rewards. Walsh clearly ranks as the biggest winner right now, since he owns more than half of the company’s stock. But he can sell no more than 1% of the outstanding shares per quarter, due to market restrictions, so he can lock in only a fraction of his paper gains. If LEXG follows the pattern deeply engraved by past overhyped penny stocks, he will never get a chance to cash in most of the rest.

The promoters touting LEXG have already banked their fat rewards in the meantime, scoring a combined $3.3 millionfrom a single campaign. Even ordinary investors have managed to strike it rich for more than a week this time, without waking up to find the promotion over and winding up poorer than they had originally been.

The magic never lasts forever with any stock, however, and it tends to wear off of penny stocks with lightning speed. LEXG has enjoyed a more powerful spell than most, to be sure, but promoters invariably break the spells they cast whenever they leave the scene. If history repeats itself as usual, those well-paid cheerleaders will soon vanish – taking those miraculous LEXG gains right along with them – and show up with a new stock and a new fairy tale when they decide to reappear. 

As a matter of fact, in a potentially dark sign for LEXG, the OTCMarkets website recently slapped a “Caveat Emptor” warning – the dreaded skull and crossbones – on the stock this week. When TheStreetSweeper called to ask OTCMarkets about the move, a representative there said that none other than “questionable stock promotion” had set off the alarm.

* No party affiliated with TheStreetSweeper -- including its principals, its editorial staff or members of its advisory board -- has taken a financial position in Lithium Exploration Group (LEXG.OB). As a matter of policy, TheStreetSweeper prohibits its editors and reporters from taking financial positions in any stocks that they cover. To contact Janice Shell, the author of this story, please send an email to editor@thestreetsweeper.org or directly to janiceshell@hotmail.com.

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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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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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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...