Answer to a hard question and very simple at that. Initially, Meridian contemplated entering into an LOI agreement with Gulf Ethanol that envisioned what had been presented as an opportunity to execute a reverse merger between the two companies.
That LOI agreement was just before expiring, and as it is now known, J. T. Cloud and Jonathan Gilchrist could and would not allow this to happen and Meridian was approached by Gilchrist with the idea of instead of a reverse merger a proposed joint venture agreement that on the face of it contained more desirable terms and conditions allowing Meridian to maintain the control over it's technology and the proposed operations of any process systems that would be constructed.
Unfortunately, what was soon to be learned was that J. T. Cloud, Gulf Ethanol, Jonathan Gilchrist and others around them had their own agenda that actually involved the effective hijacking of Meridian technology by the inference that Gulf had actually acquired the Meridian Technology as Gulf frequently claimed in their press releases which were written by Jonathan Gilchrist.
After the execution of the Joint Venture Agreement with Gulf Ethanol an agreement was entered into between Meriden and Goldbridge Capital for the acquisition of a publicly traded shell. This was the overlap of the plan of Gilchrist and Cloud in their agenda to manipulate and control the use of Meridian and eventually AETE in a well choreographed stock fraud. At this time it must be pointed out that the principals of Meridian already had in hand two LOI Term Sheets from a major investment group which while the terms provided substantial investment of funds they diluted the ownership of Meridian and the ownership of the company and it's technology to minority status for the principals of Meridian.
The ultimate decision by Meridian made the route of pursuing the reverse merger with a shell provided by Jonathan Gilchrist/Goldbridge Capital which would, under generally accepted circumstances, allow the company access to a wider range of funding and provide for the completion of processing equipment and establish production under the business model that had been worked out over a period of a year by Meridian Biorefining. Under these circumstances the stock price would have increased over time in relationship to the build out of process equipment and production growth as would reasonably be expected with any legitimate commercial enterprise.
Because of the non-performance on the Joint Venture Agreement and the fact that J. T. Cloud and Gulf Ethanol had not executed the associated License Agreement all agreements with Gulf Ethanol were terminated on January 14, 2008. All things being equal and without the knowledge of meridian management the reverse merger became the fall back position of Gilchrist and Cloud in maintaining their ability to conduct their ongoing criminal activity using Meridian in the form of AETE.
The stock exchange agreement between Meridian Biorefining and MSPR/AETE was executed on December 18, 2007. What was not expected nor foreseen was that the whole group around Jonathan Gilchrist and William Carmichael having absolutely perfected their scam scenario were already preparing AETE as their next "target company" having created 6 million shares of counterfeit stock in AETE through the execution of a 504 Reg D transaction on December 27,2007 which was accomplished midstream during the time between the signing of the stock exchange agreement and the alleged formal closing that was to transpire December 31, 2007 without the knowledge of Meridian Biorefining management.
The execution of the 504 Regulation D transaction was accomplished by Carmichael being the only consistent and continuing corporate AETE signature authority at the time and Jonathan Gilchrist switching roles in the two entities MXPR and AETE as it suited their needs in creating an environment where 6 million shares of stock were in essence counterfeited and stolen without the knowledge of the management of Meridian most of which became the new management of AETE. Stock register spreadsheets prepared by Carmichael and Gilchrist prepared on several occasions from the time of the execution of the stock exchange agreement only provided stock share numbers consistent with the stock exchange agreement. A demand was made for certification of stock register information to William Carmichael on or about February 24/25, 2008 which yielded the disclosure of the 504 Reg D transaction from Carmichael on February 26, 2008. This information provided from filings of MXPR resolutions and subsequent AETE resolutions signed by William Carmichael was the first time the documents had been made available to the new management of AETE.
During that same period of time it was determined that a complete due diligence investigation had to be undertaken by the new management of AETE to ascertain just what had been transpiring. This decision was made based on the claims established in the 504 Reg D transaction executed by Gilchrist and Carmichael on or about December 27, 2007 of the $15,000.00 payment by Gilchrist to Peter Lloyd for investor relations services which were not disclosed until a meeting on January 23, 2008. Basically the Gilchrist, Carmichael, Cloud, Uselton network has such a well established methodology for conducting these types of ongoing criminal activities that the can and do virtually hide a set of conduits that function in a parallel manner right alongside of the legitimate management of any company that they become involved with. This method and means of operations can be shown to have been used going all the way back to the companies in which Jack Uselton was sanctioned for this same type of scam in the late 90’s.
Right now there is a list of over 1005 companies that has been compiled, some of which were the basis of the Uselton indictments in July 2007 that upon close examination show this same type of method and means in the conduct of an ongoing criminal activity which includes Jonathan Gilchrist, William Carmichael, J. T. Cloud, Darrel Uselton, jack Uselton and a list of other participants that extends out to approximately 30 other individuals. That list and the associated link analysis that demonstrates the inter-relationship between these companies and their perpetrators is extraordinary in its scope, the level of their organization, and their ability to maintain and conduct these scams over a significant period of time.
The easy answer to your question of “why on earth didn't "senior management" have any idea what was going on?” is quite simple in one way and very complex in another. It’s one thing to feel that things “just aren’t quite right” at some point and then do what needs to be done and go to work in the manner that has been done and do a pretty complete internal investigation beginning with the first contact with the SEC and other enforcement agencies on or about the last week of January and the first week of February 2008 after developing enough information to be able to demonstrate the existence of a regulatory and/or ongoing criminal problem.
In effect these types of operations continue on a daily basis. If the web is surveyed for the number of press releases, or better yet, if and when someone spends the cash to subscribe to a service such as that found at www.stockpromoters.com you will find that there are over 750 companies that are currently being “promoted” by different groups that specialize in the promotion of microcap stock companies, most of which I would assume are legitimate business or have been established just as AETE was for the purpose of conducting a legitimate business that would grow or fail under its own power through the generally accepted phases of meeting commercial and market demands for a service or product. Then go to that same web site www.stockpromoters.com and look at the groups that are known for their activities as promoters in the pump and dump community and see how many companies they are promoting. What you will find is that in one fashion or another there are at 10- 20% of the companies that are currently being promoted (which does not include all of the known microcap companies in the market) that are probably being subjected to the same thing as AETE and other companies the names of which have been posted on this forum.
The world is full of traps, even some of the companies that start out without the problems that were uncovered by the management of AETE in short order become the target of other stock manipulation scams. The management of AETE acted on the available information, took the appropriate action in alerting the SEC and other enforcement agencies in multiple jurisdictions, and have also been forthcoming in its public approach to resolving the problems.
A better question is why is microcap stock fraud and stock manipulation a billion dollar a year business that involves everyone from the general public as investors, to traditional organized crime families and terrorist organizations. Another question is why is it that in the final nalysis it can be demonstrated that these groups that conduct these types of criminal activity are as well organized as the narcotics trade, the illegal weapons trade and the terrorist groups. And, I think a very interesting question that deserves a serious answer from the SEC as well as any number of enforcement agencies is why this type of activity cannot be contained any better than it is?
