Gulf Alternative Energy Corp. (GAEC)

[roger wilco]

Gulf Ethanol: It Works!

GFET's New Biomass Preprcessing System

HOUSTON, TX--(Marketwire - August 4, 2008) - Gulf Ethanol Corporation (PINKSHEETS: GFET) announced today the first successful testing of its biomass preprocessor. The prototype unit successfully processed raw feedstocks into an extremely fine powder which will allow cellulosic ethanol producers to improve results significantly.

"We are excited to see the first successful operation of our new technology," noted Bill Carmichael, President of GFET. "We have evaluated the initial results and are now ordering some design revisions that we believe will improve the efficiency of our technology. Then we will resume further testing," he added.

The U.S. Department of Energy states that, "The initial sizing and grinding of biomass affects efficiencies and quality of all the downstream operations. New technologies and equipment are required to process biomass between the field and conversion facilities." This is the need met by our new technology.

The U.S. Department of Energy states that, "Biomass is the single renewable resource that has the potential to supplant our use of liquid transportation fuels now and help create a more stable energy future. Using our indigenous biomass resources, we can potentially fuel our cars and provide new economic opportunities across the nation." It can be converted to carbon-based fuels and chemicals, in addition to electric power. America's plan to replace 20% of gasoline with biofuels within 10 years has five steps leading from the farmer's field to the consumer's vehicle. Gulf Ethanol's feedstock pre-processing technology fits in the feedstock logistics portion of this plan which addresses transportation, costs and handling of feedstocks.

About Gulf Ethanol Corporation

Gulf Ethanol is an alternative energy company focused on the development of technology for the cellulosic ethanol industry with a particular emphasis on Texas and the Gulf Coast.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This news release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements that include the words "believes," "expects," "anticipate" or similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to differ materially from those expressed or implied by such forward-looking statements. In addition, description of anyone's past success, either financial or strategic, is no guarantee of future success. This news release speaks as of the date first set forth above and the company assumes no responsibility to update the information included herein for events occurring after the date hereof.

[zekel]

Former GFET CEO, Darrel Uselton, set for trial in September. Fellow co-conspirator, Eddie Davidson found dead of an apparent murder-suicide:

http://www.denverpost.com/headlines/ci_9989562

Federal law enforcement and media across the country called him the “Spam King,” a legacy more than a decade in the making that ended with a gunshot Thursday.

After earning millions pushing everything from cheap thrills to penny stocks with anonymous, unsolicited e-mails, 35-year-old Eddie Ray Davidson became a “consultant” to the FBI, giving up names and methods, before he landed in a federal prison camp in Florence on May 27.

Davidson had regular meetings with an FBI agent and his cooperation was “complete, truthful and reliable,” Assistant U.S. Attorney Tim Neff said in court documents.

Besides telling the agents about methods, software and financial transactions used by spammers, Davidson provided information on one-time business partner Darrel Uselton, who is scheduled for trial Sept. 29 in Texas on organized-crime and money-laundering charges.

Uselton and Davidson sold low-cost, high-risk “penny” stocks in 2005 and 2006. Davidson sent thousands of unsolicited e-mails to promote stocks in Uselton interests, Neff said.

In return, Uselton paid Davidson based on sales increases, Neff said. Davidson told agents he and Uselton manipulated stock prices with bogus news releases and announcements.

Davidson had Web-based businesses in Colorado, Ohio and Florida, records show.

Before last year, he had been arrested only once before: a domestic-battery charge in Palm Harbor, Fla., in November 1998, which resulted in a misdemeanor charge on his record.

His 21-month federal prison sentence was the result of a guilty plea to tax evasion and falsifying computer records. He surrendered $714,139 to the Internal Revenue Service.

Prosecutors estimated Davidson earned $3.5 million from 2003 to 2006.

He was a veteran of the game. At just 24 years old in March 1998, Davidson was sued by America Online, which also published an online article calling him one of the country’s “Ten Most Wanted Spammers.”

His pitch for “generic Viagra” flooded America Online’s systems with more than 74 million messages in five months.

Davidson dodged the case and a default judgment was entered in July 2000 for $1.58 million, most of it for restitution from using AOL’s system as an advertising vehicle without paying for the privilege.

Playboy Enterprises sued in 1997 for copyright infringement claiming Davidson used its nude photos on his websites. Playboy got a $120,000 default judgment in 1999.

Another business permutation — Snagster Inc. — was sued in April 2003 by Yahoo. That suit was dismissed.

In 1997 his company was targeted by the U.S. Department of Housing and Urban Development for scamming people into paying $39.95 for a kit that helped them track down HUD mortgage refunds then take a commission for returning the funds to the rightful owners.

Staff researcher Barry Osborne and staff writer David Migoya contributed to this report. Joey Bunch: 303-954-1174 or [e-mail]

[zekel]

Hard to believe it was only just a year ago we saw this happend to the CEO of GFET: http://www.oag.state.tx.us/oagnews/release.php?id=2088 and the
subsequent indictment by the SEC: http://www.sec.gov/litigation/litreleases/2007/lr20187.htm

This all happening shortly after the company issued Darrel and his uncle Jack Uselton (http://www.sec.gov/litigation/litreleases/lr18294.htm), approximately 10.9 million shares of GFET at par value (Ibis Energy, Firemark Capital, Tejas Capital, Accelerator Partners, Brazos Capital, and Valores Fund, L.P. - all companies controlled/owned by them). Even after the indictment, JT Cloud and William Carmichael pretended to "buy back" these shares through their controlled company, Galleria Asset Management. They then tried to hide the fact that Useltons were still involved by showing the owner of Tejas Capital and Brazos Capital were run by a Mssrs. Steven Lease and Jim Mobitty respectively, despite the fact that the mailing address still shows up as Uselton's home address.

Notwithstanding the shell game switch on the shares, the company (JT and Carmichael) also issued themselves a hefty portion of shares at par value (10 million to Cloud Management, Oxford Funding, National Health Alliance, Galleria Securities Corp.) on top of the shares acquired from the Useltons.

No worries though, their long time buddies David Mordekhay and Jonathan Gilchrist were also well taken care of by being issued almost 9.6 million shares at par value (The Internet Business Factory and Hepplewhite Corporation).

Not too surprising when they were all fully flush with shares, and despite the arrest of Jack and Darrel, they still went on a spam campaign, issuing false and misleading press releases, highly embellished websites, and a not so independent analyst report issued by Chet Gutowski (co-owner of Gilchrist's Goldbridge Capital and Southfield Energy, both officed in the same office suite as GFET, as well as Carmichael/Cloud's other companies, such as TMDI, OXFD, and AEND 35% owned subsidiary Dynamic Distribution).

The point in rehashing all of this is that the current management of Carmichael has never learned from the litigation issues presented in the Advanced Powerline Case (OTC: APWL - http://dockets.justia.com/docket/court-txsdce/case_no-4:2007cv00356/case_id-489219/) and ongoing issues with the alleged illegal activities with the Alternative Energy Technology Center (OTC: AETE - http://investorshub.advfn.com/boards/read_msg.aspx?message_id=29526247), nor has he learned to cut his ties to the old ways of Uselton, Gilchrist, Mordekhay, and Cloud, as evidence by the recent hiring to the board of Robert Wilson (long time associate via American Security Resources (OTC: ARSC), American Enterprise Development Corp (OTC: AEND), System Management Solutions (OTC: SMSE)and the Professional Directors Institute).

The history is long and consistent with all of these players, supported directly and indirectly by a cast of many (Dino Price, Carly Long, Tyson Rhode, Ben Roberts, Debe Nease, Guttman, Tow, Blumenthal, Pollock, Carroll, and others). The story is pretty much the same - offer a fledgling company the promise of exposure through PR in exchange for large blocks of shares, infiltrate and take over the companies through a Corporate Secretary that can issue even more shares to friends and cohorts, pump up the market through "independent" promotion (OTC Services, Protrading.com, National Capital Trading, etc...), false and misleading press releases, a glossy website filled with factual inaccuracies (in some cases unauthorized by the company), the appearance of liquidity through wash trades in between various controlled family companies, and in the end
the result is invariably the same...a stock price in the gutter, and the bewildered investor wondering how he got into this train wreck.

Still confused? Here is some more supplemental information to help you navigate into the set up that is ongoing: http://www.spamnation.info/blog/archives/2007/07/the_useltons.html

Also:
http://pennystock-fraud.info/news.php/stock/symbol/Darrel%20Uselton/

http://www.rgm.com/articles/stockwatch5.html

[tippingpnt]

Meridian Attorneys Letter Cancelling Agreements with GFET tells the real story;

January 14, 2008

Gulf Ethanol Corporation
1240 Blalock Road
Suite 200, fax: (713) 461-9230
Houston, Texas 77055
Attention: Mr. J. T. Cloud, Chairman and CEO
(By fax and U. S. Mail)

Re: Joint Venture with Meridian Bio-Refining, Inc.

Dear Sir:

This letter will serve to notify you that Gulf Ethanol Corporation is in material default in regard to the above referenced joint venture agreement (dated December 4, 2007) for failure to fund a cash payment of $50,000.00 to Meridian Bio- Refining, Inc. by the end of business on January 10, 2008 as per Article I, paragraph 1.1 on page 1, and also for failure to promptly advance stock shares of Gulf Ethanol Corporation (as bargained consideration) to Meridain as per Article 2, paragraph 2.2, on page 2 of said joint venture agreement. Consequently, you are herein notified that the joint venture is forthwith dissolved the joint venture agreement having been materially breached) and that no further business relationship or legal obligations of any kind now exist between the parties to said (dissolved) joint venture agreement.

Furthermore, in view of the above described circumstances, the tender of an “Intellectual Property and Patent Sublicense Agreement” which was previously submitted in writing to Gulf Ethanol Corporation by Meridian Bio-Refining, Inc., but which sub-license agreement was never signed by Gulf Ethanol Corporation, is hereby formally withdrawn and any offer from Meridian Bio-Refining to license the technologies or intellectual property (owned or licensed by Meridian Bio-Refining) to Gulf Ethanol Corporation is revoked, rescinded, and withdrawn.

Respectfully,


JOHN MICHAEL JOHNSTON


CC : Jonathan C. Gilchrist, Goldbridge Capital, LLC

[zekel]

Sorry - did not edit my previous post with corrected links in time - here is a repost with corrected links:

Maybe William Carmichael truly has more time to dedicate to his new post as interim CEO of GFET as it was announced today that he resigned from OXFD (3-1/2 weeks ago) - it is unclear what will happen with his +/-8 million shares he captured (thru Galleria Securities) on that venture - maybe will spend more time with JT out at the ranch: http://www.jtcloud.com ??

My Comments/Opinions on the GFET shareholder letter:

"We are currently in the process of recruiting additional talent to our management team and Board of Directors" - more chiefs and no indians to do the work of actually making money....with little money in the bank, I anticipate more shares to be issued to the new management and BOD's to pay for their salary.

"...we believe that our technology, after we have finished testing and development, will play an important role in the advancement of efficient cellulosic ethanol plants in the U.S. and around the world..." - agreed - ya gotta start somewhere - untested, unproven, and never marketed - great concept but still far off in my opinion. After they prove out the technology, there will be a need to ramp up ($$) production, engineering, and marketing. Source of income is unknown at this time (except for issuing more shares).

"...because of the bulkiness of most biomass, transportation costs are high" - agreed, however, it is unclear where GFET plans to actually install this pre-processor - do you put it at the ethanol plant (and still incur the high transportation cost), or do you put it at a field location (and incur the cost of multiple pre-processor facility at each field location)?

"...attempted to engage in the international trading of ethanol, it attempted to acquire a couple of different facilities which it was unable to close and it even attempted to build an ethanol plant in China, Texas but abandoned that effort after meeting with resistance from the community." - other than Carly Long placing an ad in the international B2B website, I don't believe the Company ever attempted to engage in trading ethanol in a meaningful way at any of these locations and to push the blame on a community resistance is disingenous.

"In December, we entered into an agreement to jointly develop a technology that had been proposed by Meridian Biorefining but found they could not deliver to our specifications" - as was pointed out by those in the know at Meridian and AETE, the story line is very different than not just meeting specifications - it is reported by others to be an issue of Carmichael attempting to steal 6 million shares.

ref.: posted by "Tippingpnt" (reported to be the lead investigator with AETE):
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=29526247

"Pink Sheets companies, however, do not share the same rigorous disclosure requirements of SEC reporting companies so investors may have less information on which to make their investment decisions" - agreed. We will likely never know the reason why the bulk of 34.1 million shares were issued to company insiders and friends at par value (Useltons, Gilchrist, Carmichael, Mordekhay, and Cloud) nor will we ever see the full financial conflict of interest payment made to Chet Gutowsky for his "independent" analyst white paper he allegedly wrote.

"Pink Sheets stocks are often subject to traders who try to make money by shorting these stocks. Their method generally includes posting negative comments and, often, misinformation on blogs and message boards in order to create a negative view of a particular company while they are selling short into the stock" - this of course, does not apply to me as I have never owned this stock (long, short, or otherwise - directly or indirectly). I have also repeatedly challenged others to refute my assertions about the company and no one has provided a contrarian position.

Ironically, the misinformation to date has come directly from the company, especially its website and press releases. On a positive note, the Company continues to clean up its website and as of today has taken down most of the erroneous and false information that claimed to be a marketer/producer of ethanol (guess they actually read my blogs!).

Remaining errors/omissions/misstatements from their website:
http://www.gulfethanolcorp.com/gulf_ethanol_environment.htm
"Gulf Ethanol primarily sources ethanol from sugary crops, such as sugarcane" - GFET has no facilities to source to.

"Gulf Ethanol is actively monitoring these developments and encourages its suppliers to employ the most efficient methods of producing ethanol" - GFET has no suppliers for their non-existent facilities.

http://www.gulfethanolcorp.com/index.html
"Gulf Ethanol Corp. guarantees a high quality product to its customers. All of our fuel-ethanol meets or exceeds ASTM designation D4806 specifications and our continued efforts aimed at quality assurance include regular product testing in addition to world class customer service and reliability." - GFET has no product. ASTM D4806 is the incorrect standard for E85 fuels.

[zekel]

Speaking of Chet Gutowsky (remember his glowing independent analyst opinion he wrote about GFET?). Appears he ran the same type of operation for sister company AEND - seems like his expertise in the energy industry not only applies to Ethanol, but is also an expert on energy drinks:

Let's look at a few of the "facts" that were touted by Mr. Gutowsky in early October 2007:

http://www.havocenergy.com/investors/downloads/20071003_Analyst_Report.pdf

Valuation
"The following companies were used for our peer group analysis: Jones Soda, [JSDA], $12.06; Hanson Natural, Inc. [HANS]; $56.60; Leading Brands, [LBIX], $2.75; Sweet Success, Inc., [SWTS], $0.23 and Reed’s, Inc. [REED], $7.05. The average share price for the peer group is $15.74. We believe Havoc, although under the radar of the market, has laid the foundation necessary to perform well against its peer group in price appreciation over the next 18 months."

Definition of "peer group": something of equal worth or quality - not sure why any of the Nasdaq listed stocks above would even remotely be called a peer?

Price Target
"At a recent $0.85 per share, Havoc [AEND] lags its peers in price to value in the market. As the Company steps out of the shadows, we expect the market to realize the buying opportunity represented by AEND. As a result, we are initiating coverage of AEND – Havoc as a strong but speculative buy and hold. We target price appreciation to $3.40 by the end of the fourth quarter."

Results: $0.15 on December 31, 2007

"Havoc has taken the creative step of acquiring a 35% ownership stake in a captive distributor – Dynamic Distribution, Inc. that focuses on distribution to convenience stores and clubs."

What it fails to mention is that Dynamic Distribution is yet another shell of a company operating out of the Blalock office suite in Houston, that is also home to Southfield Energy, Telemedicus, Oxford Funding, Gulf Ethanol, Autofund Leasing, Alternative Energy Technology Center, Galleria Securities, etc, etc, etc..... Dynamic has no functional operation at this location other than a mailing address.

"Chet Gutowsky is a Chartered Financial Analyst (“CFA”) with over 30 years experience in banking, business and investment evaluation. The views expressed in this report are those of the analyst and are based upon publicly available information on which the analyst has relied as true in the formation of his opinions. No part of my compensation is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report."

Well, as I have already documented, his objectiveness is immediately compromised by his association with Gilchrist and Carmichael: http://www.southfieldenergy.com/our_team.html

Chet was touting Dynamic Distribution with several misleading statements:

"...AEND owns a 35% interest in beverage distributor, Dynamic Distribution based out of Dallas, Texas..."

Note: Dynamic is based in Houston

"...independent distributors and through its captive distributor, Dynamic Distribution, Inc...."

Question: what makes Dynamic "captive"?

"....Havoc has taken the creative step of acquiring a 35% ownership stake in a captive distributor – Dynamic Distribution, Inc. that focuses on distribution to convenience stores and clubs. This gives the company dedicated, product specific distribution and marketing in a single package as jobbers call on stores and clubs specifically selling the Havoc product...."

This is in direct contrast to the Company's own financials that admits this Houston [not Dallas] based company is in fact a "developmental stage" company with no such distribution network:

"...the Company acquired a 35% interest in Dynamic
Distribution, Inc. ("Dynamic"), a development stage beverage distributor by exchanging services related to the startup of Dynamic...."

The "exchange services" is unknown to us nor is the company structure of Dynamic known to us (except for the mailing address). One could speculate the regular routine of getting stock at par value to Carmichael, Gilchrist, and Gutowsky, who office out of the Blalock suite in Houston or perhaps worse, a disproportionate share of the profits from AEND through the ruse of "consultant fees".

Can anyone figure this out?

[zekel]

Maybe William Carmichael truly has more time to dedicate to his new post as interim CEO of GFET as it was announced today that he resigned from OXFD (3-1/2 weeks ago) - it is unclear what will happen with his +/-8 million shares he captured (thru Galleria Securities) on that venture - maybe will spend more time with JT out at the ranch: www.jtcloud.com ??

My Comments/Opinions on the GFET shareholder letter:

"We are currently in the process of recruiting additional talent to our management team and Board of Directors" - more chiefs and no indians to do the work of actually making money....with little money in the bank, I anticipate more shares to be issued to the new management and BOD's to pay for their salary.

"...we believe that our technology, after we have finished testing and development, will play an important role in the advancement of efficient cellulosic ethanol plants in the U.S. and around the world..." - agreed - ya gotta start somewhere - untested, unproven, and never marketed - great concept but still far off in my opinion. After they prove out the technology, there will be a need to ramp up ($$) production, engineering, and marketing. Source of income is unknown at this time (except for issuing more shares).

"...because of the bulkiness of most biomass, transportation costs are high" - agreed, however, it is unclear where GFET plans to actually install this pre-processor - do you put it at the ethanol plant (and still incur the high transportation cost), or do you put it at a field location (and incur the cost of multiple pre-processor facility at each field location)?

"...attempted to engage in the international trading of ethanol, it attempted to acquire a couple of different facilities which it was unable to close and it even attempted to build an ethanol plant in China, Texas but abandoned that effort after meeting with resistance from the community." - other than Carly Long placing an ad in the international B2B website, I don't believe the Company ever attempted to engage in trading ethanol in a meaningful way at any of these locations and to push the blame on a community resistance is disingenous.

"In December, we entered into an agreement to jointly develop a technology that had been proposed by Meridian Biorefining but found they could not deliver to our specifications" - as was pointed out by those in the know at Meridian and AETE, the story line is very different than not just meeting specifications - it is reported by others to be an issue of Carmichael attempting to steal 6 million shares.

ref.: posted by "Tippingpnt" (reported to be the lead investigator with AETE):
http://investorshub.advfn.com/boards...ge_id=29526247

"Pink Sheets companies, however, do not share the same rigorous disclosure requirements of SEC reporting companies so investors may have less information on which to make their investment decisions" - agreed. We will likely never know the reason why the bulk of 34.1 million shares were issued to company insiders and friends at par value (Useltons, Gilchrist, Carmichael, Mordekhay, and Cloud) nor will we ever see the full financial conflict of interest payment made to Chet Gutowsky for his "independent" analyst white paper he allegedly wrote.

"Pink Sheets stocks are often subject to traders who try to make money by shorting these stocks. Their method generally includes posting negative comments and, often, misinformation on blogs and message boards in order to create a negative view of a particular company while they are selling short into the stock" - this of course, does not apply to me as I have never owned this stock (long, short, or otherwise - directly or indirectly). I have also repeatedly challenged others to refute my assertions about the company and no one has provided a contrarian position.

Ironically, the misinformation to date has come directly from the company, especially its website and press releases. On a positive note, the Company continues to clean up its website and as of today has taken down most of the erroneous and false information that claimed to be a marketer/producer of ethanol (guess they actually read my blogs!).

Remaining errors/omissions/misstatements from their website:
http://www.gulfethanolcorp.com/gulf_...nvironment.htm
"Gulf Ethanol primarily sources ethanol from sugary crops, such as sugarcane" - GFET has no facilities to source to.

"Gulf Ethanol is actively monitoring these developments and encourages its suppliers to employ the most efficient methods of producing ethanol" - GFET has no suppliers for their non-existent facilities.

http://www.gulfethanolcorp.com/index.html
"Gulf Ethanol Corp. guarantees a high quality product to its customers. All of our fuel-ethanol meets or exceeds ASTM designation D4806 specifications and our continued efforts aimed at quality assurance include regular product testing in addition to world class customer service and reliability." - GFET has no product. ASTM D4806 is the incorrect standard for E85 fuels.

[Stock]

This is precious -- everyone here is a short, evil, basher troll. Get used to your new lot in life:

Gulf Ethanol Corp. Interim CEO Letter to Shareholders

HOUSTON, TX , I want to take a few moments to talk to you as one of the owners and shareholders of the Corporation. In every change of leadership, a company adjusts its course to work toward improving its performance in order to maximize the benefits to its shareholders. During my term in leadership, I expect to keep in touch with you as shareholders as often as possible and keep you up to date on developments within the company.

Management. We are currently in the process of recruiting additional talent to our management team and Board of Directors. We announced last week the addition of Robert Wilson to our Board of Directors. Robert is the CFO of Clean Power Corp. based in The Woodlands Texas and is a Texas CPA. He adds a strong knowledge of alternative energy and finance to our Board of Directors. Upon the retirement of our former Chairman and CEO, JT Cloud, I decided that we needed to broaden our management team and expand our Board of Directors. We expect to continue with this process throughout 2008.

Technology. As I look at the future of Gulf Ethanol, I am most excited by the development of our new cellulosic ethanol feedstock preprocessing technology. I know that is a mouthful, so let me explain. As ethanol plants proliferated across America's Midwest, corn prices began to rise which cut deeply into the profits of U.S. ethanol producers. In addition, higher corn prices affected cattle and food industries as well creating a negative backlash against the ethanol industry and most of its publicly traded companies. As a result, the industry lost significant value over the course of the last year.

Experts agree that the answer lies in new technologies that can convert cellulose (rather than sugars and starches) into ethanol. The reason is that cellulose is produced by all plants and is the most abundant biological material on earth. It is widely available in most of the world in the form of grasses, agricultural waste, sawdust, etc. The problem today is that current technologies are not efficient in converting biomass to ethanol. In addition, because of the bulkiness of most biomass, transportation costs are high. This is where we believe our new technology will fit within the nascent cellulosic ethanol industry.

Our first machine is currently being constructed for delivery sometime in June 2008. We expect this machine to transform many types of cheap biomass into a very fine, dry powder for processing into ethanol. This preprocessing off cellulosic biomass into a fine powder is significant for several reasons:

-- First, the fine, dry powder that we expect to produce will be more
efficient to transport because the moisture will have been removed reducing
weight and volume;-- Second, the consistency of the feedstock will be dramatically altered
by turning it into a uniform powder which can be conveyed and processed
much more efficiently;-- Third, the surface area of the feedstock is increased as the particle
size is reduced which further increases the efficiency of processing,
thereby increasing the amount of ethanol extracted from the feedstock;-- Fourth, the speed of processing into ethanol is increased because the
size of the particles of each feedstock has been reduced.

As a result, we believe that our technology, after we have finished testing and development, will play an important role in the advancement of efficient cellulosic ethanol plants in the U.S. and around the world.

Technology Development. Every new technology must be tested before it is ready for final deployment. We will begin the testing of our technology this summer after delivery of our initial processing unit. This will include the testing of different potential feed stocks such as switchgrass, sorghum, sawdust, grass clippings, etc. The product we produce from these tests will then be sent to nationally recognized laboratories to be tested.

The purpose of these tests is to both verify the quality of the feedstock pre-processing achieved by our technology and to determine the efficiencies produced by our preprocessing of the various feedstocks. This information will allow end users to evaluate the value of what we have to deliver as part of the biofuels industry.

Based upon the results of our initial testing, we expect to make adjustments and improvements to our technology platform to prepare it for final commercial delivery. Please watch for our press releases and disclosure filings where we will update you regarding our progress in the coming months.

Our History. Under prior management, Gulf Ethanol has attempted to advance a variety of alternative energy strategies which were not successful. The Company attempted to engage in the international trading of ethanol, it attempted to acquire a couple of different facilities which it was unable to close and it even attempted to build an ethanol plant in China, Texas but abandoned that effort after meeting with resistance from the community.

In December, we entered into an agreement to jointly develop a technology that had been proposed by Meridian Biorefining but found they could not deliver to our specifications.

The inability of the Company to complete these projects slowed our development and diminished our performance as a Company during this period.

The new management team cannot change history but we believe we can write a new future for the Company by advancing and expanding on the technology we are about to complete. We expect to try to maintain a focused approach to what is working and to advance this technology to full implementation.

With traditional energy costs shooting through the roof, people are more aware of the importance of developing alternative and renewable sources of energy as quickly as possible. The initial ethanol plants built in the U.S. use corn for their primary feedstock. This business strategy has not worked well since food prices and corn prices have risen with the increased demand for corn. Cellulosic biomass should not have this same problem because the materials are non-food plant crops and because they are far more widely available. We don't expect cellulosic ethanol to replace oil & gas but, rather, to supplement traditional fuels. In addition, because these fuels can be produced locally, they help develop energy independence based upon locally produced renewable energy sources.

Our Stock. As a Pink Sheets stock, we don't recommend that any investor over concentrate their investment in any one company. We have and will continue to strive to meet all of the disclosure requirements of the Pink Sheets to maintain their full, current reporting status -- called PS Current. We do this in order to try to keep you, as our shareholders, informed of our current financial and operating status. Pink Sheets companies, however, do not share the same rigorous disclosure requirements of SEC reporting companies so investors may have less information on which to make their investment decisions.

Pink Sheets stocks are often subject to traders who try to make money by shorting these stocks. Their method generally includes posting negative comments and, often, misinformation on blogs and message boards in order to create a negative view of a particular company while they are selling short into the stock. These bloggers seldom have any unique or inside information about the companies they are shorting and are, generally, not a reliable source of information about a company.

In Conclusion. We believe that the implementation of our new technology will be beneficial to our shareholders by validating the Company's business plan and by moving us toward profitability based upon a technology for preprocessing biomass into an efficient feedstock for ethanol producers.

Realizing that many of you have been shareholders of Gulf Ethanol for a long time, I want to thank you for your confidence in the Company. I will be working hard to earn your continued confidence and to advance the Company as an important participant in the emerging cellulosic ethanol industry in coming months. Thank you for your support of the Company.

Keep an eye on our progress in coming months and I believe you will be pleased with what we are able to achieve.


Sincerely,/S/William Carmichael
Interim CEO

About Gulf Ethanol Corporation

Gulf Ethanol is an alternative energy company focused on the development of the cellulosic ethanol industry with a particular emphasis on Texas and the Gulf Coast. For more information please visit our homepage at: www.GulfEthanolCorp.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This news release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements that include the words "believes," "expects," "anticipate" or similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to differ materially from those expressed or implied by such forward-looking statements. In addition, description of anyone's past success, either financial or strategic, is no guarantee of future success. This news release speaks as of the date first set forth above and the company assumes no responsibility to update the information included herein for events occurring after the date hereof.


CONTACT:

William Carmichael

1240 Blalock Road, Ste. 200

Houston, Texas 77055

Office: 713-461-9229

[zekel]

Oops...so much for the 5-10% drops...yikes - 16%+!

[Trendfinders]

I wouldn't doubt it, not in the stock myself...Moved away from pinkies almost all together...Was just speculating

[zekel]

Stability...as in only losing 5% per day instead of 10%??!

Let's face it, the company is headed to sub-penny level and the company insiders (Carmichael, Wilson, Gilchrist, Uselton(s), Cloud, and others) are continuing to cash out their millions of shares that were issued at par value.

[Trendfinders]

Possible that GFET may be finding some stability in this range. Going to have to keep it on close watch here...Need some more direction from the company....

[Theoriginal7]

XCEL ENERGY RENEWABLE DEVELOPMENT FUND - THIRD FUNDING CYCLE EVALUATION AND SELECTION REPORT
http://192.234.136.46/docs/07-0675RDF3rdcyclefunding120607.pdf
Dec. 6, 2007
Xcel Energy announces renewable energy project selections

• Minnesota Valley Alfalfa Producers, Raymond, Minn., to research the application of a new, energy-efficient technology to process a variety of biomass feedstock to expand the resource options for biomass energy production, $1 million.

Proposal: Researching the Use of KDS (Kinetic Disintegration System) to Process Various Feedstocks for Biomass Pelletization Use

The project research centers on designing and fabricating changes in machinery originally used for pulverizing ores and minerals to process and pelletize various feedstocks for renewable energy applications. The resulting pellet products will be used for energy production by co-firing with coal, in combined heat and power (CHP) applications, for gasification, and/or used in biofuel production. Examples of feedstocks that will be explored include sweet corn silage, distiller’s grain, sorghum and millet, municipal byproducts (trees, grass clippings) paper sludge, and switchgrass.




GFET should contact FASC. They seem to have many synergies. GLTA.

[Theoriginal7]

They just started testing for biomass preprocessing. Take a look at this company's product.


http://www.cellulosicethanolinvestments.com/company-view.php?cid=36

http://www.fasc.net/downloads/HandbookofDrying1.htm

http://www.fasc.net/downloads/2006-AETC-Overview.pdf



It would seem GFET needs to get a hold of First American Scientific in a hurry. They trade under the symbol FASC-OTCBB BTW. IMHO.

[kneehighstocks25]

Hey buddy I appreciate the heads up, luckily I found this out as soon as I had interest of playing GFET...Look forward to more of your DD, GL

[small cap investor]

This company is doing really nasty things, and you shouldn't doubt about it. I am watching the pink sheets and they are not so nice as one would expect, at least most of them: http://www.pinkinvesting.com/2008-05-22/intentions-of-gulf-ethanol-corporation-gfetpk/

[zekel]

In order to make their promotion work, they not only need the millions of shares issued at par value, but they also need the appearance of liquidity and movement on the stock. In the past, this is where Darrel and Jack Uselton came into play with their various controlled entities (Valores, Ibis, Firemark, Protrading.com, Tejas Capital, Brazos Capital, etc...). Unfortuneately for JT Cloud, William Carmichael, David Mordekhay, and Jonathan Gilchrist, this important piece was pulled out from under them last July just as the "pump" was in full swing when Jack and Darrel were arrested:

http://www.oag.state.tx.us/oagnews/release.php?id=2088

http://www.sec.gov/litigation/litreleases/2007/lr20187.htm

This and subsequent uncovering of their ongoing scams with TMDI, AETE, MYHA, and OXFD, it kinda put a kink in their scam........

[kneehighstocks25]

From the looks of it there is no campaign. And if there is a campaign, they are not really too focused on even trying to make this look better then the P.O.S that it is. I took a look at this one last week because it was generating a little bit of buzz in the marketplace it was going to begin a promotional campaign. I am glad I didn't get caught up in it the more i hear about their operation.

[small cap investor]

Yes, you are right, it is not only dumping but it tries not to fall over the board of the ship it is. And, actually, the campaign it is involved in is really nasty. Do you know what I mean?

[kneehighstocks25]

Looks like the company is dumping dumping dumping....Can't even find an entry point if I wanted to

[kneehighstocks25]

Best of Luck to you bud

[stockpsychic]

I know this has to be a scam...at the same time, i'm very impressed with yesterday's come back, looking to see if it can break .45 today and I'll reenter

[kneehighstocks25]

You know what Zekel, you are good. Think I will walk away from this one without a second thought. Appreciate the DD keep up the good work!

[kneehighstocks25]

Fair enough...Unfortunately if I listened to everyones claims on IHUB with no facts to back it up I would never have time to listen to my gut instinct lol. I appreciate what you are trying to do here but, maybe this company finally has their $h-t together and will trade on its own merit. Yesterday tells me something good is going on even if just for the time being. I do appreciate all of your posts however bud they are very informative and I look forward to more in the future. GL, see you out there.

[stockpsychic]

might explain today's lack of price appreciation...on the bright side today's volume should've soaked up those shares and this should continue to bounce

[hawk]

Someone else did.

[zekel]

There is a poster on the AETE board that claims Mizrahi turned back all of his 1.585 million shares to the company back in Dec. 2006. Noticeably absent from the financial filings of GFET are these return of the shares. I suspect Carmichael and Cloud got their hands on these shares for their own personal account....just my sneaking opinion - I have nothing to back that claim up.

[kneehighstocks25]

Based on todays activities, I would say they are moving in the right direction. Still watching this with both eyes open, but if i can get in here around support idk that i will be able to refrain!....Any more info that you come across though is greatly appreciated

[stockpsychic]

Grabbed some of this Friday, looks ready to bounce

[creede]

Nice thread here, Otc.

[zekel]

Meridian Biorefining deal was conveniently noted in a press release by AETE that the deal with GFET was cancelled. AETE subsequently bought Meridian Biorefining. AETE is run by David Mordekhay out of the same office suite on Blalock Road in Houston (also corporate headquarters for GFET, TMDI, OXFD, Southfield Energy, etc....).

However, just when you think it was safe to go back in the water, the SEC halted trading today of AETE (see News at following link):

http://www.pinksheets.com/pink/quote/quote.jsp?symbol=aete

Apr 2, 2008
Pink Sheets News Service

Washington, D.C.—
UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

April 2, 2008

In the Matter of: The Alternative Energy Technology Center, Inc.

ORDER OF SUSPENSION OF TRADING


It appears to the Securities and Exchange Commission that the public interest and the protection of investors require a suspension of trading in the securities of The Alternative Energy Technology Center, Inc. Questions have arisen concerning the company's reliance on Rule 504 of Regulation D of the Securities Act of 1933 in conducting a distribution of its securities, and the accuracy and adequacy of statements in the company's press releases regarding its rights to certain technology. The Alternative Energy Technology Center, Inc., a company that has made no public filings with the Commission, is quoted on the Pink Sheets under the ticker symbol AETE, and has recently been the subject of spam e-mail touting the company's shares.

The Commission is of the opinion that the public interest and the protection of the investors require a suspension of trading in securities of the above-listed company.

Therefore, it is ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading in the above-listed company is suspended for the period from 9:30 a.m. EDT, April 2, 2008, through 11:59 p.m. EDT, on April 15, 2008.

By the Commission.

Nancy M. Morris
Secretary

[Trendfinders]

Showed very encouraging signs of the reversal today. Broke thru .90 to close at HOD of .94. GOOOOOOO

[Trendfinders]

I agree...Everything looks positive at this time.

[Vance]

I believe the share price will rebound from here in the next couple to few months, just my opinion/prediction! g'luck

[Trendfinders]

A Few Updates~
1Yr


3Month


1Yr -

[Trendfinders]

Gulf Focuses on Energy Mandates
Monday February 25, 9:34 am ET


HOUTON--(BUSINESS WIRE)--Energy mandates continue to spread across the U.S. adding urgency to the task of alternative energy companies such as Gulf Ethanol [OTC: GFET]. In addition to Federal government mandates such as replacing 20% of transportation fuels with renewable fuels by 2020, many states are issuing mandates of their own as well.
“Government mandates continue to push markets,” noted JT Cloud, Gulf’s President. “The growth of the alternative energy is driven by the dual forces of government mandates and market demand. We stand at the crossroad of the solution to America’s energy crunch as we forge solutions for making alternative fuels from cellulosic feedstocks,” he concluded.

The development of alternative transportation fuels is important to America’s energy independence. Companies such as Archer Daniels Midland [NYSE: ADM] and Bunge Limited [NYSE: BG] have led in the development of biofuel feed-stocks. As ethanol becomes a ubiquitous source of alternative energy, most major gasoline suppliers now include ethanol in their gasoline blends. Major suppliers such as Exxon Mobil Corp. [NYSE: XOM]; British Petroleum, [NYSE: BP] include ethanol in most current gasoline blends sold across America, and demand for ethanol is expected to continue to increase.

About Gulf Ethanol Corporation

Gulf Ethanol, [OTC: GFET] is an alternative energy company focused on the development of cellulosic ethanol technologies with a particular emphasis on Texas and the Gulf Coast. The Company is focused on the procurement and development of cellulosic ethanol technologies. For more information please visit our homepage at: www.GulfEthanolCorp.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This news release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements that include the words "believes," "expects," "anticipate" or similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to differ materially from those expressed or implied by such forward-looking statements. In addition, description of anyone's past success, either financial or strategic, is no guarantee of future success. This news release speaks as of the date first set forth above and the company assumes no responsibility to update the information included herein for events occurring after the date hereof.



Contact:
Gulf Ethanol Corporation, Houston
JT Cloud, 713-461-9229 (Office)
[e-mail]

--------------------------------------------------------------------------------
Source: Gulf Ethanol Corporation

[Trendfinders]

Stock is showing the signs of a nice reversal here. Looks to be popping of yearly lows.

[Trendfinders]

Anyone still following this board? Seems like a ghost town around here :)

[Trendfinders]

The stock is reaching previous 1 year lows, could be one to keep an eye on here. .80 is support!

[bah1]

I bought some shares @1.65 then they dropped off and now are back up again, the company has made some good statements lately and things are looking good. I have noticed a no buy or sell, is there something going on, what will the shares go to. If someone has ideas it would be good to hear about it.

[antisubmarinewarfare]

Fuel Shortage Addressed by Gulf Ethanol
Monday November 26, 11:50 am ET


HOUSTON--(BUSINESS WIRE)--Gulf Ethanol Corporation (OTC:GFET - News):
The Wall Street Journal reported on November 19, 2007 that “the world is approaching a practical limit to the number of barrels of crude oil that can be pumped every day.” Gulf Ethanol is addressing this crisis through the development of technology to efficiently produce fuels from non-food biomass.

With oil trading near $100 per barrel, the Journal concludes that production restrictions could “set the stage for a period of marked energy shortages, high prices and bare-knuckled competition for fuel.” With demand growing at an average rate of 2.5% per year, the world will need nearly 120 million barrels per day by 2030.

“With prices rising and shortages looming, where does American turn for energy security?,” asked JT Cloud, President of Gulf Ethanol. “Studies show that using biomass to produce ethanol can replace as much as 30 million barrels per day of oil equivalent,” he noted. “The energy squeeze is here and will only get worse in years ahead. We believe that our investment in cellulose feed-stocks is the answer America needs now. With many ethanol stocks suffering because of rising corn prices, Gulf Ethanol provides a way to capture the value of solving America’s energy squeeze,” he concluded.

The Journal concluded "that to meet 2010 demand for oil, investment in 2005 would have to have been at least $350 billion. In fact, investment was only $225 billion for that year. As a result, we should expect shortages over several years causing debilitating price spikes."

“The time has arrived for a full-court press to complete the development of cellulosic ethanol as a pressure relief valve from rising oil demand,” stated Mr. Cloud. “We expect to be a leader in this sector providing a substantial contribution to addressing this growing crisis,” he concluded.

About Gulf Ethanol Corporation

Gulf Ethanol is an alternative energy company focused on the development of the cellulosic ethanol industry with a particular emphasis on Texas and the Gulf Coast. For more information please visit our homepage at: www.GulfEthanolCorp.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This news release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements that include the words "believes," "expects," "anticipate" or similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to differ materially from those expressed or implied by such forward-looking statements. In addition, description of anyone's past success, either financial or strategic, is no guarantee of future success. This news release speaks as of the date first set forth above and the company assumes no responsibility to update the information included herein for events occurring after the date hereof.



Contact:
Gulf Ethanol Corporation, Houston
William Carmichael, 713-461-9229
Fax: [phone]
[e-mail]

--------------------------------------------------------------------------------
Source: Gulf Ethanol Corporation

[petermic]

What a bunch of BS. With their $34,000 in the bank and humongous expertise they will dominate this industry - umm, when and if it the technology turns out to be viable.

[antisubmarinewarfare]

Gulf Ethanol Corporation: Grass Grows Under the Ethanol Industry
Thursday November 15, 11:24 am ET


HOUSTON--(BUSINESS WIRE)--Gulf Ethanol Corporation, (OTC:GFET - News). Gulf Ethanol announced today the formalization of its cellulose based ethanol initiative. Cellulose ethanol is a renewable, advanced biofuel that can be used in today’s cars. The primary difference between the two types of ethanol products is that conventional fuel ethanol is derived from grains such as corn and wheat. Cellulose ethanol is made from the non-food portion of renewable feedstocks such as sorghum, switchgrass and corn stover.
All automotive manufacturers warrant the use of 10% ethanol blends (E10). These same manufacturers warrant (E5), 5%, blends in Europe. Ethanol blends are sold at retail outlets across Canada, the United States and Europe. As well, Ford, DaimlerChrysler, General Motors, Mazda and many more vehicle manufacturers, sell cars, trucks and minivans that are flexible fuel vehicles designed to use ethanol in up to 85% (E85) blends.

“Dependence on fossil fuels and corn based ethanol create economic pressures that can be relieved by the use of non-food feedstocks to generate large quantities of renewable fuels,” noted CEO JT Cloud. “With 60% of America’s oil being imported, it is critical for America to develop efficient, renewable fuel sources. Renewable fuels, such as cellulose ethanol represent a low-cost domestic source of energy that generates both environmental and economic benefits to the U.S. economy,” he added.

Gulf Ethanol is aggressively developing its cellulose-based production strategy and expects to become a leader in the alternative fuels industry along side of companies such as ethanol producer MGP Ingredients (MGPI).

Meanwhile, auto companies like Ford (F) and General Motors (GM) are ramping up promotion of flex vehicles that run on E85 -- hoping they will catch on like hybrids that combine the use of electrical power and gasoline.

About Gulf Ethanol Corporation

Gulf Ethanol is an alternative energy company focused on the development of the cellulosic ethanol industry with a particular emphasis on Texas and the Gulf Coast. For more information please visit our homepage at: www.GulfEthanolCorp.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This news release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements that include the words "believes," "expects," "anticipate" or similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to differ materially from those expressed or implied by such forward-looking statements. In addition, description of anyone's past success, either financial or strategic, is no guarantee of future success. This news release speaks as of the date first set forth above and the company assumes no responsibility to update the information included herein for events occurring after the date hereof.



Contact:
Gulf Ethanol Corporation, Houston
William Carmichael, 713-461-9229
Fax: [phone]
[e-mail]

--------------------------------------------------------------------------------
Source: Gulf Ethanol Corporation

[petermic]

GFET posted a new quarterly report.

http://www.pinksheets.com/otciq/ajax/showFinancialReportById?id=12805

On August 27, 2007, we pledged 500,000 shares of our common stock as collateral for a loan made by Texas State Bank to Oxford Funding Corporation, a company which is related to Gulf Ethanol Corporation through common ownership.

33.2 million shares outstanding. Total assets of $34,615.

[Our-Street]

I am reviewing the undisclosed ownership situation I suggested may exist.. I have found a place where what I thought was undisclosed was disclosed.

Sorry about that.

As always, do your own due diligence. All is my opinion.

[petermic]

The Uselton case:

http://spamsuite.com/taxonomy/term/15

[petermic]

Posts from the prior link:


Having met Jack back in 1998 and subsequently been involved with trying to get Jack and family to pay for his sins (I testified in front of the SEC back in 1998/1999 regarding Mountain Energy), it gives me great pleasure to see the video of Darrel being arrested along with Jack's mug shot!! (see Texas Attorney General Web site under news releases for video)

One of the latest companies to fall prey to their scheme is Gulf Ethanol Corporation (OTC GFET.pk). Apparently the company was not too enthusiastic about Darrel's relationship and removed him from the company earlier in the year...although it apparently has not stopped the fluffy press releases (reference company web site at gulfethanolcorp dot com)

and the company still has an advertising link on the Houston Chronicle web site. The company's stock price fell off the cliff coincidentally at the news release of Jack and Darrel's arrest...interesting to note that according to company Pink Sheet financials, Jack and Darrel control approximately 44% of the stock via their control of IBIS and Firemark entities.


Posted by Steven in Houston @ 2007-07-25 12:40



--------------------------------------------------------------------------------


Interesting also to note....William Carmichael appears to be a name that keeps surfacing in Houston for various OTC companies and may be the "unnammed" link - this guy seems to have a knack for having a very wide breadth of expertise in all of the "hot" markets:

Gulf Ethanol Corp - VP of Operations Oxford Funding - Investor Relations LipidLabs - Director and VP Marketing (note: LipidLabs president, Mr. Cloud, may also be an officer of Gulf Ethanol) A Time to Grow - Chairman and Chief Executive Officer American Song and Book Company - Founder iExalt - Director of Marketing Mannabeach - Founder American Enterprise Development Corp - Director Cyber Law Reporter, Inc. - Director


Posted by Steven in Houston @ 2007-07-25 14:01

[petermic]

http://www.stockwatch.com/swnet/newsit/newsit_newsit.aspx?bid=U-s0125079-U:*SEC-20070716&symbol=*SEC&news_region=U

SEC sues pair of pump and dump penny stock spammers

2007-07-16 13:59 ET - Street Wire

Also Street Wire (C-*BCSC) BC Securities Commission

by Lee M. Webb

The U.S. Securities and Exchange Commission (SEC) is suing a pair of Texas-based securities law recidivists, Darrel T. Uselton and his uncle Jack E. Uselton, for an alleged pump-and-dump scheme involving spamming 13 companies quoted on the wild and wooly pink sheets.

In the lawsuit filed in the U.S. District Court for the Southern District of Texas on July 9, the SEC claims that from May of 2005 through December of 2006 the Useltons obtained cheap stock from at least 13 pink sheet companies and then scalped those shares into an artificial market they created through manipulative trading, direct mailers, Internet-based promotional activities and spam e-mail campaigns.

According to the U.S. regulator, the spamming duo pocketed more than $4.6-million in the serial scalping and market manipulation scheme. (All amounts are in U.S. dollars.)

Neither of the Useltons has yet filed an answer to the SEC complaint and the allegations have not been proven.

The SEC securities fraud case is not the only legal difficulty facing the Useltons.

On the same day the U.S. regulator filed its lawsuit, Texas Attorney General Greg Abbott announced that the pair face criminal charges in connection with their allegedly fraudulent scheme.

A Harris County grand jury indicted 40-year-old Darrel Uselton and 69-year-old Jack Uselton on money laundering and organized criminal activity charges on July 3.

"Investors will not tolerate scam artists who use the Internet to illegally manipulate stock prices," Mr. Abbott declared in a July 9 news release. "Together with several states and the SEC, we have uncovered an elaborate scheme to defraud unwitting investors.

"The Office of the Attorney General will aggressively prosecute market manipulators, spammers and con artists whose illegal schemes defraud unsuspecting citizens."

Investigators from Mr. Abbott's office have seized more than $4.2-million from bank accounts associated with the defendants.

The grand jury indictment was unsealed on July 6 and Darrel Uselton was arrested at his residence without incident on the same day.

Wearing sandals and dressed in shorts and a tee shirt that gave full effect to his rather large belly, the rotund promoter was in his garage when approached by investigators from the attorney general's office. He quickly placed his hands behind his back where his wrists were fitted with metal handcuffs.

Accompanied by four police officers, Mr. Uselton seemingly calmly flip-flopped a short distance down the street to the awaiting state-supplied transportation for the ride to the Harris County jail where he is still being held in lieu of an $8-million bond.

An arrest warrant was issued for Jack Uselton, who turned himself in on July 11. The elder Mr. Uselton is now also a guest at the Harris County jail pending $8-million bail.

Engaging in organized crime and money laundering are first-degree felonies in Texas and carry punishment of five to 99 years in state prison, as well as fines of up to $10,000, upon conviction.

Darrel and Jack Uselton, of course, enjoy the presumption of innocence with respect to the criminal charges.

North and south

The explosive proliferation of e-mail spam touting penny stocks, primarily skunky OTC Bulletin Board and pink sheet promotions, has been of concern to regulators on both sides of the border for some time now.

Canada does not have a national securities regulator, so responsibility for efforts to combat stock spam falls upon the individual provincial and territorial jurisdictions that make up this country's pastiche of regulatory regimes.

Recently, the chairman of the British Columbia Securities Commission (BCSC), Doug Hyndman, has been touting the perceived success of the regulator's SpamWatch initiative, which was launched in May.

As part of the effort to combat spam, the BCSC has issued a few trading halts that last only three days and have absolutely no effect outside of the province.

In a June 25 speech to the Vancouver Board of Trade, however, Mr. Hyndman served up a rather grandiose assessment of SpamWatch.

"To date, we have imposed five halt trading orders, and surprise, surprise, the volume of spam has dropped dramatically," Mr. Hyndman told the Board of Trade listeners. "What this told us is that the people responsible for the spam are well aware that we are now watching and acting."

As noted by Stockwatch, the real surprise for some market followers is that Mr. Hyndman seems to believe, or at least claimed, that the few relatively inconsequential three-day trading halts, which are effective only within B.C. and have no impact on OTC-BB or pink sheet trading, have dramatically reduced the amount of stock-touting e-mail spam.

If there has in fact been a dramatic drop in the amount of spam, it seems likely that the SEC's Operation Spamalot and subsequent investigative actions deserve a significant portion of the credit.

In unveiling Operation Spamalot in March, two months before the BCSC chimed in with its initiative, the SEC immediately suspended trading in 35 companies and has since suspended a number of other spam stocks.

Unlike a provincial three-day BCSC trading halt, when the SEC issues a 10-day suspension the targeted stock does not trade anywhere.

Moreover, it has been clear for some time that the U.S. regulator has been investigating the people behind spam campaigns, something undoubtedly of more concern to spammers than the possibility of falling under the baleful eye of B.C.'s comparatively toothless securities regulator.

The securities fraud suit against the Useltons and the related criminal charges brought by the state of Texas represent at least some of the fruits of the SEC's investigation of stock spamming.

The cast

According to the SEC, stock promoter, former broker and repeat securities violator Darrel Uselton "was the mastermind of the scheme."

The younger Mr. Uselton's previous regulatory woes, resulting in multiple fines, censures and suspensions, trace back to at least early 2004.

In March of 2004, he was sanctioned by the National Association of Securities Dealers (NASD) for violating minimum net capital requirements, failing to provide required financial information and acting as a general securities principal without being registered.

In that action, Darrel Uselton was fined $15,000, suspended from acting as a general securities principal for one year and suspended from association with any NASD member for six months.

(Darrel's brother, Mark Uselton, was also sanctioned in that particular NASD disciplinary proceeding. As it happens, that was not Mark Uselton's first brush with NASD. In 2003, he was fined $7,500 suspended for six months.)

In April of 2005, NASD sanctioned Darrel Uselton again, this time for selling a member firm without seeking prior approval. He was fined $10,000 and suspended for six months.

That evidently marked the end of Darrel Uselton's career as a broker, but he clearly kept his hand in the securities business. According to the U.S. regulator, however, his subsequent participation in the industry was as a serial fraudster.

While the SEC tags Darrel Uselton as being the principal architect of the alleged fraud, the regulator claims that his uncle, Jack Uselton, "was a full partner with his nephew."

Interestingly, Jack Uselton reportedly helped to raise his nephew after Darrel's father died 20 years ago. It is not clear whether that help included teaching Darrel Uselton the ropes regarding the stock business.

In any event, Jack Uselton ran afoul of the SEC for a 1998 pump-and-dump scheme involving Mountain Energy Inc., an OTC-BB promotion that ran from four cents per share to a high of $1.75 per share in a matter of approximately three weeks based on false and misleading press releases and oral misrepresentations made by the elder Mr. Uselton.

While the short-lived pump was under way, insiders dumped millions of unregistered shares on unsuspecting investors before the price collapsed.

As it happens, at least $3.6-million worth of those shares were dumped through controversial Toronto-based brokerage Merit Investment Corp. and its equally troubled successor, now-defunct Rampart Securities.

The SEC suspended trading in Mountain Energy in July of 1998 and the company ceased operations the following month.

In September of 2001, the U.S. regulator filed a securities fraud lawsuit against Jack Uselton and several other Mountain Energy players.

On Oct. 10, 2002, Mr. Uselton settled with the SEC, agreeing to a permanent ban from acting as an officer or director of any public company and consenting to being enjoined from future violations of the anti-fraud provisions of securities laws.

Based on Jack Uselton's sworn financial statements demonstrating that he was essentially broke, the U.S. regulator did not seek a civil penalty.

Apparently the elder Mr. Uselton's financial position improved considerably, though perhaps only temporarily, as a result of his more recent participation in the allegedly fraudulent scheme he ran with his nephew.

According to the U.S. regulator, the Useltons conducted their affairs through a number of Texas-based corporate entities that they controlled.

Among other companies, the defendants controlled Ablaze Technologies Inc., Firemark Capital LLC, IBIS Energy LLC, OTC Services Inc., Protrading.com, the Valores Fund LLC and Warrior Capital LLC.

By a coincidence, Warrior Capital may be familiar to readers following Stockwatch's coverage of another smelly promotion, Conversion Solutions Holdings Corp., headed by semi-literate Georgia promoter Rufus Paul Harris.

As reported in a Nov. 7, 2006, Stockwatch article, Warrior Capital picked up 400,000 unrestricted shares of Conversion for consulting services under a Regulation D exemption on March 5, 2005.

While Conversion has a large contingent of Texas shareholders, it is not clear whether the Useltons managed to acquire any more shares before the promotion orchestrated by Mr. Harris ramped up last year.

In a case unrelated to the action against the Useltons, the SEC filed a securities fraud lawsuit against Conversion and Mr. Harris last October. That case is still working its way through the court.

Among the relevant players in the serial scalping and market manipulation scheme attributed to the Useltons, is "a principal spammer" who remains unidentified in the 31-page SEC complaint.

Presumably the unnamed principal spammer was responsible for operating the "botnets" or proxy bot networks typically comprised of personal computers connected to the Internet that have been infected with malicious viruses or malware that forward the stock spam.

While the SEC does not name the principal spammer in its lawsuit, it is clear that his identity is known to the regulator.

According to the SEC, in return for disseminating massive amounts of spam e-mail touting the penny stocks, the Useltons paid the spammer approximately $1.5-million.

It is likely that the spammer's name will surface at some point during the proceedings.

In order to run a pump-and-dump scheme, of course, the operators must use one or more brokerage accounts to unload their shares.

Darrel and Jack Uselton reportedly controlled more than 30 separate brokerage accounts that were cleared through various firms around the U.S.

Among others, the Useltons controlled accounts at TD Ameritrade; Scottrade Financial Services; Penson Financial Services; Leeb/Pershing Securities; E*Trade Securities; Fidelity Investments; Barron Moore/Computer Clearing Services Inc.; and Basic Investors/NF Clearing Inc.

The SEC does not provide any breakdown of just how many shares the Useltons dumped through each of those brokerage firms, but as is the case with Vancouver firms, say, some brokers are more accommodating than others when it comes to unloading rather large amounts of shares of penny stocks.

By another coincidence, Basic Investors and Computer Clearing Services are probably familiar to readers who followed Stockwatch's extensive coverage of Saskatchewan native Urban Casavant's now-revoked pink sheet woofer, CMKM Diamonds Inc.

Long before the SEC finally revoked CMKM's registration in October of 2005, Mr. Casavant had his company peel off a staggering 703.5 billion shares, many of which were issued to family, friends and business associates.

In the subpenny promotion's heyday, a Basic broker actively touted CMKM and an associated company, U.S. Canadian Minerals Inc., to gullible investors and his firm executed a rather hefty number of CMKM trades.

While perhaps just an unwitting conduit, CMKM's master shareholder list indicates that a whopping 165 billion shares of the pink sheet dog of dogs passed through Computer Clearing Services before the promotion was shut down.

Returning to the Useltons, the SEC claims that their pump-and-dump scheme involved spamming 13 pink sheet stocks.

Those stocks allegedly include Oretech Inc., Intelligent Sports Inc., Advanced Powerline Technologies Inc., Notch Novelty Corp., Avondale Resources Corp., Spooz Inc., ESPRE Solutions Inc., Grifco International Inc., Leatt Corp., Adrenaline Nation Entertainment Inc., Equipment and Systems Engineering Inc., Gulf Petroleum Exchange Inc. and Wentworth Energy Inc.

The scheme

According to the SEC, each of the market manipulations orchestrated by Darrel and Jack Uselton followed a similar pattern, which may be testament to the fact that the spamming scheme was effective.

Typically, after locating a penny stock outfit desperate for cash, the Useltons negotiated to obtain unrestricted shares from the company for little or no money in return for providing purported financing or promotional activities.

Almost immediately, the free trading stock was transferred into various brokerage accounts controlled by Darrel and Jack Uselton.

In the next step, known as "lighting up" a company, the Useltons allegedly created the appearance of an active market through "in and out trading," buying and selling their shares from one account to another at baseless and inflated prices.

With the market primed, the schemers encouraged the pink sheet outfits to issue fluffy press releases and then launched their spam e-mail campaigns using an array of botnets.

"Hundreds of millions of spam e-mails flooded the inboxes of American investors touting the Useltons' near-worthless penny stocks with bases price projections and other grandiose claims," the SEC alleges.

According to the regulator, the Useltons paid their principal spammer a fee based upon a percentage of the gross dollar trading volume of the stock for each day of the spamming campaign.

The SEC says that the principal spammer often subcontracted the actual e-mailing out to spammers in Russia and Israel, sometimes enlisting additional support from spammers in California and Arizona.

The crafty Useltons generally tried to avoid large price spikes during the pump-and-dump spamming campaigns in attempt to avoid drawing the attention of the SEC.

The e-mail spam dragged in gullible investors while Darrel and Jack Uselton dumped their shares through the various entities they controlled.

"Once the e-mail campaigns ended, the small business owners of the penny stock companies were left with the hardship of erasing the negative stigma of being the subject of spam campaigns and several were inundated with angry calls, letters and e-mails," the SEC says.

"The Useltons and their principal spammer simply moved on to spam other companies," the regulator continues. "Meanwhile, investors were left with virtually worthless securities."

The SEC wants the court to order Darrel Uselton and Jack Uselton to provide an accounting and disgorge the ill-gotten gains from their fraudulent scheme.

The regulator is also seeking a civil money penalty and wants the spamming duo effectively booted out of the market for good.

If the Texas attorney general has his way, Darrel and Jack Uselton will be spending a considerable amount of time in prison.

In a following article, Stockwatch will examine the 13 spam campaigns allegedly orchestrated by the Useltons in more detail.

Comments regarding this article may be sent to [e-mail].




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Reader Comments - Comments are open and unmoderated, although libelous remarks may be deleted. Opinions expressed do not necessarily reflect the views of Stockwatch.



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Mr Webb,

I love the way you have to include CMKM Diamonds in just about everything you write. Is that the only way you can get people to read your stuff? You have only reported on half of this story so I won't keep you. Get back to digging..... more to be divulged here. Finish this story. Dig. chop chop.


Posted by HndtoHnd @ 2007-07-16 15:52



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Seams the market regulators are just starting to do something about the pump and dumps as they switch to " Short, bash and cover"

This has become epidemic on the Canadian stocks, the Annon trading providing the cover for such activity. If the exchange was to preform random audits, via Halting a stock for a week then the failure to delivers would be obvious as would the naked short sells... I for one would welcome this kind of hunting technique to return credability and integrety back into the market.

They could start with FNI which has been under attack for the last couple months, has emassed a multi million share declared short, but I would bet that the actual short position is many multiples of that... JMHO


Posted by Dave @ 2007-07-16 17:36



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Barry:

I love the way you have to include CMKM Diamonds in just about everything you write.

If your history with Urban Casavant's pink sheet woofer is any indication, I doubt that you will let facts get in the way of another of your fantasies, but the truth is that I do not include CMKM in just about everything I write.

In fact, I mention CMKM in very little of what I write. When I do, it has some relevance.

Is that the only way you can get people to read your stuff?

Getting people to read my "stuff" is not something I spend any time thinking about.

You have only reported on half of this story so I won't keep you.

You give me too much credit. So far, I have barely scratched the surface of this story.

Get back to digging..... more to be divulged here.

Indeed there is more to be divulged; some of it tied to the CMKM-spawned Owners Group.

Lee


Posted by Lee M. Webb @ 2007-07-17 02:04



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Well done Lee, in exposing yet another portly tout. I wonder if he is an urban Negotiator....


Posted by goLEEgo @ 2007-07-17 07:25



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LOL. Portly? Now that is hitting below the belt. And yes, there is a belt under all that portiness. lololol

I would be more than happy, and capable, to negoiate a meeting with Mr Casavant. But no one has asked me to yet!


Posted by HndtoHnd @ 2007-07-17 11:37



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Having been on the annoying "receiving end" of many such spams, I truly was fascinated by your article, and the discovery that something is being done about these scams. I went as far as blaming my net-provider for passing around (read: selling) my e-mail address--I was so annoyed. With installing some filters, the spaming has subsided but I can't tell now if it is gone. Anyway, thanks for an entertaining coverage. I am looking forward to read the rest. If possible, can you supply the e-mails where one can complain about this spaming?


Posted by peter braun @ 2007-07-17 11:41



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Well done Lee. I get these spams and it is good to see that at least the SEC is doing something. Although I believe this should be handled as criminal issues at all times. I have OTC stocks and wonder if these will become targeted. You always wonder that when these stocks rise substantually, is it for real?


Posted by Dave the Rave @ 2007-07-17 15:24



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Wow good article, another prolific spammer by the name of Brian i'm sure is about to go down, he ruined National Capital back in the day and the Useltons have a hard on for him, i'm sure they will use lots of names as chip's to bargain their way out...he also worked for Urban Casavant, Sherman Masur, Regis Possino... small world...good to see the SEC is slamming these spammers they bring nothing but bad into the micro cap world..


Posted by Bob Sled Fred @ 2007-07-17 20:28



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Having met Jack back in 1998 and subsequently been involved with trying to get Jack and family to pay for his sins (I testified in front of the SEC back in 1998/1999 regarding Mountain Energy), it gives me great pleasure to see the video of Darrel being arrested along with Jack's mug shot!! (see Texas Attorney General Web site under news releases for video)

One of the latest companies to fall prey to their scheme is Gulf Ethanol Corporation (OTC GFET.pk). Apparently the company was not too enthusiastic about Darrel's relationship and removed him from the company earlier in the year...although it apparently has not stopped the fluffy press releases (reference company web site at gulfethanolcorp dot com)

and the company still has an advertising link on the Houston Chronicle web site. The company's stock price fell off the cliff coincidentally at the news release of Jack and Darrel's arrest...interesting to note that according to company Pink Sheet financials, Jack and Darrel control approximately 44% of the stock via their control of IBIS and Firemark entities.


Posted by Steven in Houston @ 2007-07-25 12:40



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Interesting also to note....William Carmichael appears to be a name that keeps surfacing in Houston for various OTC companies and may be the "unnammed" link - this guy seems to have a knack for having a very wide breadth of expertise in all of the "hot" markets:

Gulf Ethanol Corp - VP of Operations Oxford Funding - Investor Relations LipidLabs - Director and VP Marketing (note: LipidLabs president, Mr. Cloud, may also be an officer of Gulf Ethanol) A Time to Grow - Chairman and Chief Executive Officer American Song and Book Company - Founder iExalt - Director of Marketing Mannabeach - Founder American Enterprise Development Corp - Director Cyber Law Reporter, Inc. - Director


Posted by Steven in Houston @ 2007-07-25 14:01

[petermic]

http://www.oag.state.tx.us/oagnews/release.php?id=2088

Monday, July 9, 2007

Texas Attorney General, Sec File Market Manipulation And Stock Fraud Charges Against Two Texas Residents
Illegal “botnets”used to cheat investors out of more than $4.6 million

HOUSTON – Texas Attorney General Greg Abbott’s Special Investigations Unit charged two Texas residents with devising an illegal high-tech scheme to defraud investors out of more than $4.6 million. Both suspects, who were indicted July 3 by a Harris County grand jury, are the subjects of an ongoing investigation by several states and the Securities and Exchange Commission (SEC). In addition to the state’s charges, the suspects face securities fraud charges, which were filed today by the SEC.

Darrel Uselton, 40, of Katy, and his uncle, Jack Uselton, 69, of Houston, face organized criminal activity and money laundering charges. According to state and federal investigators, the Useltons reaped millions in illegal profits by promoting shares from at least 13 penny stock companies. The suspects then secretly sold those stocks into an artificially active market they created with manipulative trading schemes, spam e-mail campaigns, direct mailers, and Internet-based promotional activities.



Media links

Jack Uselton

Darrel Uselton
Video of arrest


The case is being prosecuted by the Texas Attorney General’s Office (OAG) and the Office of Harris County District Attorney Chuck Rosenthal with investigative assistance from the New York Attorney General’s Office. OAG investigators have seized more than $4.2 million from bank accounts associated with the defendants. Darrel Uselton was arrested by OAG investigators and is currently being held in Harris County Jail in lieu of $8 million bond. An arrest warrant has been issued for Jack Uselton.

“Investors will not tolerate scam artists who use the Internet to illegally manipulate stock prices,” Attorney General Abbott said. “Together with several states and the SEC, we have uncovered an elaborate scheme to defraud unwitting investors. The Office of the Attorney General will aggressively prosecute market manipulators, spammers and con artists whose illegal schemes defraud unsuspecting citizens.”

SEC Chairman Christopher Cox added: “This latest step in the Commission’s anti-spam initiative is intended to protect investors from fraud artists who would treat the investing public as their personal ATM machines. The use of bots to spread investment spam at exponentially higher rates is making this type of fraud an even more virulent threat to ordinary investors. Not only are victims getting hit with get-rich-quick spam, but by turning the victims’ computers into zombies, these fraudsters are sending out still more spam to others. Given estimates that up to one quarter of all personal computers connected to the Internet are part of a botnet, and the thriving market in selling lists of compromised computers to hackers and spammers, the SEC is taking this very seriously. We remain aggressively committed to tracking down anyone attempting to use bots to prey on investors with false or misleading spam about securities.”

The Commission’s complaint, which it filed with the U.S. District Court in Houston, charges the Useltons with orchestrating a series of spam e-mail campaigns. The scheme, which relied on an array of computer “botnets,” touted near-worthless penny stocks in millions of spam e-mails sent to potential investors. Those unsolicited electronic messages included baseless price projections and other unfounded claims. Each campaign, which featured a single company, lasted anywhere from several days to several weeks.

According to the SEC’s complaint, the Useltons earned more than $4.6 million from their fraudulent scheme between May 2005 and December 2006. The SEC’s complaint indicates the Useltons and companies they controlled received unrestricted penny stock shares despite little or no investment. Those shares were allegedly provided in return for their purported financing or promotional activities.

Darrel Uselton was disciplined by the National Association of Securities Dealers (NASD) in 2004 and 2005. In a 2002 action that has since settled, the SEC permanently enjoined Jack Uselton from violating anti-fraud regulations.

[Our-Street]

411 on Meridian Biorefining Corporation

Here's the exciting news!!!

Gulf Ethanol Corp. (OTC:GFET - News) announced today its board's approved for negotiations with Meridian Biorefining Corporation of Dallas, Texas. Meridian Biorefining Corp develops advanced processing and biofuels refining technology for primary and downstream processing.
http://biz.yahoo.com/bw/071016/20071016006254.html?.v=1

Here's the not so exciting truth.

https://esos.state.nv.us/SOSServices/AnonymousAccess/CorpSearch/CorpDetails.aspx?lx8nvq=pKvt8UxOwbjMQxDGsAVqKQ%253d%253d

Corporation was started October 8, 2007. Whoever started it has instructed the registrar not to publish the names of the officers or directors.

Of course, I am sure there is a logical explaination about how Meridian has been developing advanced processing and biofuels refining technology for primary and downstream processing for a long time and just got around to incorporating 8 days before the announcement. RIIIIIIIIGHT!!!!!!

Fortunately, although we can't have access to who actually started this corporation, I know an agency that can.

These are important details someone needs to know before investing in this stock.

Of course, these are just my opinions.. ok with more than a few facts thrown in.... so do your own due diligence.