First, I am pretty sure it is illegal. All that insider information and deals for publically traded stock.
Second: The investor must have incredibly bad timing. The only time the stock traded near the .15 he paid was the morning of 8/10/09.
8/7/09 PPS .065 8/10/09 open .080 high .12 close .096 8/11/09 PPS .070
You say he would do this in exchange for secret information the company told him so he wouldd know he would make a killing. Gee, if we figured it out - maybe the SEC could? NAAAA