DJ IN THE MONEY: American Lithium And The Mystery Stock Promoter
Thursday, November 05, 2009 01:08:00 PM
By Carol S. Remond
A DOW JONES NEWSWIRES COLUMN
Like many development stage companies, American Lithium Minerals Inc. has negative working capital, no revenues and little in the form of actual business.
The stock of this Nevada corporation rose to a high of $2.99 last month, spurred by promotional newsletters paid by Lock Partners Inc. Then the company's stock price suddenly dived last week in heavy trading volume. The stock was recently trading at $2.27.
American Lithium came to life in February through a name change and four-for-one forward stock split. The company, which says it's investigating prospective lithium opportunities, has so far spent $61,000 to purchase "an option to acquire" mining claims in Nevada. On Thursday, it said it signed a letter of intent to acquire a lithium project in Utah.
Nobody at American Lithium was available to comment despite repeated phone calls.
A Vancouver promotional outfit called Rhino Marketing Inc., which was hired by Lock to market American Lithium, said Lock might be Swiss, when asked about it. But there's no sign of Lock in the Swiss corporate registry. Disclaimers indicate that Lock paid $300,000 to various outfits to promote American Lithium stock.
While the people behind American Lithium's stock promotion might want to remain anonymous, there are a few signs that might concern investors.
Two of the men hired to run the company have ties to BG Capital, an investment group based in Barbados. BG Capital has a knack for acquiring big stock positions in struggling companies on the cheap and securing large fees for its consulting services. Deals involving BG Capital tend to be highly dilutive to other shareholders.
Robert "Bobby" Genovese, founder and owner of BG Capital Group Ltd and BG Capital Management Corp., didn't return a phone calls seeking comment. Marco Markin, BG Capital Management's chief executive, also didn't return a call. According to its Website, BG has offices in Nassau, Florida, Los Angeles, Toronto and Vancouver.
Matthew Markin, who according to a Canadian news article is Marco's brother, was president of American Lithium from May 2008 to Oct. 2009. He remains as chairman of the board.
Steve Cook, American Lithium's PR guy has worked on BG Capital's two last turnaround projects, Clearly Canadian Brands Corp. (CCBEF) and Spectrum Sciences & Software Holdings Corp., now Horne International Inc. (HNIN).
Matthew Markin nor Cook returned several phone calls seeking comments. Matthew Markin worked for another BG Capital company, Neptune Society, from April 2002 to December 2003. (Marco Markin was president of Neptune Society from October 1999 to January 2004.)
Reached on his cell phone Tuesday, Cook said that this reporter's messages had been passed on to Matthew Markin and hung up.
Searches of phone records show that the number listed on American Lithium's filings with the Securities and Exchange Commission is registered to "BG Capital Man" - which might stand for BG Capital Management.
Cook features preeminently in a 2008 reality show titled Bobby G: Adventure Capitalist. The show's eight episodes show Cook, Genovese and members of his team hard at work, attempting to turn around Clearly Canadian. The stock of this Canadian beverage company climbed to a high of $4.55 in June 2006, about a year and a half after BG Capital first became involved with the company. The stock was recently trading at 6 cents a share.
Before Clearly Canadian, BG Capital and related entities were working with budding engineering company Spectrum Sciences. Spectrum's stock reached a high of $4.02 in April 2004, months after Genovese began controlling a large portion of its shares through dilutive consulting and financing arrangements. Spectrum shares were down to about $1.30 by late May 2004 after the company said the SEC was looking into its dealings with consultants. In November 2005, BG Capital agreed to pay $3.25 million to settle a lawsuit brought by a Spectrum shareholder seeking to recover short swing profits. That same month, Spectrum Sciences said the SEC had concluded its investigation without recommending any enforcement action. (Spectrum Sciences and Genovese were featured in several In The Money columns in 2004).
According to filings with the SEC, Matthew Markin owns 22 million shares of American Lithium's 49 million shares outstanding at the end of July.
The company said it raised $1.45 million in two private placements in July and October to foreign investors. According to a filing, the July $450,000 placement was purchased by Seaplane Ventures Inc. The document didn't indicate where that entity is registered or who controls it.
(Carol S. Remond, a special writer on the In The Money team, is an award-winning columnist who won a Gerald Loeb Award in 2005 for best news service content with "Exposing Small-Cap fraud," a series of articles that described how three small companies unscrupulously pumped up their stocks. She can be reached at 303-997-5783 or by e-mail: email@example.com)