Forbes article just out on BGBR
Big Bear Mining Boss' Claims Contradicted By SEC Filing
Christopher Steiner, 04.29.10, 05:14 PM EDT
Bankrupt CEO got millions in shares; others paid to tout the stock.
Big Bear Mining Chief Executive Steve Rix's claims earlier this week that he owns no shares in the company have been contradicted by a newly released Securities & Exchange Commission filing.
Big Bear Mining, which began trading in copious volumes last week, has continued changing hands at a furious rate. So furious, in fact, that the Scottsdale, Ariz., firm with no revenues has become one of the week's most heavily traded over-the-counter stocks. That, and a bevy of paid promoters--including one who was paid $10,000 and has since rescinded his recommendation--appear to have made Rix a rich man. (See: "Is Big Bear Mining Selling Fool's Gold?")
Big Bear ( BGBR - news - people ), with no revenues or any imminent likelihood of any, nevertheless boasted a market value of $165 million as of April 29. Reached on April 22, Rix said he had no ownership stake nor any compensation agreement with the company and thus had not benefited personally from the stock's rise. It's an odd claim, considering Rix is Big Bear's sole employee and director
An SEC Form 8-K released this week contradicts Rix, stating that on April 19, three days before Rix spoke to Forbes, he received 30 million shares of the company for a total of $2,000. The market value of those shares was then $38 million; they're now worth slightly less, at $36 million. Rix did not return calls from Forbes seeking comment on the SEC filing.
The man who supplied the stock to Rix was the company's founder, Aaron Hall, who, according to SEC filings, was a bouncer at Stone Temple, a Vancouver, B.C. nightclub.
As for mining experience, Rix doesn't seem to have any. His personal website states that his previous professional activities included telemarketing campaigns for churches, installing a chaplaincy at an Arizona prison, operating a scuba shop and involvement "in starting up and owning" Blu Financial Network, a dormant venture capital company.
Rix's website allows interested parties to sign up for the "Rix Fix," which is "for young millionaires in the making." If Rix was ever a millionaire before his Big Bear windfall, however, he lost it all; the CEO declared personal bankruptcy in 2009.
Big Bear's popularity with penny stockpickers may be related to payments made by two companies to promoters. An outfit called Treasure Cay Limited spent $900,000 mounting a direct mail campaign promoting Big Bear, according to disclosures contained at the bottom of its promotional material. That included a $10,000 "editorial fee" paid to James Digeorgia, who previously recommended the stock, it added.
"Based on new information I received in the last 24 hours that I was not presented with when I initially reviewed and recommended the stock, I believe it would be in the best interest of any investor holding shares in this company to sell them," Digeorgia said in a statement released April 27.
Digeorgia, whose website is anchored by a signed picture of himself, runs a newsletter called the Gold & Energy Advisor. He did not return calls from Forbes.
A company called Mennen Creative Limited paid two stock pickers, Jason Kelly and Michael Cohen, $57,500 each for their roles in endorsing the stock for six weeks, according to the mailing. Both men sent out messages aimed at creating buzz for their upcoming picks during the weeks leading up to their release.
Cohen said he'd retire as a stockpicker if Big Bear didn't triple after his pick. Rix told Forbes last week he'd never heard of Kelly nor Cohen, both of whom work for a Seattle company called Global Marketing Corporation.
Big Bear lists its address in Scottsdale
