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SEC charges Alternate Energy with fraud

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TechKim   Sunday, 12/19/10 09:30:32 AM
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SEC charges Alternate Energy with fraud
http://news.yahoo.com/s/ap/20101217/ap_on_bi_ge/us_nuclear_reactor_idaho



By TODD DVORAK, Associated Press Todd Dvorak, Associated Press – Thu Dec 16, 7:59 pm ET
BOISE, Idaho – The Securities and Exchange Commission charged an Idaho company on Thursday with fraudulently raising money from investors across the country and Asia to build a $10 billion nuclear power plant.

The SEC also asked a court to freeze the assets of Alternate Energy Holdings Inc. and its two top executives.

The federal financial regulators accusing the Eagle-based company of taking part in a scheme to enrich its chief executive at the expense of investors. Specifically, SEC investigators say AEHI manipulated its stock price, in part through a barrage of misleading public statements about the company and hiding the profits reported by CEO Donald Gillispie and a senior vice president Jennifer Ransom.

The SEC says it has records that Gillispie and Ransom secretly unloaded stock holdings and funneled the money back to Gillispie, enabling him this year to make six times the salary he reported to investors and spend lavishly on jewelry, cruises, a Maserati sports car and other items.

"In light of AEHI's ongoing efforts to raise funding while promoting itself through a daily deluge of press releases, we needed to take immediate action to get to the bottom of the company's misleading statements," said Marc Fagel, Director of the SEC regional office in San Francisco.

AEHI spokesman Dan Hamilton said the company's lawyers are reviewing the SEC complaint and declined to comment on the allegations.

Gillispie, 67, has been working for more than two years to raise money and nail down a location in southern Idaho to build a nuclear power plant.

Last week, the Payette County Planning and Zoning Commission recommended changing the zoning of a 5,000-acre tract from agricultural to industrial to accommodate the facility. That change still needs formal approval by the county board of commissioners.

Earlier this week, the SEC announced it had suspended trading of AEHI securities pending an investigation into the stock sales by executives.

The 17-page complaint filed Thursday in U.S. District Court in Boise accuses the company of raising millions of dollars from investors in Idaho, the nation and elsewhere with the help of misleading statements about viability of a company that "has no realistic possibility of building a multibillion dollar reactor." The SEC claims AEHI has tapped investors for at least $5 million so far this year.

SEC lawyers say the scheme had two components: promoters and press releases. When AEHI went public in 2006, Gillispie hired promoters to convince investors to snatch up restricted stock, then told promoters to enter sale orders at the end of certain trading days to drive up the value and volume to artificial levels, according to the complaint.

The complaint also targets a flurry of press releases alleged to contain false and misleading information. The complaint targets those claiming that no officer had sold stock.

But the SEC claims Ransom, 36, sold at least one million shares, then hid the sales from investors and the public and failed to file the proper SEC forms listing the sales. Gillispie is also accused of concealing sales of his shares and driving the profits into his own checkbook. Regulators claim AEHI reported to investors that Gillispie's 2010 compensation was $133,000, though agency officials claim his salary was actually six times that amount.

The SEC is also asking the judge to ban Gillispie from serving as an officer or head of any public company.


http://news.yahoo.com/s/ap/20101217/ap_on_bi_ge/us_nuclear_reactor_idaho

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