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The Securities and Exchange Commission last week charged a self-described power company in Idaho—with ties to Bedford County—with fraudulently raising funds for a $10 billion nuclear power project. The SEC is seeking an emergency court order to freeze the assets of the company and two executives.
The company was originally based out of Thaxton and includes a number of investors from the Bedford area.
The SEC alleges that Alternate Energy Holdings Inc. (AEHI) has raised millions of dollars from investors in Idaho and throughout the U.S. and Asia while fraudulently manipulating its stock price through misleading public statements that conceal the secret profits reaped by its CEO Donald L. Gillispie and Senior Vice President Jennifer Ransom. Gillispie has touted the company as a tremendous investment opportunity that could rival Exxon Mobil in profitability, despite the fact that AEHI has essentially no revenue and minimal operations, the SEC stated.
The SEC suspended trading in AEHI stock earlier this week.
According to the SEC’s complaint filed in federal district court in Boise, AEHI’s fundraising was facilitated by a scheme to drive up the company’s stock price, both through frequent press releases (at least 87 in 2010 alone) and efforts of paid stock promoters to manipulate the stock price. The SEC alleges that the company has made multiple misrepresentations, including claims that its executives had such confidence in AEHI that they had not sold a single share of company stock. Records obtained by the SEC show that Gillispie and Ransom have instead secretly unloaded extensive stock holdings and funneled the money back to Gillispie, a release from the SEC stated.
The SEC’s complaint also alleges that AEHI reported to the SEC and investors that Gillispie’s compensation was $133,000. However, Gillispie has actually reaped approximately six times that amount in 2010, according to the SEC complaint.
The SEC’s case was investigated by Kristin Waldron, David Berman, Heather Marlow and Tracy Davis of the San Francisco Regional Office. The SEC’s investigation is continuing. The SEC acknowledges the assistance of the Idaho Department of Finance and FINRA in this matter.
In a motion filed simultaneously with the enforcement action, the SEC seeks emergency relief for investors including an asset freeze and a temporary restraining order enjoining the defendants from further violations of the securities laws.
Dan Hamilton, a spokesman for AEHI, spoke Friday about the allegations.
“We’re not making any comments right now, but I will tell you that we are actively defending ourselves on this one,” Hamilton said.
A document filed by AEHI on March 25 with the SEC reported that Gillispie had transferred $7.7 million of company stock to Martha Gillispie “as a result of their divorce settlement.”
Gillispie was honored recently by Newt Gingrich’s American Solutions organization as the 2010 Businessman of the Year. R.C. Hammond, a spokesman for the organization, confirmed the award and said award recipients must first join American Solutions to be eligible.
“We’re going to monitor the SEC’s investigation and await its conclusions,” Hammond said.
Gillispie, originally from Lynchburg, said in 2006 that he started Alternate Energy Holdings, Inc. as a result of the Sept. 11, 2001, attack, and subsequent energy issues, with the hope that “maybe we could help some with alternate energy ideas.”
The goal, he said, was to reduce the cost of energy to the consumer “and reduce the dependence on foreign oil. Hopefully all these will help the environment.”
Gillispie stated then that his background was in working with nuclear power, first on nuclear submarines and then as a consultant helping commercial nuclear power plants become more efficient and profitable. He stated he had previously helped start a technical management consulting business in Atlanta, Ga., and a nuclear operating company which operated six nuclear power plants in Hudson, Wis. Gillispie initially assembled a board of semi-retired executives from the energy business to oversee AEHI.
Gillispie began running the company out of his then home in Thaxton, but moved the headquarters to Idaho several years ago.
The company was originally taken public through a reverse merger. An additional stock offering of 100 million shares was then planned with the hopes of raising $200 million or more to infuse the company with the needed cash for its purchase plan and other projects.
Back in 2006 Gillispie stated that one of the unique aspects being pursued by the company was the opportunity to harvest energy from lightning. A model prototype, he stated, had been developed which would harness that natural energy from a bolt of lightning, collect power from the ground area surrounding the strike and convert it into usable electricity to be sold through existing power grids. Gillispie said that could prove especially useful in third world countries.
The SEC’s complaint charges AEHI with violating Sections 13(a) and 17(a) of the Securities Act of 1933 (Securities Act) and Rule 13a-11 thereunder and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The SEC’s complaint also charges Gillispie with violating Section 17(a) of the Securities Act, Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5 and 16a-3 thereunder and with aiding and abetting violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The complaint charges Ransom with violating Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5 and16a-3 thereunder. The complaint names as relief defendants two companies controlled by Gillispie and Ransom (Executive Energy Consulting LLC and Bosco Financial LLC).
(Some information for this story was provided by Landmark News Service)