In the latest court filings in the case of Alternative Energy Holdings Inc., a firm that claimed it was planning to develop a nuclear power plant in Idaho, the Securities and Exchange Commission says the firm's CEO and vice president schemed to mislead investors while using the company "as their own personal piggy bank;" click below for a full report from AP reporter John Miller.
SEC: Execs used company as 'personal piggy bank'
By JOHN MILLER, Associated Press
BOISE, Idaho (AP) — Federal securities regulators say court-ordered release of evidence involving a small would-be Idaho nuclear plant developer's activities strengthen their claims that its executives treated the company "as their own personal piggy bank."
Securities and Exchange Commission lawyers filed new documents in their case against Alternate Energy Holdings in U.S. District Court, seeking to keep the Eagle, Idaho-based company's executives' assets frozen.
The SEC's latest filing, made Friday, comes as investors are attempting to recoup some of their losses in the company with a federal class-action lawsuit of their own.
SEC lawyers wrote that Chief Executive Officer Don Gillispie and Vice President Jennifer Ransom schemed to mislead investors. Gillispie's and Ransom's response to the SEC complaint, filed with the court in Boise earlier this month, exacerbated the federal regulators' concerns, the agency's lawyers wrote.
"Far from giving the Court comfort that the asset freeze can be lifted, defendants' opposition papers highlight exactly why investors need to be protected during the pendency of this litigation," according to the SEC's filing. "AEHI's own accounting establishes that the company has spent over $19 million of the approximately $26 million raised from investors, without any explanation of where that money has gone."
T.J. Angstman, Gillispie's lawyer, didn't immediately return a phone call seeking comment.
For the last decade, Alternate Energy Holdings has sought to build a nuclear power plant in three Idaho counties, switching locations multiple times. It's issued numerous press releases, making claims about funding and various business ventures that have drawn the attention of anti-nuclear groups, such as the Snake River Alliance, and now, the federal SEC.
Two weeks ago, Gillispie wrote that he was the victim of anti-nuclear groups that have altered documents circulating on the Internet to make it appear he had done something wrong. He asked a federal judge to lift the asset freeze and dismiss SEC's claims against him and Ransom.
"The SEC's conclusory argument that AEHI is a sham company with no realistic possibility of building a nuclear power plant is not only false, it is an unreasonable conclusion given how far the company has already come in the approval process," Gillispie's lawyer wrote then.
But SEC attorneys contend otherwise.
Among other things, they say the company falsely stated in marketing material that its project was "fully funded;" that Ransom hid $675,000 in stock sales; that Ransom and Gillispie misled shareholders about their pay; and double-dipped to recoup more than $145,000 in personal expenses, including stays at Las Vegas' Bellagio Hotel & Casino.
"Defendants' efforts to mislead the Court and the public should be rejected," the SEC lawyers wrote.
Recent filings in federal court, including a Jan. 10 deposition of Gillispie, appear to offer insight into how he ran the company.
For instance, while he claimed to have 15 employees, most of the company's workers were actually contractors. In addition, he made more than $50,000 in loans to the company but said he kept them off Alternate Energy Holdings books because he was "trying to show the company to be without debt until we actually had an asset to warrant the debt."
And Gillispie discussed his marketing efforts in Asia, describing how he traveled there multiple times with Ransom in 2009 and 2010.
"She can pitch to people who, let's say, aren't very technical," Gillispie said. "And quite frankly, Asians like a pretty blond face to look at, so it doesn't hurt. I'll be honest with you about that."
In a separate class-action lawsuit filed last month in U.S. District Court, investor Lance Teague says Gillispie and Ransom, among other things, distributed false and misleading information about the company in order to illegally inflate its share price. Teague's lawsuit is based on the SEC complaint.
"Don Gillispie engaged in a scheme by which he hired stock promoters and issued press releases to artificially inflate the value of the company's stock," Teague's lawyers wrote, accusing Gillispie of simultaneously unloading his own shares for a profit.
Copyright 2011 The Associated Press.