As if things weren’t bad enough for Idaho’s wandering nuclear reactor salesman Don Gillispie and his Alternate Energy Holdings, Inc., the U.S. Securities and Exchange Commission has filed additional fraud charges against the two, beefing up its federal court civil case that threatens to kill the company and its project once and for all.
The SEC has asked a federal court judge in Boise for permission to file an amended complaint against AEHI, reflecting new information that it says further shows a pattern of misconduct by AEHI and Gillispie in their greedy quest to shake more dollars out of unsuspecting investors in Idaho and around the country.
The amended complaint, filed on July 7, alleges a fresh set of illegal acts by AEHI and Chief Executive Officer Gillispie. According to the new charges, Gillispie solicited investments in his Idaho nuclear reactor scheme by making wild claims about the chances the plant could be built. Besides the repeated bogus securities sales pitches, the SEC said, AEHI continued to pump out so many factually challenged news releases that “AEHI’s securities lawyers and investor relations firm resigned over their concerns about the volume and nature of AEHI’s press releases.”
The SEC lodged the new charges just three weeks after the Payette County Commission ignored repeated warnings from county residents about AEHI’s legal and financial troubles and voted unanimously to grant an AEHI rezoning request needed for the company to build on property that was zoned for agricultural use. In yet another press release, AEHI heralded the Payette County Commission vote as “a landmark achievement for the company and the international nuclear renaissance” and said, “AEHI intends to enter the federal approval process with the U.S. Nuclear Regulatory Commission by applying for a combined construction and operating license for an advanced nuclear power plant.”
In fact, nothing could be further from the truth. Even if AEHI had the tens of millions of dollars to prepare an NRC reactor license application (it doesn’t) it would take years to prepare such an application for a reactor that AEHI has yet to identify.
“As if things couldn’t get any worse for AEHI, the nation’s securities watchdog agency continues to expose this company for the sham that it is,” Snake River Alliance Executive Director Liz Woodruff said in a news release after the Alliance learned of the amended complaint. “If there was ever any doubt about the integrity of this company and its prolonged scam on Idahoans and investors worldwide, this new complaint puts them to rest.
“The list of new charges is extensive,” Woodruff said. “These new allegations come when, incredibly, AEHI stock can still be purchased. According to these charges, AEHI is not in the business of building Idaho’s first privately owned nuclear reactor. It is in the business of separating Idahoans from their hard-earned money.”
The SEC’s updated list of charges even drew the attention of Dan Yurman, a nuclear blogger and industry expert who is one of the nuclear industry’s big supporters and whose blog, “Idaho Samizdat: Nuke Notes,” is one of the most-read blogs in the nuclear community.
“AEHI’s now tarnished reputation has been a pain in the neck for the Idaho National Laboratory, which conducts nuclear energy R&D work for the federal government,” Yurman wrote. “An anonymous source familiar with the issues at the Idaho lab told this blog this week via email that having a firm like AEHI in Idaho has often challenged INL’s public image. ‘We all too often have to defend our own programs and the nuclear industry because of their corrupt tactics, rhetoric, and confusing promises. The sooner AEHI goes away the better.’”
Yurman continued: “I have written that there are inconsistencies between what AEHI claims and the facts. For instance, AEHI claimed the NRC was on a fast track to approve the design certification of a South Korean 1,400 MW reactor. In fact, in preliminary discussions in fall 2009, the NRC told the South Koreans it could be two years, or longer, before the agency would even consider having serious pre-application discussions with the vendor. I cited and linked to NRC documents in the Adams system. Also, I pointed out in previous blog posts the massive investment that would be needed to upgrade the grid in Idaho to take the power from the plant and deliver it to customers elsewhere in the Pacific Northwest. The firm has gone through three so-called investment bankers. None have raised any money for the firm.”
Followers of this peripatetic power plant proponent will recall that AEHI came to Idaho more than four years ago with its half-baked proposed nuke plant it claimed it would build in Owyhee County. After Owyhee County showed the company the door, AEHI sailed up the Snake River to nearby Hammett in Elmore County, where county officials refused to approve the project. It then moved back downstream to Payette County, where it found local government support despite mounting evidence the project would never be built. Payette County interrupted its rapid approval of AEHI’s requests last December, when the SEC filed its first fraud charges against the company and when AEHI’s stock was frozen along with its assets. After a judge lifted the asset freeze in February, Payette County resumed its review and eventually gave AEHI the permission it sought to rezone land for the proposed site.
“AEHI was stopped dead in its tracks when the SEC filed its first complaint last December,” Woodruff said. “Looking at these new charges and what has happened to the company over the past year, it’s unbelievable that anyone in Idaho is still taking this project seriously. The only thing serious about it is the negative impact to Idaho investors by this renegade company that, as the SEC has alleged, never intended to build a reactor in Idaho. The people of Idaho should be indebted to the Securities and Exchange Commission for at least minimizing the damage done in this state and elsewhere.”
The SEC’s original complaint against AEHI includes detailed charges that AEHI, Gillispie and others “raised millions of dollars from individual investors in Idaho, elsewhere in the U.S., and Asia by making misleading statements about the viability of AEHI, which has no realistic possibility of building a multi-billion dollar nuclear reactor.” The government claimed that, beginning in 2006, AEHI’s principals conspired to pump up its stock value through misleading press releases and other means and then cash in by dumping the inflated stock through secret sales. The government charged that Gillispie and co-defendant Jennifer Ransom, then senior vice-president of administration and AEHI secretary, enriched themselves through illicit actions and lived a lavish lifestyle of fancy sports cars, jewelry, and trips to exotic locations.
The new charges build on those allegations. For example, the SEC’s amended complaint says:
“We’ve said since the day AEHI stepped foot in Idaho that it never planned to build a reactor in this state, and nothing has changed,” Woodruff said. “Our biggest concerns now are for the Idahoans who have invested huge sums in this fly-by-night operation and the fact that some officials in Idaho continue to look the other way and embrace what the SEC is showing to be one of Idaho’s most pervasive investor schemes.
Besides the SEC’s civil fraud case, AEHI also faces a class-action lawsuit by investors who claim they were bilked by the company. AEHI was in court in February to answer to the government’s charges. If the court accepts the SEC’s motion to amend the government’s complaint, another hearing will be scheduled. Meantime, AEHI’s jury trial in the SEC case is set for October 2012, with a settlement conference scheduled for this September.