The attention grabbing article by the “Street Sweeper” self touted as a
vigilante site is even more interesting now then it was when it was first
released back in October 2009.
The subject article written by Melissa
Davis was written without a date. The date and source are the standard
practice for any credible news release.
As you will read the absence of a date was and still is no accident.
The article starts out describing the failed acquisition of Hybridyne
Power Systems Canada by Atlantic Wind & Solar Inc. (AWSL). “Pretending to buy us” stated Richard
Leverton , Chief Media Relations of Hybridyne, the article read. These statements contradict court
documents filed in West Virginia and Ontario as we will outline below.
Corporate mail server content proves Hybridyne’s Thomas Cleland and
Richard Leverton considered the deal closed. Most telling were emails thanking
friends and business associates for the compliments and well wishes on the
completed Atlantic Hybridyne acquisition.
Even more compelling was statements from AWSL‘s financial auditors San
Kan & Associates who are registered with the Securities & Exchange
Commission. In the financial
statements they confirmed the transaction by way of standard procedures including on site field
work, meetings with Thomas Cleland
and the rest of the Atlantic management in Toronto and reviewing all
documentation related to the acquisition. .
Documents showed not only the transaction being complete, but Cleland
of Hybridyne requesting AWSL to pay for their accounting work on Hybridyne’s
behalf that was required for the audit.
Also mentioned were emails from the Hybridyne CEO Cleland to Atlantic
listing all the items they would like to put out in press releases. A much different story then the StreetSweeper (http://www.thestreetsweeper.org/pennypincher.html?i=458)
would lead one to believe.
With a court order in hand, and one victory already behind them in one
of the two cases, Atlantic demonstrated clearly that they fulfilled all
obligations under the purchase and sale agreement. Both cash and stock were
paid to the venders. In fact court filing show that the Hybridyne CEO and his
company were also loaned $300,000 to secure a solar project while he was the
CTO of Atlantic.
Prior to this article and corresponding court action, everything was
great in the new corporate marriage until just before the subject StreetSweeper article came out. At the time the Atlantic (AWSL) stock
was high flying. Trading over $4.80 on substantial volume. Like the StreetSweeper, this fact was
also upsetting Thomas Cleland the CEO of Hybridyne.
It seems that seeing volume in stock trading caused Cleland to believe
he should be reaping immediate rewards.
In emails to the Atlantic Chairman, Gilles Trahan, Cleland made demands
for the shares he was given to have the S.E.C. restrictive legend removed so he
could sell. Despite Trahan
explaining that his shares were still restricted Cleland seems to have felt the
best course of action was to extort the company into making the shares free
trading. Realizing the Company
would not budge (but NOT realizing that it COULD NOT budge) on the issue
Cleland made true on his threats to cause public and S.E.C. related problems.
The Unravelling of
the Acquisition
Emails from Cleland start with claims such as “the transaction was not
approved by the CEO”, yes he himself
was the President & CEO.
He took the position that the deal did not close. Despite 5 million shares being issued
and $300,000 changing hands. This
email turned out to be a blessing for Atlantic as they secured a court order to
have all 5,000,000 of the shares issued as part of the acquisition canceled,
bringing the company’s issued and outstanding share count down significantly.
The article would lead you to believe that Hybridyne was the source of
any success for Atlantic This also seems suspect at best. A couple years later according to news
releases Atlantic has secured 20 contracts with the Ontario Power Authority for
solar PV projects representing approximately 3 MW’s of utility scale solar farms. The Company also announced they are
awaiting contract award on an additional 20 MW’s of solar projects in Ontario
alone. A number of press releases
from Atlantic’s clients and joint venture partners also crossed the wire
confirming their decision to partner with AWSL.
Total contracts announced by Hybridyne and their Chief Media relations
officer Levington since then is zero.
It seems Atlantic found more success after walking away from Hybridyne.
The focus of the article then shifts to another company Gilles Trahan,
Atlantic’s Chairman was at the
time involved with as Chairman an interim CEO.
Scrutiny shifted to MSE Enviro-Tech (MEVT). The article described how the CEO of Megola Inc. (MGON) made
statements of how disturbed he was with Trahan’s Company MEVT. He describes how MGON was the supplier
of the anti-fire product known as Hartindo. While describing Trahan’s big house, Jaguar and $26,000
rims he failed to mention that, as
court filings would later show, Gardner orchestrated a exclusive
rights-gone-bad sale to MEVT.
Before taking control as interim CEO of MEVT, the company entered into
a purchase agreement for the exclusive rights to an anti-fire product referred
to an Hartindo. As part of the
agreement MEVT was to pay 6 million shares of MEVT to PCL Limited an offshore
company controlled in part by Joel Gardner. The then CEO of MEVT had been put in place by none other
then Joel Gardner. Not
surprisingly given the circumstances a unsecured loan of $500,000 was also made
by MEVT to this same off shore entity.
According to his Delaware court action for control, Trahan who was a
large shareholder and who had recently loaned the company an additional
$200,000, was upset by this transaction. In the company’s minute book, with a
forensic trace back through the history of the rights purchase, more
irregularities were found. A deal that was once “exclusive” had been modified
by Gardner and his hand picked MEVT CEO Michael Robinson. The language in key
documents had been changed to call the rights “co-exclusive” with the other
“co-exclusive” party to be disclosed.
Even Robinson must have began to feel something was up. Records
indicating the he as CEO requested from PCL and Gardner the name of the other
entity that had the “co-exclusive“ rights many times over a period of a year.
It was not until a letter from legal counsel demanded the information that it
come out. The grandfather company with the rights that everyone sought the name
was none other then Megola (MGON).
Despite Gardner controlling this company and PCL it seemed for a year
that he did not know who had the grandfathered rights until one day he
discovered it was his own company. About this time Trahan finally gained
control of MEVT.
When confronted by Trahan about this shady transaction Gardner seemed
to go on the offensive attacking Trahan and MEVT.
By this time Gardner and his associates had sold most of the 6 million
shares of MEVT and the $500,000 cash wired to Gardner seemed to be
unrecoverable.
According to correspondents with shareholders who purchased MEVT
shares from Gardner, Gardner was a huge supporter of MEVT at the time of the
stock sales, citing its exclusivity and the product sales that were lined up.
This continued as Gardner continued to dispose of 6 million shares,
selling most but also trading some for a fleet of exotic cars such as a Hummer
and a 7 series BMW plus some Ford F1 pick up trucks records indicated
Sales continued and the good times had clearly found Gardner. At one point Gardner took over 30
members of friends and family to the Dominican Republic on vacation. This lifestyle was later to catch up to
him and is perhaps the cause of his recent tax problems with the Canadian
government.
Once the shares were finally all sold by Gardner and his associates,
and with Trahan and his lawyers representing MEVT breathing down on him, the
story started changing dramatically. Now MGON and Gardner were claiming the exclusive
rights MEVT purchased were “co-exclusive” - a word I must admit I did not know existed and am still not
sure does. Even worse, a few months later Gardner and MGON were stating that
MEVT had no rights at all as described in the Davie’s article.
Although the Company and Trahan took Gardner and his company to
Delaware courts, the courts seemed to see the difficulty in trying to reverse
all the sale transactions that would fall out from a court order to cancel his
stock. Given Gardner and his
companies financial position MEVT had little recourse.
According to MGON SEC filings they bought and sold these rights or a
version of them to at least 5 parties.
It appears the only significant sales the company has had was the sale
of rights to others like MEVT.
Additionally they lost the technology and repurchased similar rights in
a few different transactions - the same product from a number of offshore and
numbered companies. This again
resulted in more shares issued to dubious companies on and offshore.
Where is Megola now? MGON
has made not one but 2, reverse stock splits. Each one being 50 for 1. Meaning if you had 10,000 shares at the beginning you have 4
shares now. Despite this the stock
still trades back under a penny.
The S.E.C. filings are no longer up to date and it is safe to say the company
has folded. Where did all the
money go? It appears that many
investors are asking the same question.
Journalism or Tabloid Reporting
for Short Sellers?
So why would any reporter write such an article with only quotes from
non credible sources? Looking at
the failed-to-deliver reports for AWSL and MEVT just prior to the article it
seems some people were selling a lot of shares that they did not own, in fact
representing more than half the trading volume on a number of days. This is known as a short sale. But this was no normal short. In a legitimate short sale the selling
broker must borrow the underlying shares, prior to entering the sale. This was in fact a naked short meaning
they had only 3 days to deliver the stock they sold. To imagine the serious
consequences of having a broker sell stock he or she does not have. Brokers and regulators can force the
seller to go into the market and buy the stock back at ANY price, even if it
was much higher, creating tremendous losses for the trader or hedge fund.
In fact when a stock is continuing to trade higher almost every day
(as it was with AWSL), there can be no worse time for this to happen. The price moving up indicates there are
more buyers then sellers. Given
that the selling was approximately half short sales there would be at least 50%
less sellers. Timed with an immediate reduction of these short sales and the
simultaneous forced market buy-ins of millions of shares this can destroy a
small hedge fund that is betting on it going down. This buy-in situation has been known to created short
squeezes pushing small company shares up by 10 times or more. Given the 2
million shares short as reported by Buyins.net this could mean a loss of tens of
millions of dollars.
Let the Manipulation Begin
Then, like a perfectly conducted orchestra, articles came out from the
StreetSweeper. and online message
board posters stating everything from scam to fraud. When looking on the main page of the StreeSweeper, the same Melissa Davis
who wrote this article is standing beside CNBC’s Jim Cramer from Mad Money and
the Street.com (http://www.thestreet.com), ironically as he
himself is under public scrutiny for exactly the same thing.
In this interview on the Wall Street Confidential he confesses to
taking short positions in a stock then spreading false rumors and having “bozo
news reporters write on it” as he stated.
He further states “what’s important when you’re in that hedge fund mode,
is not to do anything remotely truthful, because the truth is so against your
view that it’s important to create a new truth, to develop a fiction. And the
fiction is developed by almost anybody who is down like 2% to up 6% a
year”. Watch the interview here (http://www.youtube.com/watch?v=gMShFx5rThI). Sound eerily familiar? We thought so too.
Kramer was interviewed on John Stewart’s The Daily Show. Watch the interview and follow up news
coverage on Youtube (http://www.youtube.com/watch?v=xLUvP9ycDx0)
and on the web. A simple google
search of “Jim Cramer manipulation” can provide some entertaining but depressing facts.
How many people had to sell stock losing their savings because one or
two individuals think it is ok to purposefully manipulate investors into
selling so they can make money.
How is this any less corrupt then the Enron management or any other
securities violation or crime? In
fact some might argue this is even more destructive to America as it is preying
upon the small business and trying to force them to go under. By driving down the stock and spreading
false rumors the Company is unlikely to raise more money to fuel their growth
and with more and more people and companies turning to the internet for
researching a company to do business with, this also can slow sales
dramatically. Causing not only a
reduction of employee hirings but usually mass layoffs.
Voice your concern and sign our online petition
and get the SEC to look at this form of manipulation. Go to http://www.petitiononline.com/mrktrfrm/petition.html
