Energy Exploration International Inc. has raised more than $12 million from foreign investors, through sales agents who say — or imply– that they’re working from the oil and gas company’s Dallas headquarters.
But when Sharesleuth paid a surprise visit to EEI, a manager struggled to explain why the offices were virtually empty. It was the middle of the morning, and the entire sales team was missing. So was the company’s president, Curtis A. Best. The man responsible for EEI’s well operations, Robert H. Hucklebridge, wasn’t there either.
That was the very scene we expected, though. A Sharesleuth investigation found that the people selling partnership interests in EEI’s drilling ventures were actually calling from telemarketing “boiler rooms” overseas, and that many were operating under false names.
Among Sharesleuth’s other findings:
- EEI was secretly controlled by Mark S. Hutcherson, a former Atlanta-based commodities broker whose firm was shut down by regulators in 2000, and Jack F. Prather, who’d been a principal of that same firm. Both men have since been implicated in other global boiler-room schemes.
- EEI’s vice president of sales, known to investors as Richard Wright, is really a convicted felon named Richard Ayoub.
- EEI outsourced its investment marketing in 2006 to a Singapore company called Pace Global Business Services Pte Ltd., which also has ties to Hutcherson and Prather. That deal is not mentioned in any material given to investors.
- EEI investors say the company’s representatives told them that its drilling projects were virtually assured of success, and provided them with financial projections and payback schedules that were wildly optimistic.
Through August, EEI and its partners had drilled eight wells using the money from foreign investors. At least six were busts, yielding little or no production, according to reports filed with the Texas Railroad Commission, which oversees oil and gas activity in the state. A group of British investors is now pushing for an accounting of the $2.5 million that EEI raised for one of the projects. They say the well, in Colorado County, Texas, was declared a dry hole and abandoned before all of the tests for oil or gas were performed.
They are demanding to know why EEI made the decision to seal the well, and why money that should have been set aside for completing the well wasn’t refunded to them.
Sharesleuth’s investigation also found that EEI sold partnerhip interests in three wells that were never drilled. Marketing packets sent to potential investors showed that each was a $1.75 million project. Instead of returning the money to investors, EEI switched them into other projects, without seeking their consent.
In two of those deals, investors were supposed to own 85 percent of the original well. Instead, they wound up with less than 40 percent of a different well that EEI drilled in partnership with other oil and gas companies.
People familiar with EEI told Sharesleuth that it was highly unlikely that the company used all of the money it raised for the undrilled wells to buy the minority stakes in the replacement wells.
EEI did not respond to questions submitted by Sharesleuth.
EEI’s Beginnings
The file for civil case 06-01562 in the Dallas County district courthouse is slim, but the few documents it contains reveal much about EEI’s beginnings (see the court documents). They show how Best founded the company on an agreement with William D. Brosseau, a man whose previous forays in the oil and gas industry landed him in prison for securities fraud. They also show how Best planned to fund the initial leases and drilling with money from an overseas entity that Brosseau identified in his complaint as “Asian Communication Group”.
Unlike Brosseau, Best was a newcomer to the oil and gas industry. He fell into the investment business after selling the Dallas hair-salon he owned for nearly 20 years. According to Best’s securities registration filings (see the documents), he left the salon in August 2003 and spent the first half of 2004 on “extended travel” in Thailand. Upon his return, he worked for a succession of investment companies — Salomon Grey Financial Inc., Gulftex Operating Inc. and Euro American Capital Corp.
In December 2005, almost seven months after the last job listed in his securities registration documents, he launched Energy Exploration International. By February 2006, he and the company had already been sued.
Court documents say that Best approached Brosseau sometime in 2005, with a desire to fund any promising oil and gas prospects that Brosseau could find. In the late 1970s and early 1980s, Brosseau cut a high profile in Dallas as a self-made petro millionaire once featured on the cover of Money magazine. By 1991, he’d declared bankruptcy. By 1997, he was in prison, having pleaded guilty to bilking U.S. investors out of millions through a boiler room he operated from his Dallas home.
None of that stopped Best from entering into a written partnership agreement with Brosseau. According to the lawsuit, the agreement would give Brosseau 50 percent of the profits from wells he brought to EEI. But within a few months, Brosseau accused Best of diverting the funds that EEI’s offshore funding source was raising for their first joint drilling venture to another company controlled by EEI’s accountant, Robert L. Ward.
Brosseau filed suit, demanding an accounting of the funds that Best had raised and asking that EEI be put into receivership. But Best settled the lawsuit quickly, without so much as a single court hearing.
If the case had gone to trial, Brosseau might have found out who Best’s Asian partners were and, in the process, uncovered who actually called the shots at EEI.
(Disclosure: No one at Sharesleuth, including majority member Mark Cuban, has any financial interest or business relationship with EEI, or with anyone mentioned in this report. However, EEI President Curtis Best and William Brosseau were acquaintances of Cuban’s 20 years ago in Dallas. He had not been in touch with either of them since then. Recently, however, Best contacted Cuban after learning that this investigation was underway.)
EEI’s real owners
Mark Stephen Hutcherson, 48, previously was the majority owner of Dunhill Financial Group Inc. The Commodities Futures Trading Commission found that Hutcherson and Dunhill defrauded the firm’s clients out of more than $8 million by misrepresenting the profits they could expect trading commodities such as natural gas, heating oil and gasoline. The CFTC said in a press release in February 2000 that Dunhill also misrepresented or failed to disclose the risk involved in trading options, as well as the amount of commissions investors would pay and the effect that those commissions would have on returns.
Over a period of three years, more than 94 percent of Dunhill’s customers suffered net losses on their investments.
Hutcherson and Dunhill settled the charges without admitting or denying guilt. The CFTC revoked their registrations. Hutcherson and the company both agreed never to reapply for registration or claim exemption from registration, and never to engage in any activity requiring registration.
Hutcherson was fined $10,000 and agreed to pay $8.3 million in restitution, although he has not done so. After leaving the commodities business, he moved overseas, where he has been linked to a number of boiler rooms that sold shares of obscure U.S. companies to foreign investors.
Hutcherson was identified as a partner in a firm called Premium Placements, which sold what it referred to as “pre-Initial Public Offering” shares in privately held companies. They included Global Food Technologies Inc. of Hanford, Calif., and International Biometrics Inc. of Newport Beach, Calif.
One investor who bought partnership interests in EEI told Sharesleuth that he previously bought shares in those companies after being contacted by companies purporting to be international brokerage firms.
Global Food Technologies severed its ties with Hutcherson long ago, said Michael Shaw, the company’s investor relations director.
“Unfortunately, it is a dangerous world and people are not always who and what they represent,” Shaw said. “Our relationship with Mr. Hutcherson ended in 2003 at the very moment we learned that he and his companies were unlicensed to place stock. GFT notified its shareholders immediately upon our discovery and we have repeatedly advised shareholders to use extreme caution in dealing with unfamiliar parties.”
Hutcherson operated Premium Placements with Paul Richard Bell, another American with a checkered regulatory past.
In 2005, Hutcherson and Prather were implicated in a fraud scheme involving an Internet technology company, Netspan International, whose shares were sold to foreign investors by an entity calling itself the Roth Group. Michael Lee Port, an American who was charged and convicted in Singapore in connection with the stock sales, told investigators that Hutcherson was involved in the operation.
Netspan said it had been approached by Prather, who offered to help raise money for international expansion. Under the deal, the shares were to be marketed by the Roth Group.
Netspan’s two founders, Bijan Moradi and Samuel Wood, were convicted of fraud-related charges in Great Britain. Hutcherson and Prather were not charged with any wrongdoing.
The evidence
Former employees of EEI told Sharesleuth that Hutcherson and Prather each owned 45 percent of the company. Evidence that we’ve seen confirms their account.
Although Hutcherson’s name does not appear in any of EEI’s government filings or marketing materials, we found several public documents that show a connection between him and the company. The Texas corporation filing for one of his companies, Effective Investments LLC, used EEI’s address as its principal place of business.
Property records show that Effective Investments owns a house in the upscale Dallas suburb of Plano. Sharesleuth checked out the property and saw a black Range Rover parked in the garage on two consecutive nights. The same vehicle was spotted in the parking lot of EEI’s office building, and sources with inside knowledge of EEI say that Best drives a black Range Rover. Finally, Hutcherson has a Texas driver’s license that lists his address as a house that was owned by another EEI executive.
Internal communications between Best, Hutcherson, Prather and others at EEI show that Hutcherson and Prather put up the money to start the company, were its majority owners and were involved in key decisions.
Sharesleuth recently began receiving unsolicited emails that contain full or partial copies of electronic exchanges between Best in Texas and Prather, Hutcherson and others in Thailand or Australia. We do not know who sent the messages, some of which also were distributed to certain EEI investors. Nor did we encourage anyone to seek access to the correspondence or to circulate it.
However, we believe that the information we received is authentic. The first set of messages included a copy of the list of questions that Sharesleuth had emailed to just two people — Best and one of EEI’s attorneys.
The correspondence provides an extraordinary glimpse inside EEI, revealing the mechanics of the boiler room operation and the identities of the key players.
One set of messages included deliberations about how EEI should respond to issues our story would raise. The correspondence shows that one of the options that Best, Hutcherson and Prather discussed was buying out Hutcherson and Prather to distance the company from their past activities. EEI announced July 30 that Best had purchased the ownership interest of one of the company’s original shareholders, who was not identified in the press release. The release said Best was now the company’s majority owner.
Another set of messages we received included a letter sent by the British investors in the well that was abandoned as a dry hole. They wondered what became of the money that should have been set aside for the completion phase of the project, known as the Campbell #1.
Sharesleuth confirmed that the letter from the investors was real, and that Best sent the response that was included in the chain of correspondence.
The emails that we received not only show that Hutcherson and Prather were owners of EEI, but that they might have sought to conceal that information from the Internal Revenue Service.
In one email from November 2007, for example, Prather asks his accountant if he can amend his tax return to reflect EEI’s losses, based on advice from Hutcherson.
“I was talking with Hutch the other day and we just got our year-end back on EEI our company with a 600k operating loss- so he was saying as 45% owner – i should redo my taxes and not pay that bill – and refigure (sic) – I do not want to set off a personal audit though – your thoughts,” he says in the email.
In another, Prather wonders if the fact that he’s listed simply as an “import consultant” in tax documents would cause problems with the amended return, “since am (sic) actually an owner of EEI.”
In still another email, Prather refers to $200,000 he borrowed from a Malaysian company in 2005 as the money he used to start EEI.
If EEI offered its partnership units only to foreign buyers, and if those buyers acknowledged that they were “accredited investors” who met certain income or net worth guidelines, then the sales could be exempt from most of the Securities and Exchange Commission regulations that cover investment offerings.
But SEC rules still require companies, as a general proposition, to disclose all material information that a reasonable investor would take into account in deciding whether to make a particular investment.
A boiler room in Thailand
Best never responded to Sharesleuth’s questions about EEI’s ownership, investment marketing or drilling activities.
But the emails that we received showed that an attorney advised EEI earlier this summer it would have to disclose Hutcherson’s role and regulatory history, and that Best considered walking away from the company as one way of avoiding the fallout.
“Our options are: try to buy him out and go forward with past disclosures, Put the company into a bancruptcy/recievership (sic) stage where you are no longer the President and move forward with a new company or just resign outright,” John Phillips, EEI’s office manager, said in an email to Best.
In another email that followed Sharesleuth’s initial inquiries, Best says to Prather and Hutcherson: “I think we need to all call the attorney while I am here and all three talk to him get his opinion and make the needed changes before this article comes out.”
Phillips was the employee that Sharesleuth encountered when we paid an unannounced visit to EEI’s headquarters in April. The company was then based in a small, windowless office suite in a commercial building about 10 miles north of downtown Dallas.
We asked by name for Richard Wright and Matt Andrews, another representative who had solicited investors on EEI’s behalf.
Phillips, one of only two employees present at the time, told us that Wright , Andrews and other members of the sales team were in the field — along with Best and Hucklebridge — showing investors a well. He declined to say which well, and threatened to call the police when we persisted in our questioning.
The empty office wasn’t a surprise; sources close to EEI had already told Sharesleuth that the company’s sales team was operating primarily from Thailand (where both Hutcherson and Prather have been living) and not from Dallas as they often told investors in sales pitches.
An email from Best to a former salesman confirmed the same.
In it, he tells the employee that EEI contracted with Pace Global Business Services in September 2006 to manage its sales and marketing and that Pace employees “are able to be anywhere in the world as long as they represent our company (EEI) appropriately.”
EEI never announced the arrangement with Pace. It did issue a press release in May, after Sharesleuth’s visit, saying it was expanding its operations into Asia, “including Singapore, Thailand and Hong Kong” and would open an office there.
According to other emails, Phillips and Best were worried about the implications if information about Pace Global became public.
Phillips noted that Chris Carey, the editor of Sharesleuth, had previously linked Hutcherson and Prather to overseas boiler rooms in a series of articles for the St. Louis Post-Dispatch in 2004.
“Carey will undoubtably (sic) make the claim that we have been running a boilerroom (sic) in Thailand,” Phillips said in an email to Best.
Investors raise questions
Sharesleuth isn’t the only one asking questions about the millions raised by EEI. Several partners in the Campbell #1 well, have complained that the company abandoned it at “breakneck speed” after declaring during the drilling that it was a dry hole.
“Being a $2.5 million project, it just does not make sense not to complete and turn it on with so much money at stake,” the investors wrote in an email to Best. “That is what was contracted to be done and what we paid for.”
The investors wondered where the money set aside for the completion phase of the project went.
“It is our understanding that to actually complete a well of this size costs around $500,000 so what happened to those funds, or put another way why havnt (sic) we received a refund?” the investors wrote.
Prather suggested to Best in a subsequent email that EEI tell them the money went toward overhead, reminding the investors of the time and expense of raising capital. As an alternative explanation, Prather suggested that EEI tell the investors that it used the extra money to buy them 10 percent of another project — even though Best had already told the investors that that 10 percent was purchased at “no expense to the partners.”
Another EEI representative, identified only as Matt in the emails obtained by Sharesleuth, said: “Where are these questions coming from? Sound prompted. Need to be careful to prepare answers.”
The emails indicate that the same person wrote a draft statement that Best later sent to the investors, which cited an “environment of rising costs” as an explanation and said that “projects can run hundreds of thousands of dollars over budget.” He assured the investors that “EEI did not make the decisions to abandon the Campbell #1 to maximize profit,” a common oil and gas investment ploy.
Singapore corporation filings (see a pdf) show that an Australian named Matthew G. Andrews was a founding director of Pace Global, the entity that handles investment marketing for EEI. Sharesleuth’s investigation found that Andrews has been an associate of Hutcherson and Prather for at least four years.
Investors say Andrews was among the EEI representatives who solicited them to buy partnership interests in its wells. A trace of the emails that one person received from Andrews showed that they came from IP addresses in Bangkok and Sydney, Australia, where EEI has a satellite office.
Andrews sent that investor a business card that identified him as an account representative at EEI. The card listed his address as EEI’s headquarters in Dallas, and listed his phone number as EEI’s main number. (See Andrew’s EEI business card)
Best didn’t respond to the request by the group of British investors for a complete accounting of the Campbell #1′s expenses. He did, however, invite them to visit EEI’s offices in Texas to see one of its “productive” wells.
Company performance
Just which wells are productive is hard to determine. The company’s in-house operator, EEI Operating Inc., has logged zero production with the Texas Railroad Commission. EEI Operating oversaw a three-well venture called the Klimitchek-Hobbs prospect.
One of EEI’s contract operators, Property Development Group Inc., reported in its Railroad Commission filings that a well called Lawson #1 produced 2,083 barrels of oil between November 2006 and January of this year. That translates to less than 5 barrels a day. The well is part of a venture referred to on EEI’s website as the Poteet Reef prospect.
That venture was supposed to include three wells, but it appears from Railroad Commission records that only two of the planned wells were actually drilled.
Although Property Development Group told Sharesleuth that the Lawson #1 is still yielding three to four barrels a day, state records show the company has not filed a production report for four months. A woman who answered the phone at Property Development Group said they had submitted the reports and that the records must not be up to date. She said she had current production reports for the Lawson #1 on her desk, but she refused to allow provide a copy to Sharesleuth.
“That’s not my job,” the woman, who refused to identify herself, said.
The Railroad Commission told Sharesleuth that its records were current and that there’s no backlog between the time that reports are filed and the time they appear in the system.
EEI has hailed the success of another of its wells, which it refers to as the EEI PetroQuest Harlan #1. The well is a joint venture with PetroQuest Exploration Inc. of Dallas, and is operated by Mission River Systems Inc. of Corpus Christi, Texas.
EEI and its investors have a 40 percent interest in the project. According to Railroad Commission figures, the well produced 4,377 barrels of oil or condensate in May and June, its first two months of operation. It also produced 18,000 Mcf of natural gas.
The Harlan #1 produced 2,213 barrels of oil or condensate in July – an average of just over 71 barrels a day — along with 3,203 Mcf of natural gas.
EEI, PetroQuest and Mission River recently drilled a second well, the Harlan #2, on the same leasehold, in Nueces County, Texas. EEI said in a message to investors this week that testing by an outside contractor showed that it could produce roughly 120 barrels a day.
EEI has been raising money for two more wells in that field, and says on its Web site that drilling is set to begin on both of those projects.
Replacement projects
Several of EEI’s current wells are “replacement” projects for drilling ventures that EEI canceled in 2006 and 2007.
In the fall of 2006, EEI began raising $3.5 million for two proposed gas wells in Wharton County, Texas, dubbed the Sklar #1 and Sklar #2. According to investor packets reviewed by Sharesleuth, EEI offered 20 partnership units at $87,500 each. Investors also could opt for fractions of units.
EEI solicited investors in early 2007 for a well it called the Machala #1. That $1.75 million venture would have been in Austin County, Texas., about 10 miles north of the Sklar wells.
EEI did not go forward with any of the projects. It said wet ground on the Sklar property made drilling too difficult. Texas records show that neither EEI nor its partners in the project ever applied for a drilling permit for the Sklar #2 or Machala #1 wells.
EEI shifted investors in the Sklar #1 into the Klimitchek-Hobbs project. EEI initially reported that the drilling there yielded three good gas wells, and told investors in April that the wells had been “connected” and were selling gas.
However, it has made little mention of them since. As noted above, state records show the EEI has reported no production.
Investors in the Sklar #2 were shifted to the recently completed Harlan #2 venture.
EEI told investors in July that it expected to have the Harlan #2 hooked up and selling oil and gas by the end of that month. It later said that work was delayed because of heavy rain caused by Hurricane Dolly. EEI’s next message to investors said the well was supposed to be hooked up and selling oil and gas by mid-August. The company said in its update last week that the well should become commercial by Sept. 12.
EEI partnered with PetroQuest and Mission River Systems on both Harlan wells. The three companies also are poised to begin drilling a third well, the Elliot #1, in the same field as the Harlan well.
EEI sought to raise $1.75 million from investors for its share of that project.
EEI’s web site also features three more projects, including the Dorsogna #1 well, in the same area as the Harlan and Elliot wells. Another venture is the Richie Farms #2 well in San Patricio County, Texas, in which investors would have a 25 percent interest. That gas well is being developed by MPG Petroleum Inc of San Antonio. The third project, added in the past few weeks, is a well in Louisiana that EEI would develop with two partners.
Sharesleuth reviewed the investor packages for six of EEI’s projects. We found that in most cases, those packages included summaries of potential payouts that were based on production levels well above the recent performance of other wells in the same areas.
Some used production levels as high as 300 barrels of oil a day in their examples. The average for all wells in Texas is just over 6 barrels a day. EEI noted in small print at the bottom of several of its projection pages that the numbers were not based on historical results and were offered for comparative purposes only.
Investor returns
It’s not clear how much money EEI’s investors have received in returns on their investments. Investors in the Campbell well have received nothing, other than tax deductions they might be able to claim against other income.
Sharesleuth talked to one investor who put $50,000 into another of EEI’s projects and has received only $300 or so in payouts.
EEI said in a slide show prepared for an investor presentation in Australia that the Harlan #1 well generated returns of $5,861.50 per unit, after taxes, in May. The company said that at current, higher production rates, the return per unit would be $11,425 month.
At that rate, investors who bought a full unit for $87,500 could recoup their initial capital in less than a year and then start realizing hefty profits.
EEI told investors in the Sklar #1/Klimitcheck-Hobbs venture last month that it intended to make up for their disappointing returns by giving them its own 15 percent interest in those wells, and by purchasing them a 10 percent interest in a new venture.
That new well was the Dorsogna #1.
“EEI is not yet satisfied with the returns that our partners have seen so far on this project, but EEI is going above and beyond normal operating procedures to pursue a satisfactory return for our partners on this project,” EEI’s John Phillips said in the message. “Although investing in oil and gas is a risky adventure, EEI has and will continue to do its part to assist our partners to maximize returns.”
Well kept secrets
The list of things that the average investor in EEI doesn’t know about the company extends beyond its true owners, its beginnings with a convicted felon and the real location of its sales team.
For example, EEI also doesn’t mention that Robert H. Hucklebridge, the president of its wholly owned subsidiary, EEI Operating Inc., was fined $5,000 in 1997 for selling unregistered securities in Texas, according to regulatory records.
And although EEI’s website said that Best was “licensed with the National Association of Securities Dealers,” his registration actually lapsed several years ago, in 2005 (see Best’s registration documents). The claim was deleted after Sharesleuth raised questions about it.
EEI’s early marketing materials touted its “accomplished geologist James Phelps,” and its web site once listed him among the four members of its management team and advisory board. Phelps told Sharesleuth that he never worked for the company, but only sold an oil prospect to Hucklebridge, who in turn took it to EEI.
Phelps told Sharesleuth he had no idea that EEI was using his credentials to boost the company’s credibility.
EEI also did not disclose the criminal past of one of its vice presidents, a man known to investors as Richard Wright.
His real name is Richard Ayoub. He pleaded guilty in 2002 to conspiracy to defraud the United States after being implicated by four other men in an international money laundering scheme.
According to court documents (see Ayoub’s indictment), Ayoub supplied the men with stolen, forged Canadian checks that they then cashed at Jacksonville, Fl., banks. Once the checks cleared, they withdrew the funds. They kept a portion of the money for themselves and gave the rest to Ayoub. He passed it on to Kourosh Ziaee — an international money launderer known to authorities as “the ghost” — through Ziaee’s associates. Ziaee then sent most of the money to Iran, where it disappeared, according to a transcript of Ayoub’s sentencing hearing.
A judge sentenced Ayoub to five months in prison and three years probation. He was released in the summer of 2004.
Sharesleuth confirmed that that EEI knew Ayoub’s real name and knew about his past. Ayoub was still on probation at the time that he joined the company and EEI was in touch with his federal probation officer.
Sharesleuth sent a list of questions to EEI’s president Curtis Best, including ones asking why Wright’s true identity was hidden from investors. Best didn’t respond. Afterward, however, one of EEI’s investors told Sharesleuth that he received a call from Ayoub saying that he wanted the investor to know his real name.
According to the investor, Ayoub explained that he only used a fake name because he was afraid his real name, which is Arabic in origin, would alienate people in the aftermath of the Sept. 11, 20001 terrorist attacks. The investor said Ayoub never mentioned his criminal conviction.
Ayoub declined to be interviewed for this article.
A kidnapping
Photo © The Associated Press. Used by permission.
In April 2007, Hutcherson was abducted from his home in Thailand and held for five days. According to news accounts, the kidnappers entered Hutcherson’s condominium claiming to be police officers. They beat him, forced him to turn over the equivalent of $400,000 in cash that was in the residence and led him away in handcuffs.
They left a note for his Thai companion demanding an additional $800,000 for his release. Instead, she went to the authorities, who reviewed the videotape from the security cameras at Hutcherson’s condominium complex and discovered that police officers were indeed among the group that took him.
Photo © The Associated Press. Used by permission.
A 30-member SWAT team freed Hutcherson in a raid on a Bangkok townhouse. They reportedly found him blindfolded, handcuffed and chained to the floor. Seven people were arrested in connection with the abduction, and three more were sought.
According to an Associated Press story, Hutcherson said he was in the oil and gas business in Texas and commuted between the United States and Thailand. A story in a Thai newspaper said he was in the import-export business.
The information that Sharesleuth assembled on EEI could support both explanations. Prather noted in an email to his accountant that although he was an owner of EEI, he was listed in its records as “import consultant/shipping services.”
Longstanding ties
It appears that Best knew Hutcherson and Prather long before the three created EEI.
In the spring of 2004, an unknown source sent Chris Carey, now the editor of Sharesleuth, a copy of the address book from one of Prather’s email accounts.
We took a fresh look at the listings when reporting this story, and found most of the key players behind EEI. Prather’s directory included email addresses for Hutcherson and Best. According to Best’s registration statement with the National Association of Securities Dealers, he was on an extended trip to Thailand at that time.
The directory included two addresses at Netspan Inc., the company that later identified Prather as its conduit to the Roth Group, which turned out to be an unlicensed boiler-room brokerage.
The directory also included an email address for someone named Matt, at the domain “thailandopportunities.com.” That site is no longer live. But an archived page from another site shows that Matt Andrews was editor of Thailand Opportunities.
That is the same Matt Andrews who now heads Pace Global.
The archived web site also listed the contact for Thailand Opportunities as Asia Communications Group Ltd. – a name very similar to the entity listed as EEI’s original funding source in William Brosseau’s 2006 lawsuit. We found a profile for Matt Andrews on a popular business networking site that lists him as an owner of Asia Communications.
Prather’s director included an address for Paul Richard Bell, who settled fraud charges with the CFTC in 1992 and was barred from the commodities and futures industry for life.
Bell has been linked to boiler room brokerages in Asia and other parts of the world. He was arrested in Australia in 2001 and charged with numerous offenses, including making false and misleading statements to investors. He pleaded guilty to some of the charges and got a suspended sentence.
The SEC brought a securities fraud case in 2002 against Bell and First Florida Communications Inc., a company he controlled. It won a judgment and permanent injunction against him the following year.
Bell and two other people were arrested again in July of this year, by authorities in London. They were meeting with investors there on behalf of ALV Group, a purported venture capital firm that has been the subject of international regulatory warnings. They were not formally charged. Their passports were returned and they were allowed to leave the country.
The web site for ALV Group says that Asia Communications Group is one of the companies that it represents.
Another of the addresses in Prather’s old directory, for a “Sir Gooch,” corresponded to one used by John V. Guchone, a former stock broker in New York who was suspended by the NASD in 1998 for failing to pay an arbitration award.
Guchone was detained along with Bell at the ALV Group event in London. ALV Group’s web site lists him as a member of its research department.
Bell and Guchone also are directors of Green World Solutions Ltd., a Bangkok-based company that says it pursuing a range of renewable energy initiatives, including the production of biodiesel from the seeds of a shrub called the Jatropha.
Some EEI investors have been receiving investment pitches from representatives of Green World Solutions, suggesting that both companies might be working from the same prospect list.
British regulators issued a warning about Green World Solutions on July 30, saying that the company was not authorized to conduct investment activities within the United Kingdom.
