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Case 1:10-cv-00634-BLW Document 29 Filed 06/17/11 Page 1 of 39
GORDON LAW OFFICESPhilip Gordon, ISBN 1996Bruce S. Bistline, ISBN 1988623 W. Hays St.Boise, Idaho 83702Telephone: (208) 345-7100Fax: (208) 345-0050Email: [email protected] [email protected]
THE ROSEN LAW FIRM, P.A.Laurence M. Rosen, Esq.Timothy W. Brown, Esq.Phillip Kim, Esq.275 Madison Avenue, 34th FloorNew York, New York 10016Telephone: (212) 686-1060Fax: (212) 202-3827Email: [email protected]: [email protected]: [email protected]
Attorneys for Plaintiffs and the Class
UNITED STATES DISTRICT COURTFOR THE DISTRICT OF IDAHO
LANCE TEAGUE, INDIVIDUALLY AND ON )BEHALF OF ALL OTHERS SIMILARLY )SITUATED, ) Case No.: 1: 1 0-cv-00634-BLW
Plaintiff, ) CLASS ACTION AMENDEDCOMPLAINT FOR VIOLATION
vs. ) OF FEDERAL SECURITIES LAWS
ALTERNATE ENERGY HOLDINGS, INC., ) JURY TRIAL DEMANDEDDONALD L. GILLISPTF, AND JENNIFER )RANSOM, )
Defendants. )
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS1
Case 1:10-cv-00634-BLW Document 29 Filed 06/17/11 Page 2 of 39
Lead Plaintiff Jerry Pehlke, Jr. and named plaintiffs Lance Teague and Cammi Veenstra
(collectively "Plaintiffs"), individually and on behalf of all other persons similarly situated, by their
undersigned attorneys, allege in this Amended Complaint the following upon knowledge, with
respect to his own acts, and upon facts obtained through an investigation conducted by their counsel,
which included, inter alia, (a) review and analysis of relevant filings made by Alternate Energy
Holdings, Inc. ("Alternate Energy," "AEHI," or the "Company") with the United States Securities
and Exchange Commission (the "SEC"); (b) review and analysis of Defendants' public documents,
conference calls and press releases; (c) review and analysis of securities analysts' reports and
advisories about the Company; and (d) information readily obtainable on the internet. Plaintiffs
believe that further substantial evidentiary support will exist for the allegations set forth herein after
a reasonable opportunity for discovery. Most of the facts supporting the allegations contained herein
are known only to Defendants or are exclusively within their control.
NATURE OF THE ACTION
1. Plaintiffs bring this class action on behalf of all persons and entities who purchased
the securities of Alternate Energy during the time period between October 23, 2006 through
December 14, 2010, inclusive. Plaintiffs assert two types of violations under the federal securities
laws: (1) stock market manipulation of AEHI securities trading ("Market Manipulation"), and (2)
making false statements and omissions of material fact to investors ("False Statements").
2. The Market Manipulation claims are made on behalf of all AEHI investors who
purchased AEHI common stock during the period from October 23, 2006 through December 14,
2010, inclusive (the "First Class Period").
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS2
Case 1:10-cv-00634-BLW Document 29 Filed 06/17/11 Page 3 of 39
3. The False Statements claims are made on behalf of all AEHI investors who
purchased AEHI common stock during the period from March 31, 2009 through December 14, 2010,
inclusive ("Second Class Period").
4. Plaintiffs seeks to recover damages caused by Defendants' violation of Sections 10(b)
and Rule lOb-5 thereunder, and Section 20(a) of the Securities Exchange Act of 1934 (the
`Exchange Act").
5. According to their public filings with the Securities Exchange Commission ("SEC"),
Alternate Energy purports to operate in the electric power generation industry by acquiring and
developing nuclear plant sites and obtaining licenses for their construction and operation throughout
the United States, especially Idaho.
6. Throughout the First Class Period, which begins shortly after Company's
incorporation in September 2006, Alternate Energy and certain of its officers and directors made
materially false and misleading statements and engaged in a scheme to manipulate and artificially
inflate the market price of Alternate Energy stock by (1) paying stock promoters to create artificial
demand in the marketplace through end of day stock purchases, and failing to disclose the same (2)
misrepresenting that Company's officers and directors never sold any shares ofthe Company's stock;
(3) understating the amount of the Company's officers' and directors' compensation by the
Company; (4) misrepresenting that a company that published a favorable article about the Company
was not paid by the Company; and (5) misrepresenting the Company's true financial condition and
potential business prospects.
7. Throughout the Second Class Period, which begins on March 31, 2009, Alternate
Energy and certain of its officers and directors made materially false and misleading statements by
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS3
Case 1:10-cv-00634-BLW Document 29 Filed 06/17/11 Page 4 of 39
(1) misrepresenting that Company's officers and directors never sold any shares of the Company's
stock; (2) understating the amount of the Company's officers' and directors' compensation by the
Company; (3) misrepresenting that a company that published a favorable article about the Company
was not paid by the Company; and (4) misrepresenting the Company's true financial condition and
potential business prospects.
8. More specifically, Defendant Donald L. Gillispie ("Gillispie") engaged in a scheme
by which he hired stock promoters and issued press releases in order to artificially inflate the value of
the Company's stock. He never disclosed these activities to the public. Indeed, the Company issued
a number of public statements assuring the investing public that Gillispie had not sold any of his
shares of the Company. In reality Gillispie sold more than a million shares of the Company during
the Class Periods, and thereby collected considerable monies by virtue of his fraudulent scheme.
9. On September 7 and September 30, 2010, the Company issued press releases stating
that no officer or director of the Company, since the Company's inception, had sold any of his or her
shares of the Company.
10. These statements were patently false as Defendant Jennifer Ransom ("Ransom"),
Alternate Energy's Secretary and Senior Vice-President of Administration had sold one million
shares of the Company between June and September 2010 at the behest of Defendant Gillispie.
11. The Company's 2008 annual report filed with the SEC materially understated the
compensation paid by the Company to Ransom in 2008.
12. The Company's 2009 annual report filed with the SEC materially understated the
compensation paid by the Company to Gillispie and Ransom in 2009 (and paid to Ransom in 2008).
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS4
Case 1:10-cv-00634-BLW Document 29 Filed 06/17/11 Page 5 of 39
13. It was not until December 16, 2010, when the SEC instituted a civil action against
Alternate Energy and Defendants Gillispie and Ransom, that any reasonable investor or class
member could have reasonably suspected that the Company's statements with respect to Defendants'
Company stock positions and compensation were false and misleading. Nor could investors have
reasonably suspected that the Company and certain of its officers and directors were engaging in a
scheme to artificially inflate the Company's stock price.
JURISDICTION AND VENUE
14. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of
the Exchange Act, (15 U.S.C. §78j(b) and 78t(a)), and Rule lOb-5 promulgated thereunder (17
C.F.R. §240.10b-5).
15. This Court has jurisdiction over the subject matter of this action pursuant to §27 of
the Exchange Act (15 U.S.C. §78aa) and 28 U.S.C. § 1331.
16. Venue is proper in this Judicial District pursuant to §27 of the Exchange Act, 15
U.S.C. § 78aa and 28 U.S.C. § 1391(b). Defendant AEHI maintains its principal executive offices
in this District and many of the acts and transactions alleged herein, including the preparation and
dissemination of statements containing materially false and misleading information and omissions of
material fact, occurred in substantial part in this District.
17. In connection with the acts, conduct and other wrongs alleged in this Amended
Complaint, Defendants, directly or indirectly, used the means and instrumentalities of interstate
commerce, including but not limited to, the United States mail, interstate telephone communications
and the facilities of a national securities exchange.
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS5
Case 1:10-cv-00634-BLW Document 29 Filed 06/17/11 Page 6 of 39
PARTIES
18. Court-appointed Lead Plaintiff Jerry Pehlke, Jr. purchased AEHI common stock
during the Class Periods and has suffered damages as a result. His certification was previously filed
with the Court and is incorporated herein by reference.
19. Named plaintiff Lance Teague purchased AEHI common stock during the Class
Periods and has suffered damages as a result. Mr. Teague's certification was previously filed with
the Court and is incorporated herein by reference.
20. Named plaintiff Cammi Veenstra purchased AEHI common stock during the Class
Periods and has suffered damages as a result. Ms. Veenstra's certification is attached hereto.
21. Defendant Alternate Energy is a Nevada corporation headquartered in Eagle, Idaho.
Since 2007, the Company's principal executive offices were located at 345 911 E. Winding Creek
Dr., Suite 150, Eagle, Idaho. Prior to that, the Company was based out of Defendant Gillispie's
home in Virginia. Alternate Energy's stock was listed on the OTC Bulletin Board and on the Pink
Sheets operated by OTC Markets, Inc. (ticker symbols: AEHLBB and AEHI.PK, respectively).
22. Defendant Donald L. Gillispie was President, CEO, and Chairman of AEHI since the
Company went public in September 2006.
23. Defendant Jennifer Ransom was, according to the annual report for fiscal year ended
December 31, 2009 filed as form 10-K with the SEC on March 31, 2010 ("200910-K") the Secretary
and Senior Vice-President of Administration of the Company since at least May, 2008.
24. The 200910-K stated that Ransom is one of AEHI's "Key Personnel." The 200910-
K listed Ransom as one of the "Persons who currently serve as the company directors or executive
officers." The 2009 10-K states that the "key members of the management team are Don Gillespie,
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS6
Case 1:10-cv-00634-BLW Document 29 Filed 06/17/11 Page 7 of 39
Greg Kane, Leon Eliason, James Taylor, Ken Strahm, Sr., Ralph Beadle, Rick Bucci, Jennifer
Ransom."
25. The 2009 10-K states that Ransom did not file a Foun 5 on a timely basis with respect
to common shares awarded to her as compensation in the fiscal year ended December 31, 2009, thus
recognizing that Ransom was an officer pursuant to Section 16 of the Exchange Act.
26. A June 2010 AEHI investor presentation states, "Proud Leadership Team:... A
company spokesperson, Ransom has served as AEHI vice-president of administration and corporate
secretary. Ransom has management experience in accounting, insurance and retail." A press release
dated September 3, 2010 states that Ransom is the Senior Vice President of Administration of AEHI
and is the President of Energy Neutral, an AEHI subsidiary.
27. Gillispie and Ransom are collectively referred to herein as the "Individual
Defendants."
28. Each of the Individual Defendants:
(a) directly participated in the management of the Company;
(b) was directly involved in the day-to-day operations of the Company at the
highest levels;
(c) was privy to confidential proprietary information concerning the Company
and its business and operations;
(d) was directly or indirectly involved in drafting, producing, reviewing and/or
disseminating the false and misleading statements and information alleged herein;
(e) was directly or indirectly involved in the oversight or implementation of the
Company;
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(f) was aware of or recklessly disregarded the fact that the false and misleading
statements were being issued concerning the Company; and
(g) approved or ratified these statements in violation of the federal securities
laws.
29. Alternate Energy is liable for the acts of the Individual Defendants and its employees
under the doctrine of respondeat superior and common law principles of agency as all of the
wrongful acts complained of herein were carried out within the scope of their employment with
authorization.
30. The scienter of the Individual Defendants and other employees and agents of the
Company is similarly imputed to Alternate Energy under respondeat superior and agency principles.
PLAINTUYS' CLASS ACTION ALLEGATIONS
31. Plaintiffs bring this action as a class action pursuant to Federal Rule of Civil
Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all persons who purchased securities of
Alternate Energy during the Class Periods and who were damaged thereby. Excluded from the Class
are Defendants, the current and former officers and directors of the Company, members of their
immediate families and their legal representatives, heirs, successors or assigns and any entity in
which Defendants have or had a controlling interest.
32. The members of the Classes are so numerous that joinder of all members is
impracticable. Throughout the Class Periods, Alternate Energy's securities were actively traded on
the OTC Bulletin Board and the Pink Sheets operated by OTC Markets, Inc. While the exact number
of members of the two Classes is unknown to Plaintiffs at this time and can only be ascertained
through appropriate discovery, Plaintiffs believe that there are at least hundreds of members in the
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS8
Case 1:10-cv-00634-BLW Document 29 Filed 06/17/11 Page 9 of 39
proposed Class. Members of the Class may be identified from records maintained by Alternate
Energy or its transfer agent and may be notified of the pendency of this action by mail, using a form
of notice customarily used in securities class actions.
33. Plaintiffs' claims are typical of the claims of the members of the Classes, as all
members of the Classes are similarly affected by Defendants' wrongful conduct in violation of
federal law that is complained of herein.
34. Plaintiffs will fairly and adequately protect the interests of the members of the Classes
and have retained counsel competent and experienced in class and securities litigation.
35. Common questions of law and fact exist as to all members of the Classes and
predominate over any questions solely affecting individual members of the Classes. Among the
questions of law and fact common to the Classes are:
(a) whether the federal securities laws were violated by Defendants' acts as
alleged herein;
(b) whether statements made by Defendants to the investing public during the
Class Periods misrepresented material facts about the business, prospects, sales, operations
and management of Alternate Energy, and whether these statements were made by
Defendants with knowledge of, or reckless disregard for, the fact that the statements were
false and misleading; and
(c) to what extent the members of the Classes have sustained damages and the
proper measure of damages.
36. A class action is superior to all other available methods for the fair and efficient
adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the
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damages suffered by individual members of the Classes may be relatively small, the expense and
burden of individual litigation make it impossible for members of the Classes to redress individually
the wrongs done to them. There will be no difficulty in the management of this action as a class
action.
SUBSTANTIVE ALLEGATIONS
37. The First Class Period begins on October 23, 2006 when the Company went public
through a reverse merger with Nussentials Holdings, Inc.
38. Throughout the Class Periods, AEHI did not earn a single dollar in revenue.
39. Defendants announced various ventures of AEHI including building a nuclear reactor
in Idaho, harvesting lighting, and nuclear-powered desalination reactors to provide developing and
Third World countries with clean water.
40. Gillispie stated in an interview on November 12, 2010 that eventually AEHI "could
rival Exxon Mobil in profitability."
41. From the beginning of the First Class Period, and possibly earlier, Gillispie engaged
in a scheme by which he utilized stock promoters to manipulate Alternate Energy's stock price.
42. In particular, in exchange for Alternate Energy stock, Gillispie knowingly ordered
these promoters to buy the Company's stock at the end of certain trading days so as to artificially
inflate the stock's price and trading volume.
43. When, in 2009, Gillispie grew frustrated with said promoters because of their
purported failure to sufficiently manipulate the price of Alternate Energy common stock, he
instructed them to purchase ever larger quantities of the Company's stock. Gillispie also offered
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS10
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incentive awards, such as offering larger quantities of stock to the promoters if they reached certain
price targets.
44. Gillispie also utilized misleading press releases to complement the fraudulent scheme
described above.
45. Examples of Defendants' communications with promoters to effect the fraudulent
scheme are laid out below.
46. On October 23, 2006, Gillispie sent an email to a person named Billy Harbour, which
stated: "Billy, See if you can get the stock up to at least a $1.00...I am dealing with a buyer who
thinks he wants 2,000,000 restricted shares... Thanks, Don."
47. On December 4, 2006, Gillispie sent an email to Harbour, which stated: "Billy, See if
you can push the stock price to $1.00 this afternoon ... it is 89 cents now ... then it will be ready for
our press release tomorrow... See you tonight..."
48. On January 17, 2007, Gillispie sent an email to Harbour, which stated: "Billy.—there
is no evidence you have been buying stock today or any day recently at $1.00 or higher .... I had
someone buy 100 shares this morning at $1.20 and the stock jumped to that price accordingly....and
then drifted down to 96 cents....please don't lie to me about this any more ...it does not help in
rebuilding your character now...."
49. On January 17, 2007, Harbour replied to Gillispie's email dated January 17, 2007
with an email, which stated: "proud purchaser of 51 shares of AEHI today at 3:45 and the same
yesterday (not sure of the time of day though). Will forward trading tickets .... my pleasure."
50. On January 18, 2007, Gillispie replied to Harbour's email dated January 17, 2007
with an email, which stated: "As stated before, buy at least 100 if you want to affect the price."
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS11
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51. On May 19, 2007, Gillispie sent an email to Harbour, which stated: "Billy ... How is
your cold? I am leaving for vacation tomorrow morning for a week and I will offer you a
challenge... if you can get AEHI stock to stay at 50 cents or better during the week ... I will give you
some more stock. Now, you did not do so well when I went to Idaho in April with this request ... Do
you think you can do better this time? I have not seen any 101 purchases in quite a while now. Let
me know if you accept the challenge... Take care, Don."
52. On July 18, 2007, Gillispie sent an email to Harbour, entitled "Missing in action,"
which stated: "Billy... How goes it? I don't see any evidence of you buying stock and keeping us at
$1.00 or higher nor your friends moving the pile... volume numbers look the same.. Help ... the time
is now ... talking with big investors this week ... got check for $250,000 yesterday... Please get
going... Don."
53. On July 30, 2007, Gillispie sent an email to Harbour, which stated: "Billy ... I really
need some help with the stock price... can you, John and Charlie get some buyers? If we can get the
price to $3, we can move to the NASDAQ ... the other ingredients are almost in place ... it is the only
major barrier... after that the stock will expand... even ML can recommend Thanks, Don."
54. On August 7. 2007 Harbour sent an email to Gillispie, entitled "Re: Buy Billy Buy
now," which stated: "just got in .... will buy ASAP."
55. On August 7, 2007, Gillispie replied to Harbour's email dated August 7, 2007 with an
email, which stated: "It is not apparent John and Charlie are doing much... so I need you to keep it
from closing below 90 cents at least... thanks."
56. In order to effect Defendants' fraudulent scheme, Defendants also made statements,
knowing, or with reckless disregard for the fact, that they were false and misleading in the annual
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS12
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report for the fiscal year ended December 31, 2008 filed as form 10-K with the SEC on March 31,
2009 ("2008 10-K"), the first day of the Second Class Period, that materially understated the
compensation Ransom received from the Company. In fact, Ransom personally received large sums
of money that investors were misled into believing was being used for the Company's business.
Gillispie, as CEO, and Ransom knew how much money Ransom was receiving from AEHI.
57. The 2008 10-K falsely reported that the company paid Ransom a flat fee of $60,000
of "other compensation" consisting of an "expense allotment, travel, auto and entertainment."
58. In fact, Ransom actually received at least $163,000 in cash from AEHI in 2008.
59. The 2008 10-K was signed by Gillispie and other officers and directors of AEHI.
60. The signed certification of Gillispie filed with the 2008 10-K pursuant to the
Sarbanes-Oxley Act of 2002 ("SOX") was materially false and misleading. In addition to stating that
he was "responsible for establishing and maintaining disclosure controls and procedures ... and
internal control over financial reporting," the certification falsely stated, in part, that the 2008 10-K
(a) "does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report," (b) "the financial statements, and
other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report," and that Gillispie disclosed (c) "[a]ll significant deficiencies and material weaknesses
in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and report financial
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS13
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information," and "[a]ny fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over financial reporting."
61. Defendants violated Regulation S-K Item 404 and FAS 57 by failing to disclose the
amount of money paid to Ransom in 2008, the payment being a related party transaction.
62. As part of Defendants' scheme, on September 7, 2010, AEHI issued a press release,
which made the following false and misleading statement: "Based on confidence in AEHI's
accomplishments and long term potential, company directors and line officers have maintained their
stock ownership, in which no shares have been sold since company inception."
63. As part of Defendants' scheme, on September 30, 2010, an AEHI press release quoted
Gillispie in making the following false and misleading statement: "Recent insider purchases and the
fact that neither I, our CFO, board members, nor any officers who have day-to-day line
responsibilities for running the company have sold a single share since the Company's inception
speak to our strong confidence in the outlook for the business."
64. By way of his fraudulent scheme and misleading press releases, Gillispie was able to
artificially inflate the value of Alternate Energy stock from $0.11 per share on April 1, 2010 to $0.85
per share on September 30, 2010.
65. Said press releases, however, were patently false because Ransom, a Senior Vice-
President of the Company, sold one million shares of Alternate Energy stock between June and
September 2010.
66. Ransom sold said shares as orchestrated by Gillispie.
67. Gillispie also sold an additional 137,000 shares through Brian Webb, an attorney for
Alternate Energy.
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68. Gillispie, Ransom, and Webb all had brokerage accounts located at the same firm and
used the same broker.
69. Gillispie instructed the broker to sell stock for Ransom and Webb, including how and
when to execute the trades.
70. Ransom transferred at least $200,000 of the $675,000 in proceeds from her sales of
AEHI stock between June and September 2010 to Gillispie.
71. Thus, Gillispie sold shares of AEHI stock between June and September 2010 through
his nominees, Ransom and Webb.
72. As a result, the Company's statements indicating that no officer or director of the
Company had ever sold his or her shares of the Company were false and misleading because Ransom
sold her shares of the Company.
73. The Company's statements indicating that no officer or director of the Company had
ever sold his or her shares of the Company were also false and misleading because Gillispie used
Ransom and Webb as his nominees for stock sales, and thereby sold his shares of the Company.
74. AEHI and Gillispie made their statements that no officer or director of the Company
had ever sold his or her shares of the Company knowing, or in reckless disregard of the fact, that the
statements were false and misleading -- because both Gillispie and Ransom knew that each of them
had sold Company stock.
75. Ransom and Gillispie were each required to report their respective sales of AEHI
stock between June and September 2010, pursuant to Rule 16a-3 of the Exchange Act. However,
Ransom and Gillispie failed to file any SEC Forms 3, 4, or 5 disclosing those sales, which supports a
strong inference that AEHI and Gillispie made their statements that no officer or director of the
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Company had ever sold his or her shares of the Company knowing, or in reckless disregard of the
fact, that the statements were false and misleading.
76. Examples of Defendants' communications pertaining to Defendants' sales of
Company stock before the false and misleading press releases dated September 7, 2010 and
September 30, 2010 are laid out below.
77. On May 21, 2010, Ransom sent an email to her financial advisor at UBS Financials
Services Inc., Richard Hammond, which stated: "Rich, I need to sell some stock when I get back.
We need to get together and chat about it. I want to do it smart and sell as little as possible to
accomplish my goals. I also would like to discuss warrants and options that I will be offered in
public offering as an officer of AEHI. Let's chat next week of coffee. I'd like to bring Brian Webb
so I make the best decisions. He's my attorney and very good friend. He handles all my stuff. I
made a big mess and Brian is trying hard to fix all my innocent but big mistakes. Take care, Jennie
P.S. Thanks for everything you do."
78. On June 5, 2010, Brian Buck, an attorney, sent an email to Gillispie, which stated: "I
haven't received any of the paperwork for her, but once I do I will get the opinion out."
79. On June 5, 2010, Gillispie sent an email to Hammond, which stated: "Hi Rich,
Whatever you can do to expedite this request to Brian Buck for Jennie would be appreciated. She
needs to sell quickly for personal reasons, but also it has an impact on the company if delayed ... not
to be repeated. Also, NASDAQ contacted us about listing this week .... J Thanks so much.. Have a
nice weekend... Don."
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80. On June 6, 2010, Hammond replied to Gillispie's email dated June 5, 2010 with an
email, which stated: "Hi Don, I prepared all of the paperwork on Friday and it will be forwarded to
NY on Monday. I will keep you updated. All the best, Rich."
81. On June 14, 2010, Gillispie sent an email to Buck, which stated: "Hi Brian, Have you
done Jennie's option? The broker said it was requested a week ago. Have you seen it? She does not
want to sell her stock now, but there is an urgent need for the funds. Thanks, Don"
82. On June 14, 2010, Buck replied to Gillispie's email dated June 14, 2010 with an
email, which stated: "I just went back through all of my emails and faxes over the last 2 weeks and I
don't have anything for Jennie. I spoke to her broker, but I haven't received anything from him."
83. Later in the day on June 14, 2010, Gillispie sent an email to Hammond, ccing Buck,
which stated: "The lawyer, Brian Buck, says he did not get it ... please e-mail to him, it may be lost in
your system Thanks, Don."
84. On June 28, 2010, Gillispie sent an email to Hammond, which stated: "Hi Rich,
Please reactivate selling Jennie's stock tomorrow with careful instructions not to drop the price
(selling near the ask)... she needs to sell about 200,000 shares or $100,000 over the next 2 weeks or
so. So, about 15,000 shares a day ... 5,000 share increments work well. Heading to NYC tomorrow
to work on AMEX and public offering, plus analyst meetings, back late next week. Available by e-
mail and cell 208-230-4555 Have a great 4th Thanks, Don."
85. On July 14, 2010, Gillispie sent an email to Hammond, which stated: "Hi Rich, How
goes it these days? I need to come by and give you my stock soon....are you in the office this week?
How much money have you raised for Jennie? Best, Don."
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86. On July 18, 2010, Gillispie sent an email to Hammond, ccing Ransom and Buck,
which stated: "I have communicated with Jennie and Brian ... let's stop selling Jennie's stock and sell
Brian's now... please... Brian will communicate with your regarding how much and the
timing... thanks.. Also, I need a report on how many shares were sold for Jennie for our SEC filing
for officers early next week plus start and end dates ... ... thanks Thanks so much..."
87. On July 19, 2010, Hammond sent an email to Joyce Shreven, the Branch Office
Administrator at UBS Financials Services Inc., which stated: "Joyce, Will you please research his
request for Jennie's stock. Thanks, Rich."
88. On July 19, 2010, Shreven replied to Hammond's email dated July 19, 2010 with an
email, which stated: "Rich, Jennifer has sold 219,600 shares of AEHI since 6/15/2010. I have
attached a Realized gain/loss report which shows all sales. Thanks."
89. On July 21, 2010, Gillispie sent an email to Hammond, which stated: "Rich, They
have not been active selling AEHI stock since July2 ... according bid ask dates. Best, Don."
90. On July 21, 2010, Hammond replied to Gillispie's email dated July 21, 2010 with an
email, which stated: "We were able to sell our total daily limit order yesterday and l OK shares for
Brian this morning. Rich."
91. On September 3, 2010, Gillispie sent an email to Hammond, ccing, Buck, which
stated: "I hope you selling Jennie's shares in this hot market period....thanks."
92. In order to effect Defendants' fraudulent scheme, Defendants also made statements,
knowing, or with reckless disregard for the fact, that they were false and misleading in the 200910-K
filed with the SEC on March 31, 2010, that materially understated the compensation Gillispie and
Ransom received from the Company. In fact, Gillispie and Ransom personally received large sums
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of money that investors were misled into believing was being used for the Company's business.
Gillispie and Ransom knew how much money they were receiving from AEHI.
93. The 200910-K falsely reported that the Company paid Gillispie a flat fee of $133,000
of "other compensation" consisting of an "expense allotment for travel, auto, Idaho living expenses,
and entertainment."
94. However, in fact, Gillispie received from the Company in 2009 $367,456.15 in cash
and paid expenses — $234,456.15 more than the $133,000 disclosed to investors.
95. Gillispie double-dipped by keeping the cash that the 200910-K reported AEHI gave
him as an "expense allotment," while AEHI paid $143,500 in credit card bills for those same
expenses. These charges included travel to Asia, California, Colorado, and Las Vegas, flowers, and
almost $11,000 for Broncos season tickets. Also, AEHI paid about $36,000 for rent of his $500,000
house in Idaho. AEHI paid an additional $55,000 in undisclosed cash to Gillispie in 2009.
96. The 2009 10-K falsely reported that Ransom's cash compensation in 2008 was
$60,000 for "expense allotment, travel, auto, and entertainment."
97. In fact, Ransom actually received at least $163,000 in cash from AEHI in 2008.
98. The 2009 10-K falsely reported that Ransom's cash compensation in 2009 was
$130,000 for "expense allotment, travel, auto, and entertainment."
99. In fact, AEHI paid Ransom at least $191,028 in cash and expenses in 2009.
100. Ransom double-dipped by keeping $128,500 in cash that the 2009 10-K reported
AEHI gave her as an "expense allotment," while AEHI paid $62,500 to her credit cards for those
same expenses. These charges included travel to Asia, the Virgin Islands, Canada, California, and
Colorado.
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101. The 2009 10-K was signed by Gillispie and other officers and directors of AEHI.
102. The signed certification of Gillispie filed with the 2009 10-K pursuant to SOX was
materially false and misleading. In addition to stating that he was "responsible for establishing and
maintaining disclosure controls and procedures and internal control over financial reporting," the
certification falsely stated, in part, that the 200910-K (a) "does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report," (b) "the financial statements, and other financial information included in this
annual report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report," and that Gillispie
disclosed (c) "[a]ll significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report financial information," and "[a]ny fraud,
whether or not material, that involves management or other employees who have a significant role in
the registrant's internal control over financial reporting."
103. Defendants violated Regulation S-K Item 404 and FAS 57 by failing to disclose the
amount of money paid to each of Gillispie and Ransom in 2009 (and paid to Ransom in 2008), the
payments being related party transactions.
104. Furthermore, On October 14, 2010, in order to effect Defendants' fraudulent scheme,
Defendants issued a press release announcing that Pinnacle Digest "vetted" and "recommended"
Alternate Energy stock. The press release stated that "Pinnacle Digest was not paid or compensated
by Alternate Energy in any way for writing the article."
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105. The October 14, 2010 press release was false and/or misleading because Pinnacle
Digest's website clearly indicates that it was paid by Alternate Energy to display and distribute the
Company's news.
106. Moreover, at about the time that AEHI issued the press release about Pinnacle
Digest's recommendation of AEHI, that is between June 14, 2010 and October 4, 2010, AEHI had
sold at least 170,000 stock to the head of Pinnacle Digest pursuant to a private placement
memorandum at a steep discount ($0.10 per share) that was not available to the public. The lowest
price of AEHI stock between June 14, 2010 and October 14, 2010 was $0.39 per share. Pinnacle
Digest sold that stock after it published its October 14, 2010 article.
107. Defendants knowingly or recklessly stated that Pinnacle Digest was not paid for
writing the article about which Alternate Energy issued the press release, as Defendants knew that
they caused Alternate Energy to pay Pinnacle Digest for displaying and distributing Company news
and to sell Pinnacle Digest the Company stock at a great discount.
108. On December 16, 2010, the SEC filed a civil action in this Court (10-CV-00621-EJL)
against, among others, Alternate Energy and the Individual Defendants for violations of the federal
securities laws (the "SEC Action"). The complaint in the SEC Action made factual allegations
similar to those described herein.
109. Prior to filing the complaint in the SEC Action, on December 14, 2010, the SEC
issued an order to temporarily suspend trading of the Company's common stock. The suspension
was effective at 9:30 a.m. E.S.T. on December 14, 2010. As a result, Plaintiffs and the Class have
been damaged.
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110. Pursuant to this Court's order in the SEC Action, all of the Company's assets were
frozen from December 18, 2010 through February 3, 2011. Thereafter, the Company agreed to report
to the SEC on a monthly basis all of its expenses that are $2,500 or greater during the pendency of
the SEC Action and not to violate any of the federal securities laws.'
ADDITIONAL ALLEGATIONS OF FALSE AND MISLEADING STATEMENTS,OF ACTIONS THAT WERE PART OF DEFENDANTS'
FRAUDULENT SCHEME, AND OF SCIENTER
111. An AEHI private placement memorandum dated May 18, 2009 ("May 18, 2009
PPM") included the following false and misleading statement: "The Project is funded and seeking
NRC approval."
112. Yet, an email dated May 18, 2009 from Gillispie, entitled "Friends and family stock
offer," to which the May 18, 2009 PPM was an attachment, contained the following statement
"funding will occur with the next 30 days or so lifting the stock even higher..." Thus, the statement
that the "Project is funded" in the May 18, 2009 PPM was false and misleading.
113. Because Gillispie himself stated that the funding had not yet occurred, he knew, or
was reckless in disregard of the truth, that his statement that the project was funded was false and
misleading.
114. The 2009 10-K falsely stated that "The Company and its subsidiaries have 15 full-
time employees. In addition, nine officers and directors provide certain services dedicated to current
corporate and business development activities."
1 This Amended Complaint incorporates by reference herein the following documents in the Docket of the SECAction: (1) the Complaint filed on December 16, 2010 (Docket No. 1); (2) the Court's Order approving stipulationof the parties to the SEC Action pertaining to SEC's Motion for Temporary Restraining Order (Docket No. 25); and(3) the Court's Order On Order To Show Cause (Docket No. 56).CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS
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115. In fact, AEHI in 2009 had no salaried employees. Rather AEHI paid money regularly
to a handful of independent contractors.
116. Individual Defendants knew that they were not paid as salaried employees.
117. AEHI made false and misleading statements in press releases dated June 18, 2009 and
October 11, 2010, and in its May 2010 newsletter that AEHI has offices in Beijing, Seoul, and Lagos,
Nigeria.
118. In fact, certain investors have merely been working internationally to broker deals
between AEHI and businesses in foreign countries. In fact, AEHI has no financial interest at all in
any operations in Korea or Nigeria, and has a 10% stake in a potential, but currently nonexistent,
business in China.
119. As CEO, Gillispie knew that AEHI has no financial interest at all in any operations in
Korea or Nigeria, and has a 10% stake in a potential, but currently nonexistent, business in China
LOSS CAUSATION AND DAMAGES
120. The relevant truth concerning the Defendants' fraudulent conduct entered the market
on December 14, 2010 at 9:30 a.m. E.S.T., at which time the SEC issued an order to temporarily
suspend trading of the Company's common stock.
121. The closing price of AEHI stock on December 13, 2010 was $0.58.
122. On December 16, 2010 the SEC filed a civil action against Defendants.
123. News of the SEC's temporary suspension of trading of AEHI stock and of the SEC
Action adversely shocked the market.
124. When trading began after the temporary suspension of trading ended, on December
29, 2010, the price of AEHI stock opened at $0.06, and closed that day at $0.08.
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125. The opening price of AEHI stock on June 15, 2011 was $0.12.
126. AEHI stock's price dropped catastrophically because the market became aware of
SEC's allegations that Defendants knowingly or recklessly engaged in a fraudulent scheme and made
materially false and misleading statements, as alleged in this Amended Complaint.
Applicability of Presumption of Reliance:Fraud-On-The-Market Doctrine
A. AFFILIATED UTE
127. Neither Plaintiffs nor the Classes need prove reliance, either individually or as a class,
under the circumstances of this case, which involves a failure to disclose sales made by Gillispie and
Ransom and a failure to disclose that Gillispie was paying third parties to promote AEHI stock.
Pursuant to the ruling of the United States Supreme Court in Affiliated Ute Citizens of Utah v. United
States, 406 U.S. 128 (1972), Plaintiffs need not prove reliance because the facts withheld by
Defendants were material in the sense that a reasonable investor might have considered the omitted
information important in deciding whether to have purchased or sold the subject security.
D. FRAUD-ON-TIC-MARL ET DOCTRINE
128. At all relevant times, the market for Alternate Energy common stock was an efficient
market for the following reasons, among others.
(a) Alternate Energy stock met the requirements for listing, and was listed and
actively traded on the OTC Bulletin Board, an efficient and automated market;
(b) During the First Class Period, on average, 790,500 shares of Alternate Energy
stock were traded on a weekly basis. During the First Class Period approximately 79 million
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS24
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shares were outstanding. 2 Approximately 1 % of all outstanding shares were bought and sold
on a weekly basis during the First Class Period, demonstrating a very active and broad
market for Alternate Energy stock and permitting a strong presumption of an efficient
market;
(c) During the Second Class Period, on average, 1,801,500 shares of Alternate
Energy stock were traded on a weekly basis. During the Second Class Period approximately
166 million shares were outstanding. 3 Approximately 1.1 % of all outstanding shares were
bought and sold on a weekly basis during the Second Class Period, demonstrating a very
active and broad market for Alternate Energy stock and peimitting a strong presumption of
an efficient market;
(d) As a regulated issuer, Alternate Energy filed periodic public reports with the
SEC;
(e) Alternate Energy regularly communicated with public investors via
established market communication mechanisms, including regular disseminations of press
releases on the national circuits of major newswire services and through other wide-ranging
public disclosures, such as communications with the financial press and other similar
reporting services;
2 The 2008 10-K stated that as of March 19, 2009, the Company had 79,3 85,545 shares of outstanding commonstock. At the inception of the First Class Period, the Company had between 23 and 44 million shares of outstandingcommon stock. In the last year of the First Class Period, which extended over a period greater than four years, therewere over 200 million shares of outstanding common stock. Plaintiffs' calculation that during the First Class Periodthere were about 79 million shares of outstanding common stock takes into account the changing number ofoutstanding shares during the First Class Period, as delineated above.3 The 2008 10-K stated that as of March 19, 2009, the Company had 79,385,545 shares of outstanding commonstock. The 2009 10-K stated that as of March 31, 2010, the Company had 252,361,674 shares of outstandingcommon stock. Plaintiffs' calculation that during the First Class Period, which began on March 31, 2009 and endedon December 14, 2010, there were about 166 million shares of outstanding common stock is based on the average ofCLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS
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(f) Alternate Energy was followed by securities analysts who wrote reports that
were distributed to the sales force and certain customers of their respective brokerage firms;
(g) Numerous NASD/FINRA member firms were active market-makers in
Alternate Energy stock at all times during the Class Periods; and
(h) Unexpected material news about Alternate Energy was reflected and
incorporated into the Company's stock price during the Class Periods.
129. As a result of the foregoing, the market for Alternate Energy's common stock
promptly digested current information regarding Alternate Energy from all publicly available sources
and reflected such information in Alternate Energy's stock price. Under these circumstances, all
purchasers of Alternate Energy common stock during the Class Periods suffered similar injury
through their purchase of Alternate Energy's common stock at artificially inflated prices and a
presumption of reliance applies.
FIRST CAUSE OF ACTIONMade by Plaintiffs and the First Class for Violation of
Section 10(b) of the Exchange Act and Rule 10b-5Promulgated Thereunder Against All Defendants Except Jennifer Ransom
For Engaging in a Scheme To Manipulate and Artificially Inflatethe Market Price of Alternate Energy Stock
130. Plaintiffs repeat and reallege each and every allegation contained above as if fully set
forth herein.
131. This First Cause of Action is asserted by Plaintiffs, individually and on behalf of the
First Class, against AEHI and Gillispie (the "10b-5 Defendants") for engaging in a scheme to
manipulate and artificially inflate the market price of Alternate Energy stock.
the number of outstanding shares that were reported in each of the 2008 10-K and the 2009 10-K.CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS
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132. During the First Class Period, Defendants carried out a plan, scheme and course of
conduct which was intended to, and throughout the First Class Period, did: (1) deceive the investing
public, including Plaintiffs and other First Class members, as alleged herein; (2) cause Plaintiffs and
other members of the First Class to purchase and/or sell Alternate Energy's securities at artificially
inflated and distorted prices; and (3) manipulate the market for AEHI stock. In furtherance of this
unlawful scheme, plan and course of conduct, 1 Ob-5 Defendants, individually and as a group, took
the actions set forth herein.
133. l Ob-5 Defendants: (a) employed devices, schemes, and artifices to defraud; (b) made
untrue statements of material fact and/or omitted to state material facts necessary to make the
statements not misleading; and (c) engaged in acts, practices, and a course of business that operated
as a fraud and deceit upon the purchasers and/or sellers of the Company's securities in an effort to
maintain artificially high market prices for Alternate Energy's common stock in violation of Section
10(b) of the Exchange Act and Rule l Ob-5. All Defendants are sued either as primary participants in
the wrongful and illegal conduct charged herein or as controlling persons as alleged below.
134. IOb-5 Defendants, individually and in concert, directly and indirectly, by the use,
means or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a
continuous course of conduct to conceal adverse material information about the business, operations
and future prospects of Alternate Energy as specified herein.
135. These l Ob-5 Defendants employed devices, schemes and artifices to defraud, while in
possession of material adverse non-public information and engaged in acts, practices, and a course of
conduct as alleged herein in an effort to assure investors of Alternate Energy's value and
performance and continued substantial growth, which included the making of, or the participation in
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS27
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the making of, untrue statements of material facts and omitting to state material facts necessary in
order to make the statements made about Alternate Energy and its business operations and future
prospects in light of the circumstances under which they were made, not misleading, as set forth
more particularly herein, and engaged in transactions, practices and a course of business that
operated as a fraud and deceit upon the purchasers and/or sellers of Alternate Energy securities
during the First Class Period.
136. Gillispie's primary liability and controlling person liability arise from the following
facts: (1) Gillispie was a high-level executive, director, and/or agents at the Company during the
First Class Period and members of the Company's management team or had control thereof;
(2) Gillispie, by virtue of his or her responsibilities and activities as a senior officer and/or director of
the Company, was privy to and participated in the market manipulation of AEHI stock and the
creation, development and reporting of the Company's financial condition; (3) Gillispie enjoyed
significant personal contact and familiarity with the other Defendants and was advised of and had
access to other members of the Company's management team, internal reports, and other data and
information about the Company's finances, operations, and sales at all relevant times; (4) Gillispie
was aware of the market manipulation of AEHI stock and the Company's dissemination of
information to the investing public, both of which he knew or recklessly disregarded to be materially
false and misleading; and (5) Gillispie culpably participated in the wrongful conduct alleged herein.
137. As alleged herein, 1Ob-5 Defendants acted with scienter in that they knowingly or
with reckless disregard for the truth participated in and furthered a market manipulation scheme and
injected false information into the marketplace in order to inflate the price of AEHI securities; knew
that the statements and documents that were issued and disseminated by them concerning AEHI and
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS28
Case 1:10-cv-00634-BLW Document 29 Filed 06/17/11 Page 29 of 39
its stock were materially false and misleading; intended to and did induce AEHI shareholders,
including Plaintiffs and the First Class, to buy shares of AEHI stock at artificially inflated prices; and
were aware of the fraudulent, market-manipulating nature of their acts and the potential for their own
profit from those acts.
138. As a result of the market manipulation and the dissemination of the materially false
and misleading information and failure to disclose material facts, as set forth above, the market price
of Alternate Energy securities was artificially inflated or distorted during the First Class Period. In
ignorance of the fact that market prices of Alternate Energy's publicly-traded securities were
artificially inflated or distorted, and relying upon the integrity of the market in which the securities
trade and relying directly or indirectly on the false and misleading statements made by IOb-5
Defendants, and/or on the absence of material adverse information that was known to or recklessly
disregarded by l Ob-5 Defendants but not disclosed in public statements by l Ob-5 Defendants during
the First Class Period, Plaintiffs and the other members of the First Class acquired and/or sold
Alternate Energy securities during the First Class Period at artificially high and/or distorted prices
and were or will be damaged thereby.
139. At the time of said misrepresentations and omissions, Plaintiffs and other members of
the First Class were ignorant of their falsity, and believed them to be true. Had Plaintiffs and the
other members of the First Class and the marketplace known the truth regarding Alternate Energy's
financial results, which were not disclosed by Defendants, Plaintiffs and other members of the First
Class would not have purchased or otherwise acquired or sold their Alternate Energy securities, or, if
they had acquired or sold such securities during the First Class Period, they would not have done so
at the artificially inflated prices or distorted prices at which they did.
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140. By virtue of the foregoing, IOb-5 Defendants have violated Section 10(b) of the
Exchange Act, and Rule l Ob-5 promulgated thereunder.
141. As a direct and proximate result of l Ob-5 Defendants' wrongful conduct, Plaintiffs
and the other members of the First Class suffered damages in connection with their respective
purchases and sales of the Company's securities during the First Class Period.
142. This action was filed within two years of discovery of the fraud and within five years
of Plaintiffs' purchases of securities giving rise to the cause of action.
SECOND CAUSE OF ACTIONMade by Plaintiffs and the Second Class for
Violation of Section 10(b) of the Exchange Act and Rule 10b-5Promulgated Thereunder Against All Defendants Except Jennifer Ransomfor Making Misrepresentations of Material Fact Knowingly or Recklessly
143. Plaintiffs repeat and reallege each and every allegation contained above as if fully set
forth herein.
144. This Second Cause of Action is asserted by Plaintiffs, individually and on behalf of
the Second Class, against the lOb-5 Defendants for making misrepresentations of material fact
knowingly or recklessly.
145. During the Second Class Period, l Ob-5 Defendants carried out a plan, scheme and
course of conduct which was intended to, and throughout the Class Period, did: (1) deceive the
investing public, including Plaintiffs and other Class members, as alleged herein; and (2) cause
Plaintiffs and other members of the Class to purchase and/or sell Alternate Energy's securities at
artificially inflated and distorted prices. In furtherance of this unlawful scheme, plan and course of
conduct, Defendants, individually and as a group, took the actions set forth herein.
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146. l Ob-5 Defendants: (a) employed devices, schemes, and artifices to defraud; (b) made
untrue statements of material fact and/or omitted to state material facts necessary to make the
statements not misleading; and (c) engaged in acts, practices, and a course of business that operated
as a fraud and deceit upon the purchasers and/or sellers of the Company's securities in an effort to
maintain artificially high market prices for Alternate Energy's common stock in violation of Section
10(b) of the Exchange Act and Rule lOb-5. All IOb-5 Defendants are sued either as primary
participants in the wrongful and illegal conduct charged herein or as controlling persons as alleged
below.
147. l Ob-5 Defendants, individually and in concert, directly and indirectly, by the use,
means or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a
continuous course of conduct to conceal adverse material information about the business, operations
and future prospects of Alternate Energy as specified herein.
148. These l Ob-5 Defendants employed devices, schemes and artifices to defraud, while in
possession of material adverse non-public information and engaged in acts, practices, and a course of
conduct as alleged herein in an effort to assure investors of Alternate Energy's value and
perfonfiance and continued substantial growth, which included the making of, or the participation in
the making of, untrue statements of material facts and omitting to state material facts necessary in
order to make the statements made about Alternate Energy and its business operations and future
prospects in light of the circumstances under which they were made, not misleading, as set forth
more particularly herein, and engaged in transactions, practices and a course of business that
operated as a fraud and deceit upon the purchasers and/or seller of Alternate Energy securities during
the Second Class Period.
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149. Gillispie's primary liability and controlling person liability arise from the following
facts: (1) Gillispie was a high-level executive, director, and/or agent at the Company during the
Second Class Period and members of the Company's management team or had control thereof,
(2) Gillispie, by virtue of his responsibilities and activities as a senior officer and/or director of the
Company, was privy to and participated in the creation, development and reporting of the Company's
financial condition; (3) Gillispie enjoyed significant personal contact and familiarity with the other
Defendants and was advised of and had access to other members of the Company's management
team, internal reports, and other data and information about the Company's finances, operations, and
sales at all relevant times; (4) Gillispie was aware of the Company's dissemination of information to
the investing public that he knew or recklessly disregarded to be materially false and misleading; and
(5) Gillispie culpably participated in the wrongful conduct alleged herein.
150. l Ob-5 Defendants had actual knowledge of the misrepresentations and omissions of
material facts set forth herein, or acted with reckless disregard for the truth in that they failed to
ascertain and to disclose such facts, even though such facts were available to them. Such l Ob-5
Defendants' material misrepresentations and/or omissions were made knowingly or recklessly and
for the purpose and effect of concealing Alternate Energy's operating condition and future business
prospects from the investing public and supporting the artificially inflated or distorted price of its
securities. As demonstrated by lOb-5 Defendants' overstatements and misstatements of the
Company's financial condition and business prospects throughout the Second Class Period, l Ob-5
Defendants, if they did not have actual knowledge of the misrepresentations and omissions alleged,
were reckless in failing to obtain such knowledge by deliberately refraining from taking those steps
necessary to discover whether those statements were false or misleading.
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151. As a result of the dissemination of the materially false and misleading information
and failure to disclose material facts, as set forth above, the market price of Alternate Energy
securities was artificially inflated or distorted during the Second Class Period. In ignorance of the
fact that market prices of Alternate Energy's publicly-traded securities were artificially inflated or
distorted, and relying directly or indirectly on the false and misleading statements made by l Ob-5
Defendants, or upon the integrity of the market in which the Company's securities trade, and/or on
the absence of material adverse information that was known to or recklessly disregarded by l Ob-5
Defendants but not disclosed in public statements by lOb-5 Defendants during the Second Class
Period, Plaintiffs and the other members of the Second Class acquired and/or sold Alternate Energy
securities during the Second Class Period at artificially high and/or distorted prices and were or will
be damaged thereby.
152. At the time of said misrepresentations and omissions, Plaintiffs and other members of
the Second Class were ignorant of their falsity, and believed them to be true. Had Plaintiffs and the
other members of the Class and the marketplace known the truth regarding Alternate Energy's
financial results, which were not disclosed by 1 Ob-5 Defendants, Plaintiffs and other members of the
Second Class would not have purchased or otherwise acquired or sold their Alternate Energy
securities, or, if they had acquired or sold such securities during the Second Class Period, they would
not have done so at the artificially inflated prices or distorted prices at which they did.
153. By virtue of the foregoing, lOb-5 Defendants have violated Section 10(b) of the
Exchange Act, and Rule l Ob-5 promulgated thereunder.
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154. As a direct and proximate result of l Ob-5 Defendants' wrongful conduct, Plaintiffs
and the other members of the Second Class suffered damages in connection with their respective
purchases and sales of the Company's securities during the Second Class Period.
155. This action was filed within two years of discovery of the fraud and within five years
of Plaintiffs' purchases of securities giving rise to the cause of action.
THIRD CAUSE OF ACTIONMade by Plaintiffs and the First Class for
Violation of Section 20(a) of the Exchange Act Against the Individual Defendants forActing as Controlling Persons as to the 1Ob-5 Defendants' Engagement in a Scheme To
Manipulate and Artificially Inflate The Market Price of Alternate Energy Stock
156. Plaintiffs repeat and reallege each and every allegation contained above as if fully set
forth herein.
157. This Third Cause of Action is asserted by Plaintiffs, individually and on behalf of the
First Class, against the Individual Defendants for acting as controlling persons as to the IOb-5
Defendants' engagement in a scheme to manipulate and artificially inflate the market price of
Alternate Energy stock.
158. The Individual Defendants acted as controlling persons of Alternate Energy within the
meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level
positions, agency, and their ownership and contractual rights, participation in and/or awareness of the
Company's manipulative scheme and operations and dissemination of information to the investing
public, the Individual Defendants had the power to influence and control, and did influence and
control, directly or indirectly, the decision-making of the Company, including the market
manipulation of AEHI securities alleged herein and the content and dissemination of the various
statements that Plaintiffs contend are false and misleading. The Individual Defendants were
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provided with or had unlimited access to copies of the Company's reports, press releases, public
filings and other statements alleged by Plaintiffs to be misleading prior to and/or shortly after these
statements were issued, and had the ability to prevent the issuance of the statements or to cause the
statements to be corrected.
159. In particular, each of these Individual Defendants had direct and supervisory
involvement in the day-to-day operations of the Company and, therefore, is presumed to have had the
power to control or influence the particular transactions giving rise to the securities violations as
alleged herein, and exercised the same.
160. As set forth above, the l Ob-5 Defendants each violated Section 10(b) and Rule l Ob-5
by their participation in the market manipulation and acts and omissions as alleged in this Amended
Complaint.
161. By virtue of their positions as controlling persons, the Individual Defendants are
liable pursuant to Section 20(a) of the Exchange Act. As a direct and proximate result of Individual
Defendants' wrongful conduct, Plaintiffs and other members of the First Class suffered damages in
connection with their purchases of the Company's common stock during the First Class Period.
162. This action was filed within two years of discovery of the fraud and within five years
of Plaintiffs' purchases of securities giving rise to the cause of action.
FOURTH CAUSE OF ACTIONMade by Plaintiffs and the Second Class for Violation of Section 20(a) of the
Exchange Act Against the Individual Defendants for Acting as Controlling Persons as tothe 10b-5 Defendants' Misrepresentations of Material Fact Made Knowingly or Recklessly
163. Plaintiffs repeat and reallege each and every allegation contained above as if fully set
forth herein.
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Case 1:10-cv-00634-BLW Document 29 Filed 06/17/11 Page 36 of 39
164. This Fourth Cause of Action is asserted by Plaintiffs, individually and on behalf of the
Second Class, against the Individual Defendants for acting as controlling persons as to the IOb-5
Defendants' misrepresentations of material fact, which they made knowingly or recklessly.
165. The Individual Defendants acted as controlling persons of Alternate Energy within the
meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level
positions, agency, and their ownership and contractual rights, participation in and/or awareness of the
Company's operations and dissemination of information to the investing public, the Individual
Defendants had the power to influence and control, and did influence and control, directly or
indirectly, the decision-making of the Company, including the content and dissemination of the
various statements that Plaintiffs contend are false and misleading. The Individual Defendants were
provided with or had unlimited access to copies of the Company's reports, press releases, public
filings and other statements alleged by Plaintiffs to be misleading prior to and/or shortly after these
statements were issued, and had the ability to prevent the issuance of the statements or to cause the
statements to be corrected.
166. In particular, each of these Defendants had direct and supervisory involvement in the
day-to-day operations of the Company and, therefore, is presumed to have had the power to control
or influence the particular transactions giving rise to the securities violations as alleged herein, and
exercised the same.
167. As set forth above, the l Ob-5 Defendants each violated Section 10(b) and Rule l Ob-5
by their acts and omissions as alleged in this Amended Complaint.
168. By virtue of their positions as controlling persons, the Individual Defendants are
liable pursuant to Section 20(a) of the Exchange Act. As a direct and proximate result of
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS36
Case 1:10-cv-00634-BLW Document 29 Filed 06/17/11 Page 37 of 39
Defendants' wrongful conduct, Plaintiffs and other members of the Second Class suffered damages
in connection with their purchases of the Company's common stock during the Second Class Period.
169. This action was filed within two years of discovery of the fraud and within five years
of Plaintiffs' purchases of securities giving rise to the cause of action.
WHEREFORE, Plaintiffs pray for relief and judgment, as follows:
(a) Determining that this action is a proper class action and certifying Plaintiffs as
class representatives under Rule 23 of the Federal Rules of Civil Procedure, and Plaintiffs' counsel
as Class Counsel;
(b) Awarding compensatory damages in favor of Plaintiffs and the members of the
two Classes against all Defendants, jointly and severally, for all damages sustained as a result of
Defendants' wrongdoing, in an amount to be proven at trial, including interest thereon;
(c) Awarding Plaintiffs and the members of the two Classes their reasonable costs
and expenses incurred in this action, including counsel fees and expert fees; and
(d) Such other and further relief as the Court may deem just and proper.
JURY TRIAL DEMANDED
Plaintiffs hereby demand a trial by jury.
Dated: June 17, 2010 GORDON LAW OtTICES
/s/ Bruce Bistline Bruce S. Bistline, ISBN 1988Philip Gordon, ISBN 1996623 W. Hays St.Boise, Idaho 83702Telephone: (208) 345-7100Fax: (208) 345-0050Email: bbistlinengordonlawoff ces.com
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS37
Case 1:10-cv-00634-BLW Document 29 Filed 06/17/11 Page 38 of 39
Email: p-gordon(c mordonlawoffices.com
-and-
THE, ROSEN LAW FIRM, P.A.Laurence M. Rosen, Esq.Timothy W. Brown, Esq.Phillip Kim, Esq.275 Madison Avenue, 34th FloorNew York, New York 10016Telephone: (212) 686-1060Fax: (212) 202-3827Email: [email protected]: [email protected]: [email protected]
Attorneys for Plaintiffs and the Class
CLASS ACTION AMENDED COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS38
Case 1:10-cv-00634-BLW Document 29 Filed 06/17/11 Page 39 of 39
CERTIFICATE OF SERVICE
I hereby certify that on June 17`h, 20111 filed the foregoing electronically through the
CM/ECF system, which caused the following parties or counsel to be served by electronic means,
as more fully reflected on the Notice of Electronic Filing.
Philip Gordon pgordon@gordonlaw offices.c
Bruce S. Bistline bbistline@gordonlaw offices.com
Laurence M. Rosen, Esq. lrosen(iDrosenlegal.com
Phillip Kim, Esq. [email protected]
Thomas J. Angstman [email protected]
Richard Roth rich(i4rothlaw.com
_/s/Bruce BistlineBruce S. Bistline