Case 1:10-cv-00621-EJL-REB Document 168 Filed 06/01/12 Page 1 of 11

MARC J. FAGEL (Admitted to Cal. bar) MICHAEL S. DICKE (Admitted to Cal. bar) dickem@sec.gov SUSAN F. LAMARCA (Admitted to Cal. bar) lamarcas@sec.gov ROBERT L. TASHJIAN (Admitted to Cal. bar) tashjianr@sec.gov DAVID A. BERMAN (Admitted to N.Y. bar) bermand@sec.gov Attorneys for Plaintiff SECURITIES AND EXCHANGE COMMISSION 44 Montgomery Street, Suite 2800 San Francisco, California 94104 Telephone: (415) 705-2500 Facsimile: (415) 705-2501 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF IDAHO SOUTHERN DIVISION SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. ALTERNATE ENERGY HOLDINGS, INC., DONALD L. GILLISPIE, and JENNIFER RANSOM, Defendants, and BOSCO FINANCIAL, LLC, and ENERGY EXECUTIVE CONSULTING, LLC, Relief Defendants. PLAINTIFF SECURITIES AND EXCHANGE COMMISSIONS STATEMENT OF UNDISPUTED MATERIAL FACTS Case No. 1:10-cv-621-EJL-REB

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Pursuant to Local Civil Rule 7.1(b)(1), plaintiff Securities and Exchange Commission (Commission) submits this Statement of Undisputed Material Facts in support of its Motion for Summary Judgment against defendants Donald Gillispie and Alternate Energy Holdings, Inc. (AEHI). The Commission submits that the following material facts are undisputed:1 1. AEHI is a publicly-traded company with its principal office in Eagle, Idaho. See

Decl. 4 & Exh. 4 (cover) (2010 Form 10-K). The company was formed in September 2006 as a result of the reverse merger of two predecessor companies. See id. at 1. AEHIs common stock is quoted on the Pink Sheets. See Decl. 4 & Exh. 4 at 24 (2010 Form 10-K). 2. In October 2008, AEHI filed a registration statement with the Commission

pursuant to Section 12(g) of the Securities Exchange Act of 1934, see Decl. 1 & Exh. 1 (Form 10), and became a reporting company. See id. 4 & Exh. 4 (2010 Form 10-K) (cover). 3. AEHIs stated mission is to develop nuclear power plants in the United States.

See Decl. 4 & Exh. 4 at 2 (2010 Form 10-K). As AEHI acknowledged in its filings with the Commission, it is a development stage company that generated no revenue from its inception through December 31, 2010. See Exh. 4 at 16 (2010 Form 10-K). 4. Since the companys formation in 2006, Gillispie has served as AEHIs President

and Chief Executive Officer, as well as the chairman of its board of directors. See Decl. 4 & Exh. 4 at 36 (2010 Form 10-K); id. 48 & Exh. 48 at 27:10-11 (1 Gillispie Dep. Tr.). 5. During this period, AEHI had only one other executive officer, Rick J. Bucci, the

companys Chief Financial Officer. See Decl. 4 & Exh. 4 at 36 (2010 Form 10-K); id. 48 & Exh. 48 at 26:23 28:17 (1 Gillispie Dep. Tr.). Bucci works part-time for AEHI from his accounting office in New York, focusing primarily on the preparation of the companys financial statements and public filings with the Commission. Id. 51 & Exh. 51 at 12:13-22, 32:6-13
1

All citations are to the accompanying Tashjian Declaration and attached exhibits.

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(Bucci Dep. Tr.). Defendant Jennifer Ransom served as AEHIs Senior Vice President of Administration and Corporate Secretary through the end of 2010. See id. 3 & Exh. 3 at 34-35 (2009 Form 10-K). According to Gillispie, however, Ransom never maintained any key decision making control over AEHI. Id. 45 & Exh. 45 34 (Gillispie Affidavit). One director testified that the AEHI board of directors functioned as an advisory committee to Gillispie, who ran the company. Id. 55 & Exh. 55 at 40:14-22 (Sellman Dep. Tr.). 6. Gillispie testified on January 10 and June 28, 2011 on behalf of AEHI as the

person most knowledgeable about certain topics. See Decl. 48-49 (attaching 1 Gillispie Dep. Tr. and 2 Gillispie Dep. Tr.). At his individual deposition, held on April 27, 2012, Gillispie asserted his Fifth Amendment privilege, declining to answer questions on the ground that the answer would tend to incriminate him. See id. 50 & Exh. 50 at 6:7 9:18 (3 Gillispie Dep. Tr.). Gillispie also asserted the Fifth Amendment privilege in response to written discovery requests from the Commission. See id. 42 & Exh. 42 (first set of interrogatories); id. 43 & Exh. 43 (second set of interrogatories); id. 44 & Exh. 44 (requests for admission). 7. AEHI prepared Private Placement Memoranda or PPMs that it sent to

potential investors. See Decl. 5-16 & Exhs. 5-16 (PPMs); id. 39 & Exh. 39 at 4-5 (AEHI Response to Interrogatory no. 5); id. 41 & Exh. 41 at 43-56 (AEHI Responses to Requests for Admission nos. 116-119, 121, 125, 127-135, 137-147, 150-155). 8. Gillispie was responsible for approving, maintaining, and making changes to the

AEHI PPMs. See Decl. 37 & Exh. 37 (Gillispie e-mail); id. 48 & Exh. 48 at 184:2 185:10 (1 Gillispie Dep. Tr.) (admitting that he made changes to PPMs); id. 50 & Exh. 50 at 22:24 23:19 (3 Gillispie Dep. Tr.) (asserting Fifth Amendment); id. 46 & Exh. 46 10 (Tuttle Decl.); id. 30 & Exh. 30 (Tuttle e-mail, Don is the one who drafts these, attaching PPMs).

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9.

AEHI created multiple versions of the PPMs with various dates from at least

October 2006 to October 2010. See Decl. 5-16 & Exhs. 5-16 (PPMs); id. 39 & Exh. 39 at 45 (AEHI Response to Interrogatory no. 5) (listing 23 PPMs). In each PPM, AEHI offered to sell a specified number of shares of AEHI stock at a specified price. See id. 5-16 & Exhs. 5-16 (PPMs). For example, in a PPM dated February 13, 2009, AEHI offered to sell 60 million shares of restricted common stock at $0.05 per share up to $3,000,000. See id. 13 & Exh. 13 at 1. 10. The AEHI PPMs described the companys principal project, the Idaho Energy

Complex, a large advanced nuclear power plant to be built in Southwest Idaho. See, e.g., Decl. 13 & Exh. 13 at 1 (Feb. 13, 2009, PPM); cf. id. 4 & Exh. 4 at 7 (2010 Form 10-K) (describing Idaho Energy Complex and plans for six nuclear reactors). AEHI estimates that it would cost $100 million to obtain regulatory approval to build the Idaho Energy Complex. See id. 4 & Exh. 4 at 30 (2010 Form 10-K) ($100 million); see also id. 45 & Exh. 45 28 (Gillispie Affidavit) (estimating phase one cost of over $100 million). 11. AEHIs PPMs contained varying statements about whether the company had

obtained funding for the Idaho Energy Complex project. Some of the PPMs stated that AEHI was seeking funding for the project. See Decl. 16 & Exh. 16 at 1 (Jan. 1, 2010, PPM). 12. AEHI PPMs dated between June 2007 and December 2009, however, state the

following about the Idaho Energy Complex: The project is funded and seeking NRC approval. See Decl. 6-10, 13-15 & Exhs. 6-10, 13-15 (PPMs) (emphasis added). Another AEHI PPM stated that the project has obtained $3.5 billion in funding. See id. 5 & Exh. 5 at 1 (June 4, 2007, PPM). A different version stated that the project has funding arrangements and is seeking process approvals. See id. 11 & Exh. 11 at 1 (Jan. 13, 2009, PPM) (emphasis added). And yet another version stated that project has funding commitments and is seeking process approvals. See id. 12 & Exh. 12 at 1 (PPM dated Jan. 13, 2009) (emphasis added).

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13.

AEHI had not secured funding for its nuclear power plant project as of the dates

of the PPMs (or since). AEHIs financial statements indicate that the company had not found funding. See Decl. 3 & Exh. 3 at 30 (2009 Form 10-K) (stating that if the company is able to raise funding, it may develop a site). Nor did the companys balance sheet reflect the amount that AEHI said it required to obtain regulatory approval or to build a nuclear power plant. See id. 3 & Exh. 3 at F-2 (2009 Form 10-K) (showing assets of less than $712,000); see also id. 4 & Exh. 4 at F-3 (2010 Form 10-K) (showing assets of less than $7,802,000). 14. Gillispie has admitted that the Idaho Energy Complex project was not funded.

See Decl. 48 & Exh. 48 at 192:25 193:13 (1 Gillispie Dep. Tr.) (discussing Mar. 31, 2009, PPM). Gillispie filed an affidavit in this action asserting that the PPM had been altered to include the misrepresentation that the Idaho Energy Complex project was fully funded. See id. 45 & Exh. 45 16 (Gillispie Affidavit). Gillispie described the PPM as nonsensical because: Why would AEHI distribute a PPM which states that the project is fully funded when the purpose of the PPM is to raise money? Exh. 45 62 (Gillispie Affidavit). Gillispie subsequently asserted the Fifth Amendment privilege when asked about 10 different AEHI PPMs dated between June 2007 and December 2009 that falsely claimed that the Idaho Energy Complex project was funded. See Decl. 50 & Exh. 50 at 24:13 41:3 (3 Gillispie Dep. Tr.). 15. The AEHI PPMs made no reference to companys filings with the Commission

and did not contain any audited financial information. See Decl. 5-16 & Exhs. 5-16 (PPMs). 16. Gillispie distributed the PPMs in e-mail messages soliciting investment in AEHI

and noting the difference between the PPM offering price and the current market price. See Decl. 24-25, 27-28, 30, 32-35 & Exhs. 24-25, 27-28, 30, 32-35 (e-mail messages); id. 46 & Exh. 46 11 (Tuttle Decl.). For example, in an e-mail message dated May 18, 2009, Gillispie wrote: We are about to close the 5 cents a share stock offer from the company . . . the stock

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has been trading at 10 cents with and [sic] an Ask price of 11 today. See Decl. 24 & Exh. 24 (e-mail attaching Feb. 13, 2009, PPM). 17. Gillispie encouraged recipients of the AEHI PPMs to share the offer with other

potential investors. See Decl. 24-25, 27-28, 30, 32-35 & Exhs. 24-25, 27-28, 30, 32-35 (e-mail messages); id. 46 & Exh. 46 11 (Tuttle Decl.). For example, in an e-mail message dated October 3, 2009, Gillispie wrote: Please use this e-mail and PPM to send to investors until 10/31/09. (Last shot at 5 cents stock as mentioned in recent investor letter as we file for public offering). See Decl. 27 & Exh. 27 (e-mail attaching Jan. 13, 2009, PPM) 18. Gillispie rewarded helpers by paying 10 percent of the value of any new

investment that they found. See Decl. 53 & Exh. 53 at 23:8 27:24 (Shi Dep. Tr.); id. 56 & Exh. 56 (Shi Dep. Exh. 2); id. 29 & Exh. 29 (Gillispie e-mail); id. 36 & Exh. 36 (Gillispie email). Gillispie also offered stock bonuses to those who helped find new investors in AEHI. See id. 53 & Exh. 53 at 140:10 142:24 (Shi Dep. Tr.); id. 59 & Exh. 59 (Shi Dep. Exh. 22); id. 54 & Exh. 54 at 69:8 72:7, 78:10 79:17 (Ko Dep. Tr.); id. 61 & Exh. 61 (Ko Dep. Exh. 8). 19. Gillispie arranged for AEHI to hold an investment orientation seminar in the

San Francisco Bay Area in January 2009. See Decl. 53 & Exh. 53 at 40:15 43:17, 89:9 101:8 (Shi Dep. Tr.). AEHI advertised the seminar in commercials placed in Chinese-language media, including television, radio, and newspapers. See Exh. 53 at 92:12 95:10 (Shi Dep. Tr.); Decl. 57 & Exh. 57 (Shi Dep. Exh. 11); id. 54 & Exh. 54 at 47:10 48:24 (Ko Dep. Tr.). The seminar was held at a hotel in Millbrae, California, on January 31, 2009. See id. 53 & Exh. 53 at 99:15 101:8 (Shi Dep. Tr.); id. at 58 & Exh. 58 (Shi Dep. Exh. 13). 20. At the seminar, Gillispie solicited investors for AEHI. See Decl. 53 & Exh. 53

89:9 92:4 (Shi Dep. Tr.); id. 54 & Exh. 54 at 53:13 60:11, 62:12 68:13 (Ko Dep. Tr.); id. 61 & Exh. 61 (Ko Dep. Exh. 6); id. 62 & Exh. 62 (Ko Dep. Exh. 8). In e-mail exchanges

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following the seminar, Gillispie distributed the AEHI PPM to seminar attendees. See Decl. 54 & Exh. 54 at 74:4 78:3 (Ko Dep. Tr.); id. 62 & Exh. 62 (Ko Dep. Exh. 9). 21. AEHI solicited approximately 850 potential investors to purchase shares of AEHI

stock. See Decl. 38 & Exh. 38 at 5 (AEHI Response to Interrogatory no. 2 & Exh. B, identifying investors who were solicited by AEHI). 22. From 2006 through the end of 2010, AEHI issued more than 311 million shares of

common stock in exchange for services and cash. See Decl. 4 & Exh. 4 at F-5 to F-7 (2010 Form 10-K) (Consolidated Statements in Stockholders Equity). Starting in October 2006, AEHI sold stock in every single month except three: October 2008, November 2008, and July 2009. Id. 23. During the same period, AEHI raised more than $14.55 million from sales of its

common stock. See Decl. 4 & Exh. 4 at F-8 (2010 Form 10-K) (Consolidated Statements of Cash Flows). Nearly all of the cash raised by AEHI through December 31, 2010, came from the sale of AEHI securities. See id. 24. AEHI had approximately 850 shareholders of record as of March 31, 2011, as

well as an undisclosed number of shareholders who beneficially owned shares held in street name. See Decl. 4 & Exh. 4 at 28 (2010 Form 10-K); cf. id. 39 & Exh. 39 at 7-8 (AEHI Response to Interrogatory no. 7 & Exh. A, listing approximately 1,500 transactions involving AEHI shares). The purchasers of AEHI shares resided in 37 states and five countries, according to company records. See id. 39 & Exh. 39 at 7-8 (AEHI Response to Interrogatory no. 7 & Exh. A). Approximately 584 AEHI shareholders lived in Idaho when they bought the stock. Id. 25. AEHI PPMs included a two-page Investor Questionnaire. See Decl. 46 &

Exh. 46 12 (Tuttle Decl.). The Questionnaires included questions about annual income, net worth, and prior investing experience. See Decl. 5-16 & Exhs. 5-16 (PPMs)

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26.

The Questionnaires show that AEHI routinely sold shares to investors who

provided no information other than their names and addresses. See Decl. 66-76 & Exhs. 6572; id. 46 & Exh. 46 12 (Tuttle Decl.) (Potential investors did not need to provide information about their financial condition or investing history to purchase stock from AEHI.). 27. The Questionnaires also show that AEHI sold shares to investors with incomes

less than $200,000 per year and net assets of less than $1 million, and who were otherwise inexperienced investors. See Decl. 69-76 & Exhs. 69-76; see also id. 23 & Exh. 23 (Gillispie e-mail to firefighter thanking him for his investment). 28. At least as of early 2010, AEHI required only corporate investors (as opposed to

individuals) to provide information about their financial background. See Decl. 67; id. 16 & Exh. 16 (Jan. 1, 2010, PPM); see, e.g., id. 74-76 & Exhs. 70-72 (Questionnaires). 29. AEHI has not filed a registration statement with the Commission to offer or sell

shares pursuant to the Securities Act of 1933. See Decl. 47 & Exh. 47 (SEC Attestation); id. 41 & Exh. 41 at 5 (AEHI Response to Request for Admission no. 3). 30. In its filings with the Commission, AEHI claimed that its offers and sales of

common stock were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933. See Decl. 2 & Exh. 2 at 24 (2008 Form 10-K) (claiming exemption); id. 3 & Exh. 3 at 28 (2009 Form 10-K) (same); id. 4 & Exh. 4 at 29 (2010 Form 10-K). 31. As described below, during the same period that AEHI offered stock with PPMs

claiming that its nuclear power plant project was funded, the company disseminated press releases and shareholder letters concerning funding. 32. At least prior to December 2009, Gillispie was responsible for writing and

distributing the false and misleading press releases and shareholder letters. See Decl. 50 &

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Exh. 50 at 53:6-14 (3 Gillispie Dep. Tr.) (asserting Fifth Amendment); see id. 78 & Exh. 73 (e-mail exchange regarding June 5, 2009, press release). 33. On June 26, 2007, AEHI issued a press release titled Alternate Energy Holdings

(AEHI) Secures $3.5 Billion in Funding for Proposed Idaho Energy Complex. See Decl. 17 & Exh. 17. The press release claimed that Cobblestone Financial Group, Inc. had provided AEHI with a letter of intent to fund 100% of AEHIs proposed Idaho Energy Complex. See Exh. 17. Gillispie wrote the June 26, 2007, press release. Decl. 50 & Exh. 50 at 69:10 70:9 (3 Gillispie Dep. Tr.) (asserting Fifth Amendment). 34. Although AEHI had signed a letter of intent to engage Cobblestone to help it

secure financing, the agreement did not secure funding for the nuclear power plant project. See Decl. 51 & Exh. 51 at 15:19 16:21 (Bucci Dep. Tr.) (testifying that Cobblestone wasnt lending money. Cobblestone is a broker.); id. 63 & Exh. 63 (Matteson Dep. Exh. 2); id. 52 & Exh. 52 at 36:25 41:18 (Matteson Dep. Tr.) Cobblestones President and Chief Executive Officer testified that he told Gillispie that he was surprised when he saw AEHIs June 26, 2007, press release because the letter agreement from Cobblestone was not a commitment to provide funding. See id. 52 & Exh. 52 at 41:20 43:10 (Matteson Dep. Tr.). In a subsequent agreement, signed in July 2007, AEHI expressly acknowledged that Cobblestone does not guarantee that a [funding] Commitment can be obtained. See Decl. 64 & Exh. 64 (Matteson Dep. Exh. 5); id. 52 & Exh. 52 at 46:18 50:8 (Matteson Dep. Tr.). Gillispie knew that the Cobblestone agreement did not secure $3.5 billion in funding for AEHIs nuclear power plant project when he wrote the June 26, 2007, press release. See Decl. 50 & Exh. 50 at 70:10 71:11 (3 Gillispie Dep. Tr.) (asserting Fifth Amendment). 35. On December 6, 2007, AEHI issued press release titled AEHI Receives $150

Million Private Placement Commitment Letter for Idaho Nuclear Reactor Project. See Decl.

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18 & Exh. 18. According to the press release, AEHI had received a commitment letter from Silverleaf Capital Partners, LLC (Silverleaf) and would use the funds to purchase the site for the nuclear power plant. See Exh. 18. Gillispie stated in the press release that the commitment provides the initial funding to launch an important project for Idaho and western energy needs. See id. Gillispie wrote the December 6, 2007, press release. Decl. 50 & Exh. 50 at 71:12 72:15 (3 Gillispie Dep. Tr.) (asserting Fifth Amendment). 36. The commitment letter from Silverleaf did not provide funding for AEHI.

Instead, the agreement with Silverleaf contemplated that the parties would use their best efforts to complete a subsequent agreement for funding. See Decl. 22 & Exh. 22 at 3 (Silverleaf letter countersigned by Gillispie). Gillispie knew that the Silverleaf agreement did not provide the initial funding to launch the nuclear power plant project when he wrote the press release. Decl. 50 & Exh. 50 at 72:16 73:15 (3 Gillispie Dep. Tr.) (asserting Fifth Amendment). 37. On June 5, 2009, AEHI issued a press release titled AEHI signs agreement with

Source Capital Group to fund Idaho nuclear site. See Decl. 19 & Exh. 19. Gillispie wrote the June 5, 2009, press release. See id. 50 & Exh. 50 at 73:16 74:17 (3 Gillispie Dep. Tr.) (asserting Fifth Amendment); id. 78 & Exh. 73 (e-mail exchange). 38. On September 9, 2009, Gillispie sent a letter to AEHI shareholders. See Decl.

20 & Exh. 20. The letter discussed the companys progress towards completing the Idaho nuclear power plant and claimed that We have a funding commitment from Source Capital for the site. Exh. 20. The shareholder letter also stated that we have a large energy trust that is willing to loan us up to $5 billion for the plant construction phase. Id. Gillispie wrote the September 9, 2009, shareholder letter. See Decl. 50 & Exh. 50 at 75:11-17, 78:16 79:14 (3 Gillispie Dep. Tr.) (asserting Fifth Amendment).

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39.

AEHIs agreement with Source Capital Group (Source) was not a funding

commitment, and AEHI had not secured a loan for plant construction. In subsequent reporting periods, neither the Source funding commitment nor the $5 billion loan were reflected in AEHIs audited financial statements. See Decl. 3 & Exh. 3 at F-3 (2009 Form 10-K) (Consolidated Balance Sheets); id. 4 & Exh. 4 at F-3 (2010 Form 10-K) (same). Gillispie knew that the Source agreement did not provide a funding commitment for AEHIs nuclear power plant project when he wrote the shareholder letter. See id. 50 & Exh. 50 at 79:15 81:3 (3 Gillispie Dep. Tr.) (asserting Fifth Amendment). Gillispie admitted that the agreement with the large energy trustwhose name he could not recallhad not been finalized when he wrote the shareholder letter. See id. 48 & Exh. 48 at 254:14 260:9 (1 Gillispie Dep. Tr.); id. 55 & Exh. 55 at 91;25 92:3 (Sellman Dep. Tr.) (testifying that he could not recall loan). 40. After receiving the September 9, 2009 shareholder letter, a representative from

Source Capital wrote to Gillispie: Don, [i]t was inappropriate and misleading for the company to notify its shareholders that the company has a funding commitment from Source Capital. What the company has from our firm is a commitment to raise capital for the company on a Best Efforts basis. See Decl. 26 & Exh. 26 (Sept. 12, 2009, e-mail). 41. The press releases and shareholder letter referred to above are still posted on

AEHIs public Web site, without correction. See Decl. 77. 42. AEHI paid Gillispie $633,000 in 2009 and $1,443,200 in 2010. See Decl. 4 &

Exh. 4 at 40 (2010 Form 10-K) (including $519,000 in cash compensation for the two years). Dated: June 1, 2012 Respectfully submitted, /s/ Robert L. Tashjian Robert L. Tashjian Attorney for Plaintiff SECURITIES AND EXCHANGE COMMISSION

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