.=DJ IN THE MONEY: A Look At The Fitness Of Absolute Health
By Carol S. Remond
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--Here's an example of how to feel better by not going to the gym.
Earlier this month, investors bid up the stock of a company called Absolute Health and Fitness Inc. (AHFI), making it worth about $300 million. That's apretty healthy valuation for a company that is said to be the owner/operator of a handful of gyms in North Carolina.
We say "said to be" because no one seems to be able to say with certainty what Absolute Health does. And that's because there is almost no trace or trail of information about the company, its principals, its financials or its shareholders.
Most of what is known about Absolute Health comes from two promotional online newsletters, www.pennystockpro.com and www.hotstockfinder.com. But it's impossible to find out who is behind those publications and who paid for the promotion.
In addition, the man who is believed to be the president of Absolute Health, Randall Rohm, was recently sued by a health club business partner who claims Rohm embezzled money from the business they own together.
That business partner, Jeremy Jaynes, was convicted in November by a Virginia jury on felony charges for violating that state's tough e-mail spam law. Some of the spam e-mails were about penny-stock schemes and other financial offers that
contained fraudulent information and which netted Jaynes up to $750,000 a month, one prosecutor said.
Even the unregulated Pink Sheets financial market, where Absolute Health's shares trade, has questions about the company. Pink Sheets placed a warning on its website to potential investors that the recent promotion of Absolute
Health's stock through faxes and e-mail may have violated federal securities laws.
Pink Sheets also warns that it hasn't been able to locate or contact the company. It doesn't know who runs it. It doesn't even have a current phone number although it does know the last known address was in Cary, NC. That
address is a post office box in a store called Pegasus Postal Center.
It's hard to even say where this story begins because so little information is available. Absolute Health came into being on the Pink Sheets earlier this year
after its most recent name change. Up until May, it was called Ornate Holdings.
Absolute Health's stock started trading in early June.
It's unclear under what name Absolute Health's gyms may be doing business. But Rohm, the company's president is identified in news articles as one of the owners of some gyms in the Raleigh, NC area doing business under the name Beyond
Fitness. A phone number once listed on the Pink Sheets as that of Absolute Health's is in fact the number of Beyond Fitness.
According to the online promotional reports, Absolute Health owns and operate three fitness centers in the Southeast. Yet, elsewhere in the reports it lists
eight fitness centers, all of which appear to be in North Carolina. A number of the gyms listed in the reports seem to correspond to gyms doing business under the Beyond Fitness name. The undated reports suggest that Absolute Health is
looking to add more gyms to its roster and it could have revenues of more than $23 million if it merges with another unnamed fitness center operator.
Neither of the websites tells investors how much they were paid for the reports, which list a six-month price target of $10 a share.
The promotional reports list two officers for Absolute Health, a president named Roland Rohm and vice president of sales and marketing named Thomas Flynn.
The reports also note that some of the gyms in their portfolio are connected to "Kapital Eng," which is presumably Kapital Engine Investments, which is run by Randall Rohm, who, as we noted above, is being sued by his business partner.
It's impossible to know if the promotional reports meant Randall when they said Roland.
An earlier version of the reports can be found on a cached Internet page for a now defunct website called www.UsPennyStocks.com. That version includes a link
to a video interview with Brian Morris, a man identified as Absolute Health's chief executive officer, and Flynn.
In the undated interview, promotional newsletter editor Thomas Heysek can be seen chatting with Morris and Flynn about Absolute Health's great potentials.
Neither Rohm, nor Flynn returned several telephone calls seeking comment.
Heysek first told Dow Jones Newswires that he didn't know Absolute Health. When asked about the interview, Heysek said he did half a dozen interviews a week and couldn't remember the company. In a follow up phone call, Heysek said he's no
longer involved with stocks.
Absolute Health was incorporated in Nevada in Aug. 1999. According to Nevada corporate records, the company's incorporation was reinstated earlier this week.
It had been revoked in September for failing to provide a list of officers.
Interwest Transfer Co., Absolute Health's transfer agent, told Dow Jones that the company had 64 million shares outstanding as of Dec. 3. A recent price of $2.08 a share now gives Absolute Health a market capitalization of $133 million.
There is no information about Absolute Health's shareholders. But a lawsuit filed last month by Jeremy Jaynes against Absolute Health's president Rohm and
Kapital Engine Investments Inc. purports the existence of a partnership controlling a number of gyms, some of which may or may not be owned by Absolute Health.
In that complaint filed in the District Court of Wake County, NC, Jaynes accuses Rohm of having mismanaged eight health clubs owned by Kapital Engine.
According to the filing, Jaynes owns 47.5% of Kapital Engine, Rohm owns another 47.5% and Flynn, Absolute's vice president of sales and marketing, the other 5%.
Jaynes was convicted Nov. 3 in the country's first felony prosecution of e-mail spam distributors. Jaynes and his sister Jessica DeGroot were convicted
in the Loudoun County Circuit Court on three counts of sending emails about penny-stock schemes and other financial offers containing fraudulent information. A third defendant Richard Rutkowski was acquitted. Jaynes is out on
bail awaiting sentencing. The jury recommended that he served nine years. A lawyer for Jaynes wasn't available to comment. According to evidence presented in court, Jaynes had obtained more than 750 million e-mail addresses, as well as a stolen database of some 84 million AOL members.
In his complaint against Rohm and Kapital Engine, Jaynes (who Virginia prosecutors said also used the names Jeremy James and Gaven Stubberfield) alleged that Rohm's mismanagement of the gyms caused the facilities to "fall
into un-cleanliness and disrepair" causing loss of revenues. Jaynes also accused
Rohm of "embezzling cash" from Kapital Engine.
Rohm and Kapital Engine have yet to respond to Jaynes' complaint. A lawyer representing Rohm and Kapital Engine was unable to comment.
Nevada corporate records shows that Kapital Engine was incorporated in Nov. 2002. Rohm is listed as president of the company.
It's not certain how Rohm and Jaynes got into the gym business. A North Carolina business publication called The Triangle Business Journal reported in May 2003 that a man named Ted Sampson who franchised a handful of Gold's Gyms
was no longer working with Gold's and had renamed his fitness centers "Beyond Fitness." In that same article, Sampson said he had taken on a new business partner, Jeremy Jaynes.
Meanwhile, the Better Business Bureau of Eastern North Carolina also seems to have some issues with gyms owned by Beyond Fitness, some of which may or may not be owned and managed by Absolute Health. A December report shows that the bureau processed 107 complaints about Beyond Fitness over the last two years, 86 of which were not addressed by the company. The Better Business Bureau said in the report that Beyond Fitness has an unsatisfactory record due to unanswered
complaints concerning advertising issues.
(Carol S. Remond is an award-winning columnist and one of four who write th
"In The Money" feature. Most recently, she shared a 2003 Best of Business Award from the Society of Business Editors and Writers for her role in Dow Jones' team coverage of the Canary Capital mutual fund trading scandal.)
-By Carol S. Remond; Dow Jones Newswires; 201 938 2074;
carol.remond@dowjones.com |
