As promised here is a copy of the letter I sent to the SEC concerning Eutro Holdings: I left out some personal information that is nobody's business on SI.
December 15, 1998
CERTIFIED MAIL
SEC Division of Enforcement
Enforcement Complaint Center
Mail Stop 8-4
450 Fifth Street, NW
Washington, D.C. 20549
Dear SEC Division of Enforcement,
Subject: Eutro Holding Company
The objective to this letter is to aid in the prevention of stock scams on unsuspecting investors.
In the summer of 1997 unaware of the dangers with investing in micro cap stocks better known as penny stocks, I invested in Eutro Holding Company (EUTO). Fairly new to investing, I got a tip from a mutual investor on the Silicon Investor (SI) Internet site. When I looked at the EUTO ticker I noticed the price was climbing very fast. That night attempting to perform due diligence on Eutro Holding, I went to the EUTO thread on SI to acquire information. Every investor on the thread was very positive, speaking of, putting the squeeze on the market makers, extremely high gap up expected at market opening, great business deal in the works, etc. Some of the greatest hype that I have ever encountered, except for the unsuspecting investor, it wasn't hype. Instead I thought; "What a great investment opportunity and I found it". I invested $3500.00.
Returning to the thread often to see how my investment was doing I got to know some of the big investors with millions and hundreds of thousands of shares each. ( I named names in here) and many others some who claimed to have 500,000 shares or more. These same investors spoke of naked shorting and short squeeze, which eventually became part of my vocabulary. Some of the Eutro investors started a group called Shortbusters. No one claimed responsibility for starting the group but it seemed to be lead by the major investors who indirectly claimed to have a direct line of contact with one of Eutro Holding Company's officers, Brad Wilkenson. As I understood it, the aim of the group was to buy all or as much stock the group could afford of shares in Eutro Holding Company float, order the certificates placing a short squeeze on the market makers. In theory, this should have forced the market makers to cover any naked shorting of the stock and drive the price to its true value. It would have worked except, the major players in Shortbusters who claimed that Brad Wilkenson promised to reclaim and remove at least 50M shares, that were being used as collateral to three or four mysterious companies, leaked into the float. They leaked into the float when the share price had reached about 10 cents arising from sub-penny level. My belief is that some of the major shareholders but not all may have been misrepresenting this company to fuel the stock price. It is also of my strongest opinion that the guarantee of a share reduction was made verbally by Mr. Wilkenson.
After a year, my investment was at a 70 percent decrease. The float was at 92M and seemed to be climbing but I knew from calling the transfer agent that the float could only reach 100M. That was all EUTO was authorized at the time. Shortbusters was gone, most of the major shareholders if not all, sold off, made or lost their thousands or millions and moved on. On the other hand, Eutro Holding Company started to show promise. They had released very positive news announcements concerning their core business dealings. They seem to be back on line and taking care of business. They had announced contracts of bringing companies' public and things were looking good. I was told that Brad Wilkenson had stated verbally that the attorneys were working on bringing the 50M-share resolution to a satisfactory close. Then on September 29, 1998 the company released an announcement concerning the share resolution and may I say; "Eutro shareholders were ecstatic". Most shareholders were under the impression that these shares were going to lower the float by approximately 20M which may have increased the value of the stock. An impression communicated verbally that was supported by the September news release about the 20M-share recovery from Marketing Alliance and Wahoo International. To our dismay, on December 10, 1998, I posted a message on SI; "Has anyone called the TA lately". They were called and later on that day it was posted that the float was at 108M with 500M total authorized. The next two days the value of my Eutro Holding stock plummeted to a total loss of 90 percent.
I truly believe that I was one of the lucky ones. My loss will total about 2000.00 after tax reduction. On the basis of what was perceived from the company to be the truth without any warning or clarification from the company we as investors believed that they were going to lower the shares authorized and we held our stock with that perception in mind. They did not say it publicly; therefore, it cannot be proved with hard facts. However, I believe circumstantial evidence shows that the company may have taken advantage of its shareholders by misrepresenting their goals. While circumstantial evidence shows that they intended to decrease the float they managed to increase it and get the SEC to authorize another 400M additional shares. Although its speculative, a few of my colleagues seem to think that this ordeal was a scheme organized by confidence men due to the heavy losses experienced by some investors. I guess the hand is quicker than the eye. I would be willing, as well as others, to cooperate in actions concerning this matter.
Respectfully,
André J. Daedone
Enclosure 1
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