Putting Together the Puzzle at Big Bear Mining

by Melissa Davis - 5/10/2010 8:54:07 AM

If Big Bear Mining (OTC: BGBR.OB) would risk hiring a bankrupt CEO with a checkered past to serve as the “public face” of the company – and essentially give him $30 million worth of stock for the favor – then investors might want to search for even darker secrets that the junior gold miner is still trying to keep.

They could start by examining BGBR’s original address. That address, listed in past BGBR regulatory filings as 1728 Yew St. in Vancouver, shows up in filings for several other penny stock outfits as well. Those companies share at least one glaring trait: They count Shane Whittle, a busy Vancouver stock promoter, among their top executives.

Armed with credible outside leads about Whittle’s connection to BGBR, TheStreetSweeper decided to call him and politely ask about his ties to the company. Whittle’s response came across as nothing short of violent.

He immediately claimed “no involvement” with BGBR and then warned of possible legal action for the “harassing” phone call. Specifically asked if he was making a threat, he replied with this: “Yeah, 100% … Take your phone call and shove it up your ass.”

Since Whittle hung up immediately after that – ending a brief phone call that sparked none of the curiosity or confusion one might expect from an oblivious party – TheStreetSweeper never got a chance to ask about evidence supporting his possible connection to BGBR. Although Whittle’s name never shows up in BGBR’s official filings, his metaphorical fingerprints have left behind some valuable clues.

That Yew Street address, which belongs to an apartment complex in Vancouver, stands out as the most obvious link. In past regulatory filings, at least three different microcap companies – Global Industries, Radium Ventures and Interactive Television Networks – have identified Whittle as an insider who claims that address as his own. (Unless those companies resurfaced with different names, their stocks no longer trade.) Notably, when BGBR listed that address as its corporate base in its original registration statement, the company stated that it neither owned nor leased any property but relied on free office services provided by “an officer” instead.

At the time, BGBR identified Aaron Hall – a young nightclub bouncer in Vancouver – as its only officer and the owner of nearly three-quarters of its stock. Hall paid just $2,000 for that stock, worth more than $100 million at current prices, and then reportedly gave almost all of it away less than two weeks ago.

TheStreetSweeper tried to contact Hall ahead of this story, but he did not return that call.

Hall’s generosity, while curious, has heightened questions about how a nightclub bouncer could wind up as the CEO and majority shareholder of a gold-mining company in the first place. A recent portrait of Whittle, painted by StockWatch, offers some possible hints.

In a February summary of so-called “market shell” activity, which included coverage of a new Whittle venture known as Big North Capital (CDNX: NRT-P.V), StockWatch concluded its one-paragraph note on the company with an interesting tidbit about its leader. After introducing Whittle as a “busy promoter” from Vancouver, StockWatch considered it newsworthy to add that he also “likes to put on nightclub parties” at various hotspots in the city. Moreover, in regulatory filings, Whittle has mentioned nightclubs as his business clients.

Those clues offer a possible explanation for the mystery behind Hall’s appointment: If a stock promoter needs a CEO to lead a new gold mining venture – and that firm has no real operations – then he might reasonably search for potential candidates in the bars where he spends time.

To be fair, that connection between BGBR and Whittle looks like more of a stretch than the common address and yet another “coincidence.” In regulatory filings, several investors – including the mother of Whittle’s former business partner – show up among the original shareholders of BGBR and Global Industries alike.

BGBR and Global Industries hired the same tainted auditing firm to bless their books as well. Another Whittle-led company, Jammin Java (JAMN.OB), uses BGBR’s auditor, its controversial transfer agent and its suspect law firm to boot. (TheStreetSweeper has examined all three of those firms in detail in previous investigative reports.)

Given all of these shared traits, Whittle’s furious reaction to TheStreetSweeper’s recent 30-second phone call starts to make more sense. With BGBR facing increasingly tough questions – about its new CEO, its recent paid promotions and its deceptive disclosures – Whittle might have good reason to distance himself from the company right now.

Filing for Bankruptcy

For BGBR’s current CEO, Steve Rix, the honeymoon has already ended.

Although Rix enjoyed a warm welcome when he arrived on the scene in March, with the company’s stock price and trading volume soaring in response, he has since come under fire. As noted in a previous story, Rix was unemployed – and filing for personal bankruptcy – when he took over as BGBR’s CEO. He owed millions of dollars at the time of that filing, with most of that debt stemming from doomed business ventures.

In its annual report last month, however, BGBR indicated that Rix had never led any bankrupt companies at all. Since then, TheStreetSweeper has discovered that at least three of Rix’s failed ventures – Carson Rix Building Co., Carson Rix Land Co. and Carson Rix Enterprises – filed for bankruptcy protection (under Carson’s name) before Rix himself followed suit a few months later. A separate company listed in Rix’s personal bankruptcy case, Foundations Enterprises Group, has since triggered a damaging lawsuit filed by an investor who poured $700,000 into the firm before it went under with roughly $4.7 million in outstanding debts.

That November 2009 complaint, which names both Foundations and Rix himself as defendants, makes some troubling accusations. It claims that Foundations operated as a “fraud or deceit” that pledged “grossly inadequate” collateral – including land parcels so small to render them virtually worthless – for the funds it secured from investors. It blatantly accuses the defendants of violating state securities laws. And it repeatedly states that the defendants “at all times acted with evil minds while consciously aware of the wrongfulness or harmfulness of their conduct.”

In a previous exchange with TheStreetSweeper, Rix blamed his failed ventures on the bad economy instead. He also said that BGBR’s securities counsel had deemed his bankruptcy immaterial and therefore exempt from disclosure rules.

BGBR has since identified MacDonald Tuskey, the same Vancouver firm hired by Whittle’s coffee company, as its securities counsel. During its past coverage of Americas Energy Company (OTC: AENY.OB), TheStreetSweeper examined Gerald Tuskey – a named partner at that firm – and his long involvement with dubious penny stock companies in detail. AENY, which fetched $4.51 a share when TheStreetSweeper began covering the company earlier this year, has since fallen by more than two-thirds to just $1.36 a share.

MacDonald Tuskey surfaced in a recent BGBR filing showing that Hall had given 66.75 million of his 100 million BGBR shares back to the company. Keeping just 250,000 shares for himself, Hall sold his remaining 30 million shares to Rix for the bargain price of $2,000. While Rix struck quite deal (since that stock is currently worth $30 million), his bankruptcy filing indicates that he was so poor a year ago that he would have been forced to sell one of his biggest assets -- $2,000 worth of household furniture – to come up with even those meager funds.

Interestingly, three days after Rix purchased that cheap stock (giving him more than 40% of the company), he reportedly told Forbes that he owned no BGBR stock at all. Since then, it appears, Rix may have intentionally misled TheStreetSweeper about paid promotions of the company’s stock as well.

Reversing the Call

In an email to TheStreetSweeper last month, Rix portrayed the recent promotions as “unexpected” but nevertheless welcome because of the investor interest they had stirred. Unless Rix has an imposter, however, he actually spoke to one promoter who was gathering information ahead of his planned tout.

James DiGeorgia, editor of the Gold & Energy Advisor, has since sparked quite a controversy with his BGBR stock calls. DiGeorgia originally issued a “strong buy” recommendation on BGBR only to reverse that call – just one week later – to an outright “sell” instead.

Through an ongoing email exchange with TheStreetSweeper, DiGeorgia has explained his actions in detail. In a nutshell, his story goes like this.

DiGeorgia spoke with “a person claiming to be Steve Rix” on two conference calls before he published his tout. He requested supporting documents, including the credentials of BGBR’s management team, but never received them. Meanwhile, his recommendation went out – without his blessing – while he was still waiting for the promised backup material.

DiGeorgia realized that he “might have a problem” on April 22, with his newsletter already landing in mailboxes, and spent the weekend researching BGBR for himself. On April 27, one day after TheStreetSweeper published a detailed investigative report on BGBR, DiGeorgia officially reversed his call. That move not only “unleashed a very ugly response” from the financer of his tout (identified as Bruce Arquette), but it also triggered outcry among actual skeptics of the stock.

“Reversing my recommendation is being painted as a bad thing instead of an honorable thing?” DiGeorgia questioned in a recent email to TheStreetSweeper. “I’ve yet to see one of the other analysts recommending this stock make any effort to address clear doubts …

“I made a mistake in judgment trusting these people,” he added in a follow-up email, “and have done my best to, as quickly as humanly possible, get the SELL RECOMMENDATION out” and correct the situation.

Learning the Ropes

Interestingly, based on media reports, Whittle now works with a mentor who at least claimed to encounter a somewhat similar problem. Frank Callaghan, a longtime player in the Vancouver market and a director at one of Whittle’s newly public firms, has been connected to an outfit known as International Wayside Gold Mines for years. As the leader of Wayside, StockWatch reported in mid-2000, Callaghan wound up being quoted in a bullish tout sheet on the company after the stock had already been halted by regulators.

In that case, however, the newsletter itself apparently took the blame.

“Frank never signed off (on) this article,” the newsletter writer told StockWatch at the time. And “the moment we printed it, I’ll be damned if we didn’t get a call from Frank changing some copy.”

Wayside was halted at $2.04 a share about two weeks before that tout appeared, StockWatch reported, losing ground after it reopened to end the year around 20 cents a share. The company, still led by Callaghan, recently reinvented itself as Barkerville Gold Mines (BGMZF.PK) and currently trades on foreign exchanges in Toronto and Germany – and on the unregulated “Grey Sheets” here in the U.S. – for less than $1 a share.

Callaghan now serves as a director, along with longtime Wayside consultant Andrew Rees, at Whittle’s new Big North Capital venture. As an apprentice shell-maker, StockWatch explained last summer, Whittle has turned to Callaghan as an “old hand” on Howe Street (a financial district in Vancouver) in order to learn the tools of the trade.

For Whittle, Big North Capital ranks as just one of many penny-stock ventures that have kept him busy over the years. At the same time that Whittle took Big North Capital public, he was also aggressively promoting another young company. He still runs that company, which recently changed its name from Marley Coffee to Jammin Java, to this day.

Interestingly, BGBR and JAMN used to be neighbors. In the fall of 2008, regulatory filings show, BGBR changed its address from Yew Street in Vancouver to 110 S. Fairfax Ave. in Los Angeles. JAMN lists its current address as 375 S. Fairfax Ave. in the same gigantic city.

Thus, even after relocating to an entirely different country – and landing in a vast city of millions – BGBR still wound up within walking distance of a Whittle-led outfit located just three blocks down the road.

Meanwhile, past reports from StockWatch indicate, Whittle still leads yet another operation known as White Lion Capital back in his home base of Vancouver. A boutique investment firm focused on small-cap companies, StockWatch noted, White Lion operates from a region where “some residents make common cause with pot-smoking Rastafarians.”

Participants in a religious movement that embraces the spiritual use of marijuana, Internet records show, Rastafarians count Bob Marley – the popular reggae singer who died in 1981 – among their most famous members. Whittle’s fledgling coffee company, launched with help from one of Marley’s sons and the famous Marley name, likes to capitalize on Marley’s commitment to purity as well. On its website, the company touts a Rastafarian food standard known as ITAL, which represents “all things pure, true and vital.”

If recent events serve as any indication, however, Whittle has stopped short of adopting Marley’s peaceful nature. In fact, during his angry phone call with TheStreetSweeper, he sounded downright dangerous – almost as menacing as, well, a “big bear.”

* To contact Melissa Davis, the author of this story, please send an email to editor@thestreetsweeper.org.