Tuesday, August 15, 2006

DOJ Suit Is Likely Snagged, But SEC Probe Of Trading Could Yield Fruit

The news that Sao Tome Attorney General Arlindho Pereira, whose report in ERHC was formally repudiated by the governments of Sao Tome and Nigeria, has been booted out of government failed to boost the share price of ERHC Energy (OTC BB symbo: ERHE), which is languishing at $0.42 while my catcher-upper, VION Pharmaceutical, jumped 20 percent since last week to $1.20.

Why isn't ERHE moving?

Fears that the search warrant served by the FBI on ERHC's Houston Offices may yet lead to an indictment still trouble some investors, although I have discounted the probability of an indictment, and would put it at about 40 percent now.

What may concern some even more, though, is that the fallout from Sao Tome probe report may yet lead to a searching examination of trading patterns in ERHC, and that those could yield paydirt for Federal prosecutors.

There is little doubt - and the company itself has indirectly said - that ERHE shares have been manipulated.

And recent events suggest that the SEC may be keen to get their hands on some principals in the GEECF case, including two of ERHC's largest investors whose names have cropped up in the context of the Rep. William Jefferson scandal due to their connection with GEECF, which is alleged to have been cozy with Sao Tome officials.

There is at least some hope that the sources of that manipulation will be exposed by the SEC, and while it would initially have a negative share price impact when first revealed, it would undoubtedly be healthy for the stock when the news was absorbed and the share price could grow normally.

Even anonymous remailers like those in Finland and elsewhere are now cooperating with U.S. law enforcement, particularly where large-scale money-laundering and frauds are concerned, so there will be very little room to hide if the SEC does come down on the market manipulators who have cost ERHC Energy investors so much money.

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