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ARCHIVED  July 2, 1999

Sky seemed the limit for Sky Sci investors

What Sky Scientific Inc. offered investors — or so stock promoters told them during 1993 and 1994 — was a literal gold mine.

But anyone with a clue about Sky Sci’s track record might have thought twice about plunking down even a modest investment in its stock.

The story of how a tiny Florida company with an odd-ball history landed among Nasdaq’s 10 most active stocks is at the core of the Securities and Exchange Commission’s case against Gilbert Marshall & Co. and Michael Usher.

Florida newspaper articles and wire stories written in the mid 1990s describe a company with tentacles that reached the most unlikely places: casinos, precious-metal mining claims, luxury clubs for the rich and powerful.

The strangest of these accounts appeared in September 1995. The PR Newswire, an outlet for business-related news, carried a story about how Sky had planned to use a Russian aircraft carrier and 15 helicopters that it had recently purchased to operate as a floating casino off the Florida coast.

Glossy brochures and phony newsletters announced that the Tallulah Mine in western Nevada held promise for enormous returns for those who got in early. “Getting the gold out,” according to a geologist quoted in the newsletters, “is like pushing a cart down a supermarket aisle, picking food from the shelves and tossing it into the basket.”

Trouble was, Sky-Sci had no gold. In fact, Sky-Sci had very little. The company’s gross revenue for the years 1993 and 1994 totaled $35,052, according to the SEC.

It is true that the paper tower built during the summer of 1994 resulted in enormous profits for many investors. Sky’s stock soared as demand, fed by a wholly concocted public-relations campaign, had stock watchers frantically seeking the scarce shares.

In early 1993, daily volume in the firm’s stock was about 4,000 shares, and its price hovered around 75 cents. By April 1993, as the promotion scheme began, volume went to 200,000 shares daily, and the price to $4.50. Sky Sci eventually reached a high of $17.50 in the summer of 1994.

“Despite its inability to establish its mining business,” Administrative Law Judge Robert Mahoney said in his decision, “the company had great success marketing its stock.”

But, almost as with the classic pyramid game, the late-comers joined those who held on too long as the case’s biggest losers.

“The stories these people told were so sad,” SEC lawyer Robert Fusfeld said of the investors who lined up at an agency hearing with their tales of woe. “One guy, a former IBM employee, invested his entire retirement in Sky Scientific. When it went down, he had to go back to work.”

Sky Sci’s stock now shows up on the OTC bulletin board with a bid price of a penny and a half. Fort Lauderdale, Fla., lawyer Howard Tescher, who represents Sky Sci managers and stock promoters in the SEC case, said the company went out of business in 1997.

What Sky Scientific Inc. offered investors — or so stock promoters told them during 1993 and 1994 — was a literal gold mine.

But anyone with a clue about Sky Sci’s track record might have thought twice about plunking down even a modest investment in its stock.

The story of how a tiny Florida company with an odd-ball history landed among Nasdaq’s 10 most active stocks is at the core of the Securities and Exchange Commission’s case against Gilbert Marshall & Co. and Michael Usher.

Florida newspaper articles and wire stories written in the mid 1990s describe a company with tentacles that reached…

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