BluForest Inc. claimed to have three REDD projects in Ecuador covering 1.6 million hectares. But BluForest was just a pump and dump scam
BluForest Inc. claimed to have three REDD projects in Ecuador covering 1.6 million hectares. But BluForest was just a pump and dump scam
Jim Can and Charles Miller, the men behind a pump and dump scam called BluForest Inc., have been banned from Alberta’s capital market. BluForest claimed to have three REDD projects in Ecuador, covering a total of more than 1.6 million hectares. The company estimated that the projects would generate 4.25 million carbon credits per year.
REDD-Monitor wrote about the BluForest REDD scam in August 2013. BluForest was a company with a background in mining, oil, and gas. The company had few staff and no previous experience of either forest conservation or carbon trading. The company also had a background in another alleged pump and dump scam.
On 15 August 2013, BluForest put out a press release claiming that it had entered into discussions with a UK-based company called Global Fuel Limited about a US$12 million sale of carbon credits. This was a forward sale of 210,000 carbon credits (at US$57 each! – at least ten times the going rate for REDD credits in 2012), and from a project that did not exist. Global Fuel Limited, the company that was supposed to be buying the carbon credits, was dissolved four years previously.
Alberta Securities Commission: BluForest was a “fraudulent pump and dump scheme”
In August 2020, the Alberta Securities Commission found that BluForest Inc. had breached Alberta securities laws. The ruling also included Jim Can and Charles Miller, the “guiding minds” behind BluForest. The Alberta Securities Commission put out a press statement under the headline “ASC finds Jim Can and Charles Miller engaged in fraudulent pump and dump scheme”. In the press statement, the Alberta Securities Commission states that,
An ASC panel ruled that Can and Miller engaged in a course of conduct that perpetrated a fraud by participating in a pump and dump scheme. The ASC panel also found that Bluforest made misrepresentations and that Can illegally distributed securities to Alberta investors and engaged in a course of conduct that resulted in or contributed to an artificial price for Bluforest securities.
In March 2021, the Alberta Securities Commission permanently banned Can and Miller from Alberta’s capital market. Can was ordered to pay an administrative penalty of C$750,000 plus C$80,000 costs. Miller was ordered to pay C$300,000 plus C$50,000 costs. In addition Can was ordered to pay the Alberta Securities Commission C$1.485,835, based on the amount he obtained from the scam.
The pump and dump scheme started in December 2010, when Can acquired control over a company called Greenwood Gold Resources Inc. Greenwood was a mining company. In February 2012, Can and Miller dreamed up a plan to convert Greenwood Gold Resources into a carbon credit marketing company.
In its decision, the Alberta Securities Commission writes that,
With Can and Miller as the guiding minds, Bluforest entered into several transactions in the following months, many of which were not at arm’s length or were not seriously pursued. For example, one transaction involved the transfer of property in exchange for Bluforest shares that apparently closed in June 2012, yet the shares remained in escrow more than a year later with no indication that they were ever released to the counterparty. Nevertheless, Bluforest’s audited financial statements included the property as one of Bluforest’s more significant assets.
BluForest’s pump and dump scam
In July 2013, Can was behind a coordinated promotional campaign aimed at getting people to buy BluForest shares. The Alberta Securities Commission found that Can had paid an investment research firm to produce a supposedly independent report. This “highly favourable report” was “exploited by promoters at the height of the campaign,” the Alberta Securities Commission writes.
In August 2013, an obscure research company called Goldman Small Cap Research (which has nothing to do with Goldman Sachs, obviously) put out a report promoting BluForest. In a press release about the report, Goldman Small Cap Research writes that,
Our investment thesis that BluForest could become a major player in the sale of verified carbon offsets through reforestation is largely based upon the Company’s balance sheet. BluForest carries the Ecuador property on its books at a $695M estimated value, as per its most recent filing.
In fact, BluForest did not own the “Ecuador property” – a large part of which was inside the Sangay National Park, and therefore not for sale. The reality was that BluForest had no REDD projects in Ecuador. In any case, the US$695 million estimated value was a massive exaggeration based on a hugely inflated carbon credit price (which in turn was based on an imaginary sale to a non-existent company).
The Alberta Securities Commission describes how the pump and dump scheme worked:
During the promotional campaign, Bluforest shares beneficially owned by Can were sold into the inflated market by an offshore brokerage, which traded through an account held at another offshore brokerage. Once the promotional campaign ended, trading volumes for Bluforest shares dropped precipitously and its share price plummeted.
This post is part of a series of posts on REDD-Monitor looking at REDD and environmental injustice in the Andes Amazon. A Spanish translation of this post is available here.