Home Solutions of America: Where Is the SEC?

By: ispeculatornew
Date posted: 01.20.2008 (1:25 pm) | Write a Comment  (2 Comments)

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The management of Home Solutions of America has been misleading investors for their own self interest for the last couple of years while the Securities and Exchange Commission has been negligent in its duty to protect investors.

I first took notice of Home Solutions of America when the company’s stock price made a run from around a dollar to five dollars in 2005. The stock price benefited when a few hurricanes hit the Gulf Coast that year (Home Solutions of America provides restoration and construction services).

The stock price stalled for a couple of quarters but then jumped all the way up to fourteen dollars on improved earnings and announcements of new contracts. The peak of this rise coincided with a press release stating a subsidiary of Home Solutions of America had been awarded a contract by American Renaissance Homes to be the exclusive provider of delivery and installation services for modular housing in New Orleans and surrounding areas. However, it was found out by Stocklemon.com that American Renaissance Homes was established and funded by Home Solutions of America only five days before the press release was issued. Also, insiders sold a huge amount of shares right after the press release was issued.

I am not sure how the management of Home Solutions of America was able to escape the ire of the SEC but no charges were brought after that incident. The stock price did quickly collapse and traded in the five to seven dollar range for a few quarters.

Against my better judgment I decided to recommend buying shares of Home Solutions of America on my website in January of 2007 (I also bought some shares myself). The stock price had bottomed out and found support, the company was trading at a low PE, the company was forecasting strong revenue growth, and there were even some insider purchases in December of 2006. I also figured that Home Solutions of America’s management would have to be complete morons to try any unscrupulous behavior again and that the company’s financial results were okay because the SEC hadn’t started an investigation. I was proven wrong on both accounts.

In May of 2007 Home Solutions issued a couple of press releases announcing contracts that were each worth a hundred million dollars. Once again the stock price started to quickly climb but once again questions were raised about the validity of the contracts by Stocklemon.com. Stocklemon.com also accused Home Solutions of America of fraud. Since the owner of Stocklemon.com isn’t a very credible source, he uses innuendo and scare tactics to coerce people into selling to serve his own interest, I decided to recommend holding until management responded to the claims. When they did not provide additional details about the contracts and did not provide guidance or a balance sheet in their Q2 2007 results I recommended selling at $4.70.

Since then the story for investors of Home Solutions of America has gotten worse. Home Solutions of America delayed filing their Q3 2007 earnings report which resulted in the company not being compliant for continued listing on the NASDAQ exchange. On January 4 Home Solutions of America withdrew its appeal for continued listing on the NASDAQ. I found this to be strange since most companies fight for continued listing until they have no options left. To top things off a director of Home Solutions of America resigned on January 7 and in his resignation letter he detailed various fraudulent activities committed by the management of Home Solutions of America. Home Solutions is currently trading on the pink sheets at $0.57.

In spite of all the events that have transpired at Home Solution of America the SEC is no where to be found. I read the SEC started an informal investigation but more drastic measures should have been taken a while ago to protect investors from buying the stock of Home Solutions of America. I hope investors, including myself, are able to get some restitution for their losses and I hope the management of Home Solutions of America gets the jail time it deserves.

Disclaimer: I have no position in HSOA.

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2 Comments

  1. Comment by Thomas — February 17, 2008 @ 8:32 am

    I do believe there will ultimately be jail time for leaders in this business.

    Frank Fradella and Brian Marshall are truly pictures of dereliction of duty and I expect some type of ban as well.

    I’m not sure yet what to think of Jeff Mattich. I don’t know how bloody his hands were, if nothing else, he is a man of weak persona and an amateur ‘financial executive’ at best.

  2. Comment by Happy — December 24, 2009 @ 8:18 pm

    Happy Holidays Everyone! All the best for the New Year.

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