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Prophet and Loss

Gaspard's Internet advice business drew the attention of regulators.

He was no longer that Ricky Laine Gaspard, a 44-year-old high school grad and home remodeling contractor in the tank town of Texas City.

Those blue-collar roots had blossomed into a new beginning of the great American dream. Sure, Gaspard remained the family man supporting a wife and three children in the house behind the high school, but for those who met him by logging on to the Internet, he was the WallStreet Prophet, a fledgling financial wizard waiting to guide them through to the great riches of the stock markets. Away from the computer, he might still be the self-taught guy who first discovered the world of brokers while watching TV business shows. On-line, this savvy sage was now promoting himself as a 14-year market veteran -- a man whose system had notched an 85 percent trading success rate. He was the stock seer whose year-old WallStreet Prophet Web site was now grossing an estimated $35,000 monthly from the growing roster of disciples.

Even pressing his wife into clerical duties, he could hardly keep up with the demand. Gaspard didn't give it a second thought on that recent day when he answered another ringing telephone. But the usual call turned unusual with the first words spoken:

"This is Jeff Ansley of the enforcement division of the Securities and Exchange Commission. Do you have an attorney?"

Gaspard didn't. But this new Prophet sensed instantly that he had a problem -- a very big one.


Years of hard labor as a residential contractor had convinced Gaspard that there had to be a better way to make an honest living. He had learned the trades from his father, who ran a roofing company for 51 years.

Gaspard grew up in Galveston County and attended the island's Austin Middle School before finishing at nearby Santa Fe High School. He married early and didn't have the financial resources to follow his classmates into college.

"I had to support a family," he says. "I couldn't afford to [continue my education]." He didn't specialize in any one construction specialty. "I'm a jack-of-all-trades." He began thinking early about leaving the blue-collar world of hammers, nails, plumbing and paint, but it took him ten years to finally discover a potential escape route.

"I wanted to get out of the contracting business because I had been in it for so long, but it could have been anything at all that I got into."

Various relatives -- his aunts and uncles -- had dabbled in the strange world of stocks. Gaspard gradually began deciphering the foreign language of the Big Board -- the puts and calls and P/E ratios and the rest. He eased into the market of penny stocks and slowly graduated upward.

His introduction to the Internet about ten years ago escalated that interest. In various chat rooms, the Texas City man talked about his successes. Gaspard says that while others spent years studying how the market works, his education was extraordinarily rapid.

"When the Internet took off, then I figured things out. Once I figured things out, it made me happy," he says. "It is all a matter of interpreting the technical charts the right way."

Gaspard, along with the great majority of investors back then, took the giddy ride upward in the market boom of a few years ago. He won't say how successful those investments were, although he claims that he has made "a lot of money."

By January 2000 he had a computerized system of tracking and predicting stock performance. And the WallStreet Prophet (or at least his Internet enterprise bearing that name) was born. Gaspard finally bid farewell to his 24 years as a contractor.

At one point almost 1,000 customers had climbed aboard, paying real money every month for his investment advice. "I never expected it," he says. "Everything was growing so fast, we got so excited."


Word of this new Wall Street wizard spread, and one man was a particularly keen listener. Spencer C. Barasch wasn't interested in making cash -- he wanted to make a case. A tip about this new Internet business came into his office, the Fort Worth district headquarters of the Securities and Exchange Commission, which regulates the securities industry.

Regulators have been scrambling to cover the new world of cyberspace and the explosion of supposed "experts" ready to sell advice on how to make a killing in stocks. "There has been a proliferation of investment-touting services on the Internet," Barasch says.

Government investigators began monitoring the WallStreet Prophet's Web site. They interviewed witnesses and even subpoenaed business records. When SEC attorney Ansley placed the fateful call to Gaspard, they already had compiled considerable evidence on his operations.

While an authentic high-flying WallStreet Prophet might have summoned a sophisticated legal team and boarded the corporate jet to jawbone with the feds, Gaspard went back to his blue-collar roots. He got in his car and drove to Fort Worth for a solo session with the SEC investigators.

Government accusations make it sound as if his greatest expertise were in marketing rather than the market. In Gaspard's mind, he was just applying standard promotional techniques -- just like a home contractor might do -- to the field of high-tech stock advice.

Why, his inquisitors wanted to know, would he advertise his business as "The #1 Stock Tips Program on the Internet" when it clearly wasn't? Gaspard explained that it wasn't a product of Madison Avenue but something he'd learned while cheering for sports teams at Santa Fe High: "Everybody would shout that they are No. 1, and I did the same."

Okay, he admitted to them, maybe he didn't have an 85 percent success rate. And maybe his firm didn't analyze the stocks of 10,000 companies daily. And yes, what was promoted as his exclusive market-forecasting software wasn't owned or controlled by him. In fact, it was available elsewhere. "One of our members said, 'Let's call it proprietary software,' " he says with a chuckle.

They informed him that, in their opinion, learning the market by watching shows such as Wall Street Week and Nightly Business Report hardly qualified him to make the claim that he'd had more than 14 years of experience in the market.

And there was the matter of his multilevel marketing offers, in which members could get bonuses for signing up more customers to his business.

The bottom line, according to the government, is that claims and boasts that might be fine for selling used cars or vacuum cleaners can't be tolerated in the volatile field of financial investments.

"Just like you can't scream 'Fire!' in a movie theater, under the First Amendment, there are certain things you can't do. Securities laws require that people speak the truth, and the complete truth," Barasch explains. "In this case, we allege that Gaspard was dealing in securities and lied."

Gaspard counters that much of his advertising was essentially accurate, and he didn't know the restrictions about the securities advice field.

"A lot of people start an Internet business, and I just felt that for them to even consider bringing charges against me was wrong," he says. "I went up there to Fort Worth and told them the complete truth. They educated me as to what I needed to do to make corrections."

Even if he hasn't yet made it to the top of Wall Street, Gaspard at least got his 15 minutes of fame with some of the bigger players. A national SEC press release announced that he, along with some companies doing millions of dollars in business, had agreed to cease and desist from misleading claims, and would advise clients and prospective customers of that. He would have faced civil actions and possible fines if he had fought the government's claims.

The investigation was part of a nationwide SEC sweep involving 23 individuals and companies and 11 enforcement actions. "I think they did it to show that they had everybody under control. I just had to be one of the unfortunate ones on their list," Gaspard says, adding that he'll be more careful.

The potential impact on his business is difficult to assess, although the guru in him is hardly ready to revert back to home improvement work. He thinks he'll soon be leaving behind his home office and heading for high-rise headquarters in Clear Lake -- something more suitable for a WallStreet Prophet.


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