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TheStreet Open House

Stock Hustler Ray Dirks Faces Curtain

In the case of Transmeridian, the report written by Dirks and approved by his wife Jessy set a one-year price target of $3 on the stock. At the time, shares of Transmeridian, an oil and gas concern, were selling for about 50 cents.

Yet Dirks foresaw great things for the tiny company. He predicted that revenue would soar from $5 million in 2002 to $200 million in 2004. Dirks left out that the company's auditors had expressed reservations about Transmeridian's ability to continue as a going concern.

Today, DataLogic, Carnegie Cook and Thane all trade for well under $1. Transmeridian trades for about $1.50, but its 2003 revenue will come in well under $250,000 and the company was on a pace to lose about $5 million. The company's auditors still have doubts about the company's viability.

Dirks refused to discuss the NASD action. Reached at his office at Sky Capital, he hung up the phone several times when questioned about the pending disciplinary proceeding.

Touting small stocks is nothing new for Dirks.

In the fall of 2001, soon after the Sept. 11 terror attacks and the anthrax-letter murders, Dirks threw his weight behind a small money-losing company called Vital Living Products that claimed to have developed a do-it-yourself anthrax-detection kit. Dirks arranged for the company's president to debut the life-saving product at a media event at New York's Friars Club -- which is better known for joke-telling than killing deadly germs.

In the panic-filled weeks following Sept. 11 and the Friars Club appearance, shares of Vital Living soared 4,000%, from a nickel to $2. But the euphoria quickly evaporated when agents from the Federal Bureau of Investigation arrived at the company's North Carolina headquarters with search warrants. In early 2002, Vital Living reached a settlement with the Federal Trade Commission over allegations that it "deceptively advertised" its PurTest Anthrax Test kit.

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