While I thought PNWC would be worth a run (and still might be) from these levels I wouldn't touch this with a ten foot pole after this article (and I sure as hell am not "gainfully" employed by them):
(c) Copyright 2000 Canjex Publishing Ltd. canada-stockwatch.com
Dalmatian Resources Ltd - Street Wire
Dalmatian president's OTC promotion intriguing
Dalmatian Resources Ltd DTN
Shares issued 10,310,851 Jul 21 close $0.21
Fri 21 Jul 2000 Street Wire
See (U:PNWC) Street Wire
by Brent Mudry
The Florida Internet tout of Wayne Douglas Miller and Gary Burnie's
Winchester Mining Corp., fined $20,000 in a consent settlement amid a
continuing investigation by the United States Securities and Exchange
Commission, claims that Winchester not only hired him to tout the stock
last November, but the company also had contact with the author of a bogus
and bullish Chase Manhattan Bank research report. (All figures are in U.S.
dollars.)
Mr. Miller, who is president of both Winchester, listed on the OTC Bulletin
Board, and Dalmation Resources Ltd., listed on the Canadian Venture
Exchange, claims he had no clue about the Tampa tout, Jason M. Chester of
JMAX Online Communications Inc., until he got a call from the SEC in
December, just after the promotion caught the regulator's eye.
Winchester changed its name to PNW Capital Inc. a week ago.
"The SEC phoned and talked to me back in December. It was just a horror
show ... they (JMAX) got this guy Thompson to write the report. They never
talked to me about anything," Mr. Miller told Stockwatch.
Mr. Chester, however, has a different story. "Fred Thompson was in contact
with Gary Burnie and the other gentleman you mentioned," Mr. Chester told a
reporter, referring to Mr. Burnie and Mr. Miller. Mr. Burnie, like Mr.
Miller a former Vancouver broker, is secretary and a director of
Winchester.
Mr. Thompson was featured in a civil complaint filed by the SEC on Tuesday
in the U.S. District Court for the Middle District of Florida, Tampa
Division, although he was not named as a defendant.
The SEC claims that in early November, Mr. Chester entered into an
agreement with "persons acting on behalf of Winchester," to publish a
favourable company profile on two of his Internet sites and conduct a
spamming campaign of unsolicited E-mails. Mr. Chester was paid 250,000
Winchester shares by third party.
The regulator claims that in mid-November, shortly after receiving the
shares, Mr. Chester disseminated a favourable Winchester profile to
millions of Internet users through the use of an unnamed Canadian service
provider that specializes in spamming.
"The bulk E-mailing process took approximately one week to complete due to
the number of persons receiving the Winchester profile," states Mitchell
Herr, a regional trial counsel for the SEC, in the complaint.
In late November, according to the SEC, Mr. Chester met Mr. Thompson for
the first time in a bar in Tampa.
"At their initial meeting, Chester learned that Thompson worked at Chase
and asked him to prepare an investment review of Winchester for publication
on the Internet. Chester subsequently paid Thompson $500 cash and provided
Thompson will a cell phone in return for Thompson's completion of his
review of Winchester," states the SEC.
While Mr. Chester told Stockwatch that Mr. Thompson "indicated to me that
he was qualified to do the review" of the penny stock, the SEC disagrees.
The regulator notes that while Mr. Thompson was an employee of Chase
Manhattan in Tampa, he worked in the bank's consumer debt collections
analysis.
"Thompson has never been employed by Chase as an investment analyst or in
any similar capacity, and has never worked in the securities industry,"
states the SEC. The regulator notes that Mr. Thompson had no connection to
any of Chase's securities operations.
"Thompson prepared his review of Winchester using information provided to
him by Chester who, in turn, received the information from persons acting
on behalf of Winchester. Chester reviewed and approved Thompson's review
before he and JMAX published the review on the Internet," states the SEC.
The regulator notes the bogus Chase Manhattan review recommended Winchester
as a "Strong Buy."
"The review stated: 'It is our position that Winchester Mining Corp. offers
an opportunity for the serious investor to get in on the ground floor of
one of the fastest moving and most dynamic companies expanding into
e-commerce and Internet gaming today,'" notes the SEC.
The bogus Chase review projected that Winchester shares, then trading at 17
cents, could increase to $5 in 2000, $12 in 2001, and $26 in 2002.
The SEC notes that within hours after Mr. Chester's JMAX issued a press
release touting the bullish report, news of the review spread through
various stock chat-sites on the Internet.
"Any time you receive a strong buy from Chase Manhattan Bank you should
feel pretty good only upside from here," stated one poster.
"A recommendation from Chase Manhattan Bank, now that is an attention getta
(sic). There must be something more to this stock that we are not aware of.
This is moving the stock big time. No one from a large reputable bank would
lay their reputation on the line for an absurd, foolish, risky, Internet
gambling penny stock unless there was something substantial coming. Maybe
they see some revenues somewhere," stated another bullish poster.
The bogus Chase report sent Winchester shares on a heavy-volume run.
On Dec. 8, the day before the report, the stock traded 847,000 shares. On
Dec. 9, Winchester traded more than 9.05 million shares. "Winchester's
volume on December 9 made its stock the fifth most actively traded of the
2,673 OTC Bulletin Board stocks that traded that day," states the SEC. The
regulator notes the stock continued trading about nine million shares a day
through Dec. 14.
While Mr. Miller is in denial about anyone at Winchester having anything to
do with Mr. Chester, the Tampa tout, Mr. Miller's partner Mr. Burnie is
quite upset at Stockwatch's article on Winchester on Wednesday, and
suggests he may sue.
The Howe Street promoter, ostensibly on the advice of his lawyer, wants
details of numerous issues, including his $10,000 (Canadian) fine by the
Vancouver Stock Exchange.
Mr. Burnie was actually fined twice, not once, by the VSE.
In a negotiated consent settlement on the eve of a hearing, Mr. Burnie
agreed on Dec. 13, 1993, to a $10,000 fine, a $5,000 assessment for
investigative costs, a three-year ban, and a requirement to requalify if he
chose to re-enter the industry.
Mr. Burnie was already out of the business. His employment with Wolverton
Securities was terminated on Sept. 28, 1993, prematurely ending his 14-year
career as a broker amid several VSE investigations into his affairs. The
terminated broker subsequently went on unemployment insurance, and by Sept.
24, 1994, his $1,400-a-month payouts on the dole were cut off.
This first penalty related to unauthorized discretionary trading in client
accounts. The VSE notes that from September to December of 1990, Mr. Burnie
was responsible for executing a total of 114 trades in eight client
accounts in exchange issuers TTI Technologies Inc. and Alaskon Resources.
"These trades totalled 210,000 shares of TTI Technologies Inc. valued at
approximately $90,000 and 80,500 shares of Alaskon Resources valued at
approximately $8,500," stated the VSE. The exchange notes that Mr. Burnie
failed to obtain written authorization from the clients for the trading and
acceptance by Wolverton of the accounts as discretionary accounts.
In his second penalty, Mr. Burnie was fined $10,000 on Nov. 14, 1994 for an
unrelated offence. The hearing panel noted that while an appropriate
penalty would include a two-year ban, this was pointless as Mr. Burnie had
already been banned for three years 11 months earlier. Wolverton was fined
$10,000 for its involvement in the second episode.
This second penalty stemmed from Mr. Burnie's dealings with the notorious
but marginal promoter Frank Balfour. In a five-day hearing ending on June
7, 1993, a VSE panel heard various explanations of how Mr. Burnie's wife,
Dianne Burnie, also known as Dianne Kramer, was paid $30,000 from the
initial public offering proceeds of Bu-Max Gold Corp., a well-known Howe
Street rig job, to help settle a $22,000 or $24,000 debit in Mr. Balfour's
account with Mr. Burnie, dating back to 1987.
The VSE panel heard evidence from Gordon Cormack, later-disbarred lawyer
Phil Nerland, who had later dealings with Mr. Balfour in a deal with
securities violator Larry Kostiuk, Brent Wolverton, Brad Orloski, Mr.
Burnie and his wife. The exchange also reviewed transcripts of evidence
given in other proceedings by Mr. Balfour, Len Tinkler and Donald Page.
The panel decided that while it was unable to conclude the $30,000 payment
was a "secret commission," Mr. Burnie failed to ensure that full, true and
plain disclosure was made in the Bu-Max prospectus of the payment made to
his wife.
"The panel finds that on the basis of Burnie's own evidence he was guilty
of conduct that was unbecoming and which was detrimental to the interests
of the public," stated the panel in its decision.
The VSE panel found Mr. Burnie was not guilty of knowing Mr. Balfour was
the hidden de-facto promoter of Bu-Max.
"In this case, the fact was that Mrs. Burnie was being paid $30,000 by Mr.
Balfour for doing work on the primary issue of Bu-Max. Burnie's evidence is
that he knew Balfour and in fact Balfour had directed Bu-Max to him but he
never knew exactly what Balfour's connection was. The panel has come to the
conclusion that he did not wish to know," stated the decision.
"He could easily have made the enquiry of Balfour or others and got to the
bottom of the matter. He did not, according to his own evidence, do that.
In the view of the panel, his failure to make enquiry was conduct
unbecoming to a Registered Representative," stated the decision.
"The panel wishes to express its concern that it has taken five years for
this case to reach the hearing stage. This is unfair to both the public and
to the people involved," stated the tribunal.
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