Multivision's Nazerali testifies on Imagis, Web "lies"
2015-04-14 20:48 ET - Street Wire
by Stockwatch Business Reporter
Vancouver stock promoter Aly Nazerali returned to the witness stand this morning at his defamation trial. His testimony comes as part of a case that he as the plaintiff is pursuing against (among others) Mark Mitchell, who wrote allegedly defamatory statements about Mr. Nazerali on the Deep Capture website, and Patrick Byrne, who publishes the website and is also the chief executive officer of on-line retailer Overstock.com Inc. (another defendant). The statements appeared in 21 "chapters" on the website in 2011.
During the morning proceedings, Mr. Nazerali, in response to questions from his lawyer, Dan Burnett, provided information about himself -- specifically, his involvement with a company called Imagis Technologies -- and then began addressing the contents of the on-line chapters, which he called "full of lies."
Imagis Technologies
By way of background, Vancouver-based Imagis, founded by Mr. Nazerali, promoted biometric facial recognition software to law enforcement agencies. It began trading on the Vancouver Stock Exchange in early 1999 and became a particularly lively promotion in the wake of the terrorist attacks of Sept. 11, 2001.
Mr. Burnett invited Mr. Nazerali to comment on Imagis's post-Sept. 11 activity and relationship with the Pembridge Group. In response, Mr. Nazerali testified that around the end of September, 2011, he received a phone call from Brad Harrington of Pembridge, who invited him to come to Boston to meet Treyton Thomas (the group's chairman). Mr. Nazerali was impressed by Mr. Thomas, and told the court that in January, 2002, Imagis announced that it had hired Pembridge Venture Partners as a non-exclusive adviser.
Mr. Burnett asked Mr. Nazerali to describe the next "major step" in Imagis's relationship with Pembridge. Mr. Nazerali recalled that early in the morning of March 6, 2002, he and the board of Imagis received an e-mail from Pembridge about a non-binding go-private proposal at about $4 (U.S.) a share. Almost simultaneously, Pembridge put out the same information in a press release, sending Imagis's shares soaring, said Mr. Nazerali. (The stock touched a 52-week high of $5.66, up $1.76 over the previous day, in record trading.)
Mr. Nazerali said Imagis quickly put out its own press release to clarify that the proposal was not firm. It also started an insider blackout period. Mr. Nazerali emphasized, "I did not trade Imagis stock between March and July of 2002."
July, 2002, was when the go-private talks ended. Mr. Nazerali attributed their end to a "lack of clarity" from Pembridge.
After the talks ended, the board of Imagis met and decided to appoint Mr. Thomas as a director, said Mr. Nazerali. This was done to force Mr. Thomas to file insider reports and to prevent any "monkey business," as Mr. Nazerali called it. He did not elaborate. Mr. Thomas left the board in November, 2002, which Mr. Nazerali said was around the time that the British Columbia Securities Commission and the U.S. Securities and Exchange Commission began demanding information about Imagis and about Mr. Thomas in particular. The regulatory meetings marked "the last [time] I personally had anything to do with Mr. Thomas or Pembridge," said Mr. Nazerali.
Mr. Burnett asked Mr. Nazerali to skip ahead to 2003 and 2004. Mr. Nazerali obliged and discussed Imagis's merger with the private Briyante Software, with the resulting company being renamed Visiphor. Mr. Nazerali was gone by then, having left Imagis in about April, 2003, because, as he testified, he had lent money to the company and thus had a conflict of interest. So ended the story of Imagis.
Mr. Nazerali's cross-examination will be interesting. The Imagis promotion drew plenty of media attention, not least from Stockwatch, which published over 50 stories about it between March 7, 2002, and March 19, 2003. More stories followed in subsequent years as the SEC conducted its Imagis-related case against Pembridge and Mr. Thomas. The court is surely not done hearing about Imagis yet.
Deep Capture
Over the rest of the morning, Mr. Nazerali testified about the Deep Capture website, which he claims published 21 chapters that falsely accuse him of being an arms dealer, a terrorist and more.
Mr. Nazerali said he first became aware of the chapters in August, 2011, after a phone call from a friend. What Mr. Nazerali read "horrified" him. "It was devastating. They were full of lies," he testified.
Mr. Nazerali spent the rest of the proceedings listening to quoted material from the chapters and giving his reaction, which several times was just one word: "Fiction."
For example, one chapter stated that in 1979, Irving Kott (a notorious 1970s stock promoter) saw his car explode and immediately called "his friend" Mr. Nazerali, who offered to "patch things up" with the Mafia. In court, Mr. Nazerali dismissed this as "pure fiction." He testified that he did not know Mr. Kott at the time, and denied ever having Mafia connections.
In addition to Mafiosi, Mr. Nazerali denied knowing Russian spies, Pakistani intelligence officers, Saudi intelligence officers, Al Qaeda financiers, jihadists, the Iranian regime and many others that were linked to him in the Deep Capture chapters. On occasion, Mr. Nazerali said he had heard of or met someone mentioned in the chapters, but did not have the relationship described therein.
He also denied travelling to various places mentioned in the chapters. He said he has never been to Costa Rica, contrary to Deep Chapter's claim that he "attended secret meetings in Costa Rica ... where a network of market manipulators planned the destruction of some big companies." Another country he claimed never to have visited was Afghanistan. Deep Capture had stated that Mr. Nazerali "dabbled in arms dealing, delivering weapons to war zones in Africa and to the mujahedeen in Afghanistan." In court, Mr. Nazerali said with emphasis, "I have never been involved in arms dealing, neither in Africa nor on the moon."
Mr. Nazerali also denied ever having manipulated the market, engaged in short selling, or taken part in a pump-and-dump or other scam.
Toward the end of the morning, Mr. Nazerali was asked to summarize his opinion on the chapters. He answered with a quote from one of them (in reference, of course, to something else): "They were just too nutty to contemplate." He said some particularly "outlandish" statements "offend me and my [Muslim] faith" and are "among the most egregious lies I've ever read." |
