SEC target Lancer Group liked Vancouver's ASPI Europe
Securities and Exchange Commission
Wed 16 Jul 2003
Street Wire
by Brent Mudry
Among the penny stocks favoured by Michael Lauer's Lancer Group, the
$1-billion offshore hedge fund group shut down by regulators last week, was
ASPI Europe Inc., a small Vancouver company which featured controversial
Howe Street promoter Philip Garratt and his younger associate Patrick
McGrath. (All figures are in U.S. dollars.)
The Lancer Group bought small ASPI stakes for two of its smaller funds in
the fall of 2000, a few months after Mr. Garratt left the company amid a
name change from Shopping Sherlock, and a modest ASPI stake for its
flagship Lancer Offshore fund later that year, according to account
statements. The statements were filed in United States District Court for
the Southern District of Florida last week by the United States Securities
and Exchange Commission, to support its successful application for a
temporary receiver for the Lancer Group.
Mr. Garratt, 52, an expatriate Australian promoter, is well known in
Vancouver penny stock circles. One of his previous promotions, Cycomm
International, was in the limelight in 1994 when the British Columbia
government ordered an official inquiry after the British Columbia
Securities Commission approved an $11.5-million (Canadian) financing
despite the objections of several senior officials. Mr. Garratt stepped
down as president of Cycomm amid the controversy, but the retired judge in
charge of the inquiry subsequently cleared the commission of doing anything
wrong in approving the financing.
More recently, Mr. Garratt launched Shopping Sherlock in early 1999,
serving as president and chief executive officer, while Mr. McGrath, 31,
also of Vancouver, was named chief financial officer that April, according
to various regulatory filings with the SEC.
A few months earlier, that January, Mr. McGrath was hired as an independent
consultant to an unrelated company, Constellation 3D Inc., also known as
C3D Inc. C3D's other notable Vancouver players included Mr. Garratt, whose
involvement was confirmed to Stockwatch by the company's former president,
and controversial West Vancouver promoter Rene Hamouth. Regulatory filings
show Mr. Hamouth as signatory for an offshore C3D investor, while he was
also involved in litigation over C3D shares with C3D co-founder Lev
Zaidenburg, according to court filings in U.S. District Court for the
Southern District of New York and the Supreme Court of British Columbia.
Shopping Sherlock shares briefly peaked at $31.88 on the pink sheets in
early 2000, as the company changed focus from E-commerce to information
technology. Mr. Garratt subsequently resigned as president that June, amid
a name change to ASPI Europe, but Mr. McGrath remained CFO and a key
director until March, 2002, according to various regulatory filings.
According to SEC court filings, the Lancer Group took a modest shine to
ASPI Europe in the fall of 2000. That September, account records show
Lancer bought 40,000 ASPI Europe shares for its Orbiter Fund LP, at $1.88 a
share, and 33,300 shares for its Viator Fund LP. Previous months' records
show no ASPI holdings. The investment initially looked good, as the stock
was valued at $2.82, up 50 per cent, by Sept. 30, 2000.
That December, account records show Lancer's flagship Lancer Offshore fund
bought 198,300 shares at a not-so-chipper 75 cents a share. Previous
months' records show no ASPI holdings. Yet again, Lancer's timing looked
good, as the stock was valued at $1.16 by the end of the month, up 54 per
cent. Several name changes later, and now called Sharps Elimination
Technologies Inc., the shares now go for 59 cents.
bmudry@stockwatch.com
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