BCSC-aided SEC, FBI target greased big-league broker
B.C. Securities Commission *BCSC
Fri 1 Feb 2002 Street Wire
Also Ontario Securities Commission (NNO)
Also Northern Orion Explorations Ltd (U:*SEC)
Also Securities and Exchange Commission (*OSC)
by Brent Mudry
In the latest U.S. prosecution stemming from dubious deals on Howe Street,
American authorities have launched criminal and civil cases against a
high-level former Lehman Brothers and PaineWebber broker who defrauded a
wealthy Mexican client, who lost more than $68-million, by stuffing his
account with shares and convertible debentures of American Resource Corp.,
its subsidiary American Pacific Minerals and Northern Orion Explorations
Ltd., a subsidiary of promoter Wally Berukoff's Miramar Mining, in return
for secret offshore kickback commissions over a six-year period ending in
1998. (All figures are in U.S. dollars.)
In co-ordinated actions, Enrique Perusquia, 48, who lives near Jackson
Hill, Wyo., was charged Thursday with five criminal counts of securities
fraud, capping a two-year investigation by the Federal Bureau of
Investigation, and charged with securities violations in a civil complaint
filed by the United States Securities and Exchange Commission.
"We were assisted in our investigation by the British Columbia Securities
Commission and the Ontario Securities Commission, and they were very
helpful to us," SEC attorney Christopher Cooke of San Francisco told
Stockwatch. The SEC case was filed by SEC District Administrator Helane
Morrison and staff attorneys Mr. Cooke, Victor Hong and John Yun.
Although brokerage accounts on Howe Street, the centre of dealings on the
former Vancouver Stock Exchange, dubbed Scam Capital of the World a decade
ago by Forbes writer Joe Queenan, have popped up as conduits in numerous
U.S. penny stock fraud cases in recent years, it is not known whether any
Vancouver brokerages were used in the Perusquia case.
"We still have an investigation ongoing," a source familiar with the case
told Stockwatch. U.S. officials declined to provide any details of the
continuing Perusquia probe.
While U.S. officials claim Mr. Perusquia was secretly greased through
various commissions and finders fees, and the dirty broker also stuffed his
client's account through open-market purchases, there is no allegation of
wrongdoing made against American Resource, American Pacific, Northern Orion
Explorations, or any individuals directly or indirectly involved with these
companies.
"From January, 1992, through March, 1998, Perusquia funneled tens of
millions of dollars of client funds into speculative gold mining firms from
which Perusquia was secretly receiving millions of dollars in kickback
commissions and stock. Perusquia forged client signatures on private
placement documents, powers of attorney, and other documents in order to
make these investments without his client's knowledge," states the SEC in
its complaint, filed in U.S. District Court for the Northern District of
California, San Francisco Division.
The SEC also claims Mr. Perusquia misappropriated money from the client's
accounts and engaged in unauthorized margin trading. To avoid detection,
the broker allegedly held his kickback commissions and securities in
holding companies in the secretive offshore enclave of the British Virgin
Islands which he beneficially owned and controlled.
The case is a significant embarrassment for Lehman and PaineWebber. Mr.
Perusquia began working for Lehman as a financial consultant in January,
1987, and later became a senior vice-president financial consultant at
Lehman in Zurich. In 1994 he jumped over to Paine Webber as a senior
vice-president, working between 1994 and 1998 in its New York and San
Francisco offices.
Mr. Perusquia specialized in handling the accounts of high net worth
clients, mainly from Mexico. The defrauded client, identified only as Mr.
Lerma, entrusted Mr. Perusquia, then at Lehman, with more than $45-million
from 1989 through 1991. Mr. Lerma granted Mr. Perusquia discretion to
invest his funds for low-risk income and growth, not speculative penny gold
stocks. The funds were held in the names of a series of offshore companies
established for this purposed, and Mr. Perusquia assisted in the creation
of these companies.
(In a completely unrelated case, the last time an offshore client was
ripped off in a Howe Street deal, Mafia figures and associates Phil Abramo,
Phil Gurian and Eric Wynn were haggling over offshore accounts serviced by
Pacific International Securities Calgary branch manager Jean Claude
Hauchecorne. Although Mr. Hauchecorne survived a scary encounter in a New
York hotel room a few weeks before a Bahamian legal secretary was shot dead
in the head in her bed, he was subsequently banned for life for his
handling of the offshore mob-related accounts.)
In the criminal prosecution, Mr. Perusquia faces a maximum statutory
penalty for each of five securities fraud counts of five years in prison
and a $250,000 fine, plus restitution to his victimized client. Any
sentence imposed, however, would be based on federal sentencing guidelines,
which take into account various factors.
In the civil case, the SEC seeks disgorgement of all illegal profits plus
prejudgment interest, and payment of monetary fines. In its complaint, the
SEC also seeks an injunction prohibiting Mr. Perusquia from future
securities violations.
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