No shorts????? Figment of goverment's imagination??? Read the following article from "Business in Vancouver", April 1-7, 1997.
"OFFSHORE CLIENT OF VANCOUVER BROKERAGE LINKED TO U.S. MOB-RELATED ALLEGATIONS"
Canaccord Capital was left holding the bag for US$312,000 after shady customer failed to settle short position on allegedly manipulated U.S. penny stock.
Is Peter Brown's Canaccord Capital--the most powerful Vancouver-based brokerage house--the victim of a US$312,000 fraud in an offshore stock trading scheme linked to the New York mob, currently under investigation by the National Association of Securities Dealers, the U.S. Securities & Exchange Commission, the FBI and the RCMP?
That is one of the startling allegations in an intricate and bizaare lawsuite filed last year in New York state.
A Babamian client of another Vancouver brokerage, Pacific International Securities, faces a US$150-million court judgment rendered in connection with the scheme, which is emerging as the biggest scandal to plague the penny stock market in the U.S. in recent years.
The U.S. investigations are centering on the alleged mob involvement in the U.S. market for over-the-counter stocks, in a story first revealed in the press by "Business Week" magazine late last year. The magazine broke the story in a cover feature in its December 16 issue, entitled "The Mob on Wall Street: A three-month investigation by "Business Week" reveals that the small-cap stock market has been infiltrated by organized crime under the very noses of regulators and law enforcement. It's a shocking tale of rigged stocks, occasional violence and widespread silence by brokers and traders."
Sparked by the magazine's revelations, Michigan congressman John Dingell, the ranking Democrat on the House Commerce Committee, issued requests in February to U.S. Attorney General Janet Reno and the heads of the securities commission and dealers association, according to a recent "Wall Streete Journal" report.
The case had been building in U.S. courts for months before the news first came out. The trustee for Adler Coleman Clearing Corp., a U.S. stock clearing house driven into bankruptcy, outlined the scheme in intricate detail in a 61-page counterclaim filed last June in United States Bankruptcy Court, Southern District of New York. Related follow-up suits were filed November 19 and December 5 in B.C. Supreme Court.
The cast of characters reads like a plot line for a thriller myster novel. The players include alleged mob-related stock promoters Philip Abramo, Philip Gurian and Thomas Quinn, a notorious convicted "boiler room" operator convicted in stock manipulation schemes in the past. Abramo, now in jail on a separate case of tax evasion, is alleged to have controlled several Bahamian accounts in concert with Gurian. The accounts were handled by the son of former Bahamian prime minister Lynden Pindling, lawyer Obafem Pindling, who serves as the registered agent for the offshore companies.
The U.S. suit alleges that controversial former USA Today financial columnist Dan Dorfman was planted with damaging information on stocks handled by Hanover House, which he broadcast on his CNBC show. The reports helped drive the stock prices down, allowing short sellers to benefit. Among the companies that have been investigated is Solv-Ex Corp., which also played a central role in the downfall of controversial British fund manager Peter Young of Morgan Grenfell Asset Management last year.
The tactics used by the alleged mob associates were unconventional at times, according to a secret FBI indictment.
One account relates an incident in which a broker was visited by two men who removed a "customer list from his desk, and slammed a chair against his leg and arm, breaking his wrist.
While much of the scheme involved U.S. brokers, Canadian connections are alleged to have played a major role. "By utilizing 'shells' in Canada and other foreign countries, the enterprise concealed the true mganitude of the short positions," U.S. legal documents claim.
The U.S. bankruptcy suit alleges that Gurian caused Valsyn, S.A., a Bahamian account handled by Pindling, to open an account at Canaccord in March 1995, claiming assets of US$4million. Canaccord broker and director Paul Chalmers claims that Gurian reneged on a promise to deposit US$2million in the account.
Canaccord executed Valsyn short trades of at least US$790,000 and later was required to pay US$312,000 to clearing houses after the client failed to settle. "This series of transactions, therefore, was simply a fraud on Canaccord, designed to foist the enterprise's short position upon it," Adler Coleman's trustee claims. The full extent of Canaccord's losses is not know.
On November 19, the trustee won an exparte order freezing $750,000 held for Pacific International client Roddy DiPrimo S.A., another alleged Gurian Bahamian account. On December 20 Roddy DiPrimo failed in a bid to have the injunction overturned. On March 26, the trustee filed a B.C. Supreme Court application in a bid to achieve a $68.34-million final judgment against Roddy Di_rimo.
A related affidavit notes that Gurian refused to answer numerous questions under cross-examination recently in New York, pleading the Fifth Amendment, to not incriminate himself. Among the questions Gurian refused to answer were whether he controls Di_rimo and directs the Pacific International account. |
