Howe Steet at it's finest :-)
Subject: Stockwatch: Mandorin Goldfields Inc - Street Wire
Mandorin, MedEra promoter Schoch explains Polish pickle
Mandorin Goldfields Inc MGD
Shares issued 28,273,547 Oct 8 close $0.06
Fri 8 Oct 99 Street Wire
Also medEra Life Science Corp (MER)
by Brent Mudry
Controversial Vancouver stock promoter Arn Schoch has an intriguing
explanation for the what happened to a suspicious $5.17-million loan he
received five years ago from a Polish banker. According to Mr. Schoch, a
long-time promoter on the Vancouver Stock Exchange, the exchange formerly
known as The Scam Capital of the World, he claims that most of the money
vanished in one bad deal after another. Although Mr. Schoch now serves as
vice-president of business development with Dr. Michael Pezim's MedEra Life
Science, after a stint as president of Mandorin Goldfields, his Polish
pickle stems from his tenure with CCC Coded Communications, a highflying
previous promotion on the VSE. MedEra is not part of the Polish affair, but
from the MedEra office Mr. Schoch continues to promote and practice
business development.
Mr. Schoch's Polish dealings were first revealed in March of 1996 when he
and fellow VSE promoters Don Farrell and James Curtis faced a series of
lawsuits totalling $22.4-million for purported deposits received from
alleged secret dealings with a representative of a Polish banking
consortium in 1993 and 1994. In the four suits, Bank Gospodarki Zywnosciowj
Spolka Akcyjna claimed the trio and their holding companies refused demands
to repay the purported deposits.
Vancouver lawyer Winton Derby of McCarthy Tetrault claimed an employee of
the Warsaw-based group of small co-operative farmers' banks conspired with
the Vancouver promoters in the scheme. The VSE troika met the banker,
identified as R. Kurek, in Finland in 1993. "The defendants entered into a
secret agreement with Kurek to induce Kurek to cause the plaintiff to
deposit the funds," the suits stated. (Stockwatch first reported on these
suits in a Streetwire of March 25, 1996, under symbols EMT, for Mandorin
predecessor Emerging Growth Technologies, and GMD, for Mr. Farrell's GMD
Resource.)
Lawyers for the Polish bank have been busy this year, according to recent
court filings, grilling Mr. Schoch about what happened to his share of the
Polish funds. On July 30, Mr. Derby and his associate Robert Sewell filed a
petition for a receving order in the matter of the bankruptcy of A.M.F.
Capital, the holding company through which Mr. Schoch originally received
the funds.
The petition notes that on Feb. 15, 1998, Bank Gospodarki obtained judgment
against Mr. Schoch's A.M.F. Capital for $5.17-million, through an order of
Master Bolton of the supreme court. (Mr. Schoch is the president and sole
director of A.M.F.) The judgment stemmed from the original $3-million
(U.S.) loan, purportedly received as a deposit, which the Polish bank
transferred to A.M.F. on March 29, 1994.
After receiving the judgment, the bank's Vancouver lawyers grilled Mr.
Schoch twice, on June 9, 1998, and Feb. 19, 1999, and heard an interesting
account of the missing money. Mr. Schoch confirmed that his holding company
A.M.F. has no assets to satisfy the judgment, except for a few small stock
positions, cannot pay any portion of the judgment, ceased to be an active
company in late 1995 and currently has no office or place of business. The
stock promoter also confirmed that A.M.F. has a single bank account,
dormant since Sept. 29, 1995, and no other creditors.
In sworn depositions, Mr. Schoch described the fate of the missing
$3-million (U.S.). More than a third of the money was given to Gerry
Dennehy, who moved from Australia to run CCC Coded in California. (Mr.
Dennehy also served a stint as director of Nycal (Canada), a company in the
Graham Ferguson Lacey's Australian-flavoured web, a web that also featured
Phil Garratt, an Australian expatriate who ran Cycomm International in
Vancouver.) Another third of the money was used to buy CCC Coded shares,
and much of the rest vanished in a bizarre Philippine gold scheme.
Mr. Schoch testified that $155,000 of the Polish bank's funds was
transferred to a company called Pan-Global, which in turn issued shares to
a company called Telisha Property, which was owned by Mr. Dennehy, a
business partner of the VSE promoter. Mr. Schoch also claims that a further
sum of $1.02-million (U.S.) was transferred to Mr. Dennehy personally, in a
series of loans. The Vancouver promoter claims that neither Mr. Dennehy nor
his companies provided any evidence of the transfers, with no specific
terms of repayment, at no interest and without any security. Mr. Dennehy
has not repaid any of the money, according to Mr. Schoch.
The Vancouver stock promoter also claims that he used $1.2-million (U.S.)
of the Polish funds to buy shares of CCC Coded, a company he was promoting
in 1994. Some of these funds then ended up in the Philippines.
Mr. Schoch testified that, using its CCC Coded shares as collateral, A.M.F.
obtained a $250,000 (U.S.) loan from Vancouver brokerage Yorkton
Securities. A.M.F. wired this money to an account in the Philippines in the
name of Anthony Ramos, according to Mr. Schoch, to enable Mr. Ramos to
establish his credibility with the Philippine government. The VSE promoter
was unable to recover any of this money. Mr. Schoch also told the Polish
bank's lawyers that he caused A.M.F. to wire an additional $392,000 to Mr.
Ramos to purchase gold, but the money was never returned and A.M.F. never
received any of the gold.
According to Mr. Schoch, Mr. Ramos was working on a big deal in the
Philippines. "This is at the time when Coded Communications is negotiating
for the purchase of a Philippine-based company called Domsat ... Mr. Ramos
acted as a liaison between Coded and the Philippine interests," Mr. Schoch
testified. While Mr. Schoch claims he had contact with either Mr. Dennehy
or another Coded official in the Philippines several times a week during
the Domsat period, the deal fell through and the money was never returned.
It is unclear how vigorously Mr. Schoch attempted to collect any of the
missing funds, or even find out what happened to the money. The Vancouver
promoter had little explanation for what became of a housing loan made to
Mr. Dennehy almost five years ago. "Do you know whether Mr. Dennehy did in
fact use the $505,000 (U.S.) to purchase a property in Australia," asked
lawyer Mr. Sewell in June of last year. "Until three weeks ago I believed
that he had indeed purchased a house," Mr. Schoch responded.
Mr. Schoch testified that while Mr. Dennehy allegedly asked for the loan to
buy a house for his homesick wife in Australia in 1994, he belatedly
discovered in mid-1998 that the wife, then in the midst of a divorce, had
never been aware of these $500,000 (U.S.) loan. Mr. Schoch, now an Internet
promoter with Dr. Pezim, produced little documentation to substantiate his
story about the mystery of the missing funds.
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