B.C. Securities Commission -
BCSC boiler-room target pops up again
B.C. Securities Commission BCSEC
Shares issued 0 1899-12-30 close $0
Friday Nov 12 1999
by Brent Mudry
One of stock promoter's Barry Gill's star phone chimps was back at work in a boiler-room operation just weeks after a British Columbia Securities Commission hearing into their Ambra Royalty promotion ended in early 1997, according to a recent suit. In a statement of claim filed Tuesday in the Supreme Court of B.C., a Montreal-area denturist claims he lost $80,000 after being pitched a penny stock by James Calvin Letendre, in a tag-team effort with former Vancouver broker Allen Chisholm. Mr. Chisholm ended his 30-month career as a broker with Georgia Pacific Securities in July of 1998.
The suit names the Vancouver brokerage and its former broker as defendants, but Mr. Letendre, the boiler-room man, is not named. Although Montreal has had the unenviable reputation as a centre of boiler room and telemarketing scams pitching stocks, lottery tickets and assorted other products for years, this case was a switch, with a Montreal victim of a Vancouver phone operation.
Vancouver lawyer David Towill of Edwards Kenny & Bray claims that in April of 1997, his client, Laval denturist Gerald Lupien, was "cold called" by an individual who identified himself as Mr. Kyle Davis. The suit claims that Mr. Davis was soliciting the purchase of shares in a company known as PLR Inc.
"Throughout the month of April, numerous calls were made by Davis to Lupien promoting the purchase of PLR shares pursuant to a "Boiler Room" operation in which members of the general public were contacted for the purpose of promoting and soliciting the purchase of PLR shares," states Mr. Towill in the court filing.
The unfortunate Laval target did not find out until later that Mr. Davis was really James Calvin Letendre, who was not registered to trade shares on the Vancouver Stock Exchange and was under an order from the BCSC to cease contacting members of the public in stock promotions.
Mr. Letendre was evidently undeterred after sitting through a 21-day BCSC hearing which ran from July 8, 1996, to March 17, 1997, as co-defendant with Mr. Gill and two underlings, Adrienne Tuijthof and Gordon Charles Chappell, in the prosecution of Mr. Gill's boiler-room promotion of Ambra Royalty, an OTC Bulletin Board stock.
In a 46-page decision released Oct. 22, 1997, Mr. Gill, a former VSE broker, was fined $50,000 and banned for 25 years, and Mr. Letendre was fined $30,000 and given a 15-year ban on various stock-market activities, including a prohibition on engaging in any investor relations work. Ms. Tuijthof, Mr. Gill's trusted second-in-command, was fined $30,000 and banned for 15 years, while Mr. Chappell, Ambra's de-facto head of investor relations, was fined $25,000 and banned for 12 years.
Mr. Letendre was singled out for special praise by BCSC commissioners Adrienne Wanstall and the late Peter Manson. "Letendre was the most successful and enthusiastic "telemarketer" of Ambra shares. Members of the public whom he called testified that Letendre was a very good salesperson and a little bit aggressive in his efforts to encourage them to buy Ambra shares," stated the commissioners.
Mr. Gill groomed his Ambra charges with various boiler-room techniques. Perhaps the most memorable is a phone script in Mr. Gill's writing. "Don't mortgage the wife & kids! Sell them! and Buy! the Stock!," stated the script. The eager boiler-room leader even pitched Lang Evans, a senior BCSC compliance officer, who posed as a Todd Sinclair. "Evans testified that Gill referred to the stock as a "helluva buy"," stated the BCSC decision. During the hearing, Mr. Gill unsuccessfully attacked Mr. Evans' evidence. The regulator admitted that in the mid-1980s, when he worked at the Vancouver Stock Exchange, he dealt with Mr. Gill, the pair had disagreements and he disliked Mr. Gill.
Mr. Letendre himself pitched Mr. Evans with the Ambra story. The rookie phone chimp urged the senior regulator to buy Ambra shares at six or seven cents in April of 1995, suggesting the stock would hit 30 cents by September and $1 by the end of the year. "Mr. Letendre said that he essentially looked forward to speaking to me in the future, assured me that he wasn't a broker who worked on commission, that he was working for me and that I would be put on his personal list, that he would be in regular contact with me," testified Mr. Evans.
The regulator told the hearing that Mr. Gill then came on the line, offered the name of Barry Butler at Yorkton Securities and supplied the broker's phone number. Following Mr. Gill's directions, his staff kept good notes of their phone calls. "Talked & got Barry Butler's # at Yorkton," wrote Mr. Letendre after one of his pitches to Mr. Evans. Although mentioned in the Ambra case, Mr. Butler was not a regulatory target, and Yorkton kept him on for several years after his Ambra role was revealed. Mr. Butler ended his lengthy career as a Vancouver broker in May.
Mr. Letendre was more than just an eager beaver. Over the next week, he left five messages on Mr. Evans' answering machine. When Mr. Evans called back and suggested he had $10,000 to $20,000 to invest, Mr. Letendre was quite taken aback, as he had only suggested buying 10,000 or 20,000 shares, a $1,600 (U.S.) investment.
Later that day, armed with a court-ordered search warrant, BCSC staff raided Mr. Gill's Ambra boiler room. One of the seized documents showed that Mr. Letendre had been recruited by Mr. Gill through a Vancouver Sun advertisement seeking telemarketers.
Two months later, in June of 1995, Mr. Gill and his staff began a series of meetings to prepare for their upcoming official interviews with commission staff, to make sure they got their stories straight. "It was during this period that Barry began in earnest to 'toughen-up' work with all of us in preparation towards the upcoming hearing with the B.C.S.C. Barry and Adrienne were particularly wary of Jim Letendre, specifically in what had transpired during telephone conversations with 'Todd Sinclair,'" Mr. Chappell testified at the hearing.
When it was time for the interviews, the Ambra team brought along a special guest, Jim Nielsen, a former Social Credit Minister of Consumer and Corporate Affairs, who had been hired by former Social Credit supporter Mr. Gill to keep a close eye and ear on what his Ambra phone workers told the investigators. "Though Nielson told Chappell to keep it "short and sweet," Nielson did not suggest to Chappell that he lie. However, Chappell admitted that, despite being examined under oath, he did not tell the truth at all times in that interview," stated the BCSC decision.
After the interviews and investigation wrapped up, the hearing began in mid-1996 and finished on March 17, 1997. Mr. Letendre evidently took a short breather before working the phones in a new boiler-room operation, pitching PLR shares. After first pitching Mr. Lupien that April, he called the Laval man on May 6 and told him the stock was about to be listed on Nasdaq. "During the telephone conversation, Davis instructed Lupien to open a brokerage account with Georgia Pacific to facilitate the purchase of shares in PLR," states the suit.
That same day, Mr. Chisholm, the Georgia Pacific broker, called Mr. Lupien to set up an account. "Chisholm solicited Lupient to open an account ... and to purchase shares in PLR which Chisholm recommended as a sound investment," states the suit. Mr. Lupien subsequently invested $80,000 in several stages, but within six months the shares were virtually worthless.
No statements of defence have yet been filed.
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