B.C. Securities Commission -
BCSC makes example of Seifert; SEC interest unknown
B.C. Securities Commission
BCSEC
Shares issued 0
1899-12-30 close $0
Friday Dec 17 1999
Also Arakis Energy Corp (AKSEF)
by Brent Mudry
Hours after the highly-public downfall of Michael Seifert, one of
the most prominent securities lawyers in Vancouver, the British
Columbia Securities Commission served notice of its tough new
approach to securities professionals. "We have a very high
standard that we expect professionals to meet ... lawyers,
accountants and engineers will be held to a very high standard,"
Lang Evans, deputy director of enforcement, told Stockwatch.
Mr. Evans also served notice that after watching a proliferation of
offshore share shuffling in countless Howe Street promotions for
decades, the BCSC is finally keen on sending a message to
lawyers, brokers, financiers and investors. "They can't hide from
us ... they can't frustrate the Securities Act by conducting dealings
in offshore jurisdictions," says Mr. Evans.
The senior regulator points out that in the Arakis case, the first
time the BCSC has revealed piercing the offshore veil, it sent staff
to the Jersey Islands twice to investigate with offshore officials. In
Jersey, Switzerland and other offshore havens, officials in recent
years have proclaimed their sudden dislike of being conduits for
illegal activities such as money laundering and insider trading.
"We will pursue an investigation into whatever jurisdiction it takes
us ... we will track this down," says Mr. Evans. The BCSC
official confirms that the consent settlement with Mr. Seifert does
not preclude any further action by such regulators and law
enforcement agencies as the United States Securities and
Exchange Commission and the RCMP. The BCSC has sent its
Seifert settlement to various regulators, including the SEC, for
consideration. It is not known whether the SEC plans any move to
consider barring Mr. Seifert from any dealings with stocks on the
barely-regulated OTC Bulletin Board or Nasdaq.
Ross McCutcheon, the managing partner of Maitland &
Company, a leading Vancouver securities law firm which has
featured Mr. Seifert on its staff since 1978, has little comment on
the controversy surrounding his partner. When asked if the BCSC
settlement affects any Maitland deals, including one in which the
law firm itself has an 82-per-cent stake, Mr. McCutcheon had little
to say. "I am not able to comment on that," he told a reporter.
Mr. McCutcheon confirms that Maitland has 11 lawyers, of which
six and a half are securities specialists. "I'm the half," he added.
The senior lawyer called back a few minutes to explain he is not
half a lawyer, but he spends half his time on other legal matters.
"We are sort of gun shy because of people like the Baines's of the
world ... I just don't want things to be twisted around," Mr.
McCutcheon explained.
Mr. Seifert's demise will be a major loss for Howe Street, given
his presence in numerous deals, including many with extensive
offshore dealings, most notably NDT Ventures Ltd., Arakis
Energy and others. While Mr. McCutcheon himself has done
nothing wrong, he also invested in numerous of Mr. Seifert's
deals, including Allied Strategies and Consolidated Dencam
Development Corp., two of the ones that helped earn Mr. Seifert's
regulatory reputation.
Over at the Law Society of British Columbia, secretary Jim Matkin
confirms that Mr. Seifert is a person of extreme interest. "Mr.
Seifert is under investigation by the complaints department of the
Law Society to determine if disciplinary actions should be taken,"
Mr. Matkin told Stockwatch.
THE NEW YORK PARTNERS
Mr. Seifert and his Vancouver associates, meanwhile, have been
busy in the past year or two nurturing at least seven U.S. penny
stock shells towards hoped-for listings on the OTC Bulletin
Board. They are San Fabian Resources Inc., Intertech Ventures
Inc., Northtech Ventures, Worldwide Tech, Inc., Norcan
Ventures, Inc., Stearman Enterprises Inc. and Chauvin Enterprises
Inc.
The players in these early-stage companies include Mr. Seifert, his
law firm Maitland, his long-time associate David Patterson and
New York lawyers Joseph Sierchio and Stephen Albert. Maitland
is San Fabian's biggest shareholder, with 22.73 million shares, a
remarkable 82-per-cent stake -- possibly held in trust. Mr. Sierchio
and Mr. Albert each hold 2.5 million shares. San Fabian's
president and sole director Herbert Maxwell, described as a
76-year-old New York investor, consultant to troubled companies
and writer of a newsletter on the New York theatre scene, owns a
mere 10,000 shares.
While Mr. Albert appears to be a Howe Street novice, Mr.
Sierchio is not. The New York lawyer purchased private
placement shares of both Donner Minerals and affiliate Crazy
Horse Minerals in early 1994.
In the Donner financing of 1.6 million units, Mr. Patterson was the
biggest buyer, with 375,000 units, followed by Mr. Seifert, with
345,000. Besides Mr. Sierchio, the other buyers included secretive
Swiss financier Carlo Civelli's Clarion Finanz AG, a key backer of
dozens of Howe Street deals, newsletter writer Peter Grandich and
Colin Watt.
Donner's previous backers are a virtual who's who of Howe
Street's murky offshore world. A financing in mid-1995 featured
Mr. Alexander himself and a long list of offshore accounts,
including the ever-popular Affida Bank, Mr. Seifert's Arakis
associate Integro Fiduciare, Parkdale Investments SA, Romofin
AG and Sarasin & Cie.
A year later, they were joined by Bank of Bermuda (Luxembourg),
Brahma Finance BVI, Cantrade Ormond Burrus, Fin & Counseil
SA and Isle of Man Assurance. While many of these offshore
institutions are familiar faces in Vancouver deals and some are
virtually household names on Howe Street, they diligently guard
the true identities of their clients and related nominees and fronts.
More recently, two other VSE notables took a shine to Donner
this spring, as buyers of a private placement in February. They are
Dirk Rachfall and Michael Patterson, the pair of Pacific
International Securities brokers who sprang to national
prominence this summer when they were arrested by FBI agents in
Seattle in a New York penny stock case involving members of the
Bor Russian mob and the Colombo mafia family.
In the Crazy Horse financing of four million shares at 15 cents,
Mr. Seifert and David Patterson were the biggest buyers, with
235,000 shares each. Besides Mr. Sierchio, the other buyers
include newsletter writers Bob Bishop, Doug Casey and Mr.
Grandich, Mr. Seifert's boss Mr. McCutcheon, a number of
secretive offshore companies, including British West Indies
Securities, Monrovia AVV, Mexicana Gold Resource BVI and
Raindance AVV, Canaccord Capital analyst Andrew Muir and
Mr. Watt. Mr. Civelli's Clarion invested a month later.
SEIFERT AND SIERCHIO'S PIPELINE OF BULLETIN
BOARD DEALS
While Mr. Seifert has at least seven not-yet-listed bulletin board
deals in the works in the U.S., San Fabian is the most recently
active and notable. In a Dec. 9 filing with the SEC, San Fabian
notes that on Oct. 4, Maitland converted a mid-1997 $20,000
(U.S.) convertible debenture, worth $22,134 (U.S.) with accrued
interest, into 2.21 million shares.
With this change of control, Mr. Sierchio, San Fabian's sole
officer, director and controlling person, resigned the same day
and was replaced by Mr. Seifert. On Oct. 27, three weeks after
Maitland converted its debenture, San Fabian did a split of 10 new
shares for one old shares, boosting the law firm's position to
22.73 million shares. After serving for six weeks, Mr. Seifert then
passed the torch over to Mr. Maxwell, the New York stock and
theatre buff, on Nov. 19.
Two other Seifert-Sierchio efforts updated their disclosures with
SEC filings on Oct. 21: Chauvin and Stearman. Mr. Seifert was
Chauvin's sole officer and director from inception until Aug. 1,
when he passed the torch to Mr. Maxwell.
Mr. Sierchio and his partner Mr. Albert are Chauvin's biggest
holders, with 556,000 shares each, a 34-per-cent holding each.
The pair paid for their shares by converting a $500 (U.S.)
convertible debenture, also on Aug. 1. Mr. Seifert holds 126,000
shares, a 7.7-per-cent stake, while Mr. Patterson and Mr. Watt
have 126,000 and 124,000 shares respectively. Mr. Maxwell holds
a mere 15,000 shares.
For now, Chauvin is but an empty shell waiting for a good
promotable asset, but the lawyers are offering few clues as to
what kind of deals they are looking for. "Management anticipates
seeking out a target company through solicitation. Such
solicitation may include newspaper or magazine advertisements,
mailings and other distributions to law firms, accounting firms,
investment bankers, financial advisors and similar persons, the use
of one or more World Wide Web sites and similar methods,"
states Chauvin in its filing.
Stearman is a virtual clone of Chauvin, with exactly the same
respective shareholdings and an identical $500 (U.S.) convertible
debenture. As with Chauvin, Mr. Seifert served as sole officer and
director until Aug. 1, when he passed the torch to Mr. Maxwell.
With such close and timely dealings, one might expect Mr. Seifert
to promptly inform Mr. Sierchio of his $450,000 fine and 12-year
ban, to give the New York lawyer a "heads up." Unfortunately, a
reporter had to break the news to a surprised Mr. Sierchio on
Friday afternoon, eight and a half hours after the BCSC decision
was released.
"I have no idea what you are talking about," Mr. Sierchio told
Stockwatch. After hearing the full details of Mr. Seifert's troubles,
Mr. Sierchio was reluctant to say much. "I appreciate you filling
me in ... but there is nothing I can say ... I have no comment,
goodbye," said Mr. Sierchio as he hurriedly hung up the phone.
(c) Copyright 1999 Canjex Publishing Ltd.
canada-stockwatch.com |
