Here is an interesting news release ....
National Bank of Canada - Street Wire.
BCSC case reveals astounding cast of P.I. clients
National Bank of Canada NA
Shares issued 188,728,712 2001-07-10 close $28.7
Tuesday Jul 10 2001 Street Wire.
See B.C. Securities Commission (BCSEC) Street Wire.
by Brent Mudry
While Pacific International Securities and its top seven officers maintain their innocence to the serious charges levied by the British Columbia Securities Commission, one thing is sure at this point: the besieged Vancouver brokerage has had an unfortunate knack for attracting controversial penny-stock clients. They include Larry Kostiuk's old pal Joe Garofalo, massive mortgage fraudster Shalom Weiss, bucket-shop pro Randolph Beimel and members of New York's fearsome Russian mafia.
"Any suggestion that we would condone any wrongdoing in any one of our 30,000 client accounts is wrong," Bert Quattrociocchi told Stockwatch. The P.I. executive vice-president and his boss, chairman and chief executive Max Meier, confirm that the brokerage will vigorously defend the charges in a full hearing before the BCSC. P.I. has retained regulatory lawyer Mark Skwarok, in addition to counsel Don Sorochan.
"Unfortunately, it (the hearing) will be a year or so away," says Mr. Meier, reached on vacation. Although National Bank of Canada's National Bank Financial has a deadline of March 31, 2002, to increase its current equity stake of 35 per cent to 60-per-cent control, Mr. Meier says he has not yet thought about the possibility of any extension, given the regulatory cloud looming overhead.
While Pacific International has been singled out as the only Vancouver brokerage targeted by the BCSC, at least for now, brokers at other firms may recognize the names of several of its clients. "I have done lots of business in Vancouver," Mr. Garofalo told Stockwatch several years ago.
Mr. Garofalo, a close associate of the late and legendary Ramon Donofrio, has a regulatory record including a May, 1993, permanent injunction imposed by the United States Securities and Exchange Commission.
Several other P.I. clients, who allegedly had accounts at the Vancouver brokerage, either directly or less directly, may be less well known on Howe Street, although they are certainly familiar faces with American authorities.
SHALOM WEISS
Mr. Weiss stands out, if only for his 845-year prison sentence and $100-million restitution fine. (All figures are in U.S. dollars.)
Mr. Weiss was among 12 defendants who pled guilty between 1994 and 1999 in a massive mortgage fraud, an operation the Orlando, Fla., office of the FBI called "one of the largest white-collar crimes ever."
The bureau, along with the Internal Revenue Service and the U.S. Postal Inspection Service, launched a probe in 1994 targeting two defendants running the National Heritage Life Insurance Co., with a believed fraud amount of $12-million. The case snowballed over the years into a $450-million complex mortgage and real estate fraud.
Florida officials note that Mr. Weiss, who had been a respected member of New York's Jewish community, became involved with National Heritage when he agreed to buy $100-million in mortgages and sell them for $135-million. Unfortunately for investors, he spent only $65-million on worthless, non-performing mortgages and diverted much of the remainder for his personal benefit, including spiriting funds away to Israel and Switzerland.
National Heritage was a scam from day one. In 1990, Arizona businessman Patrick Smythe, Orlando accountant David Davies and New York attorney Michael Blutrich bought an equity stake in National Heritage with a rubber $4-million cheque. Although the account had only a few thousand dollars, the trio stalled the closing until a Friday evening, and by the Monday morning, they were able to siphon funds from the company's treasury, a particularly audacious leveraged buyout with no money down.
In 1994, the Delaware Insurance Commissioner tried to audit National Heritage, which sold high-interest 9.5-per-cent annuities to 28,000 people across the country. In a few years, the company had boosted its assets from $45-million to $450-million, through purported investments in stocks, bonds and real estate, but in reality the funds were being siphoned out and embezzled.
When the state insurance commissioner found that most of National Heritage's assets could not be verified, the FBI was called in. Later that year, National Heritage collapsed, in one of the biggest fraud-related company failures ever in the U.S. up to that time.
In November, 1999, Mr. Weiss was convicted of racketeering, wire fraud, interstate transportation of stolen property, money laundering, filing false statements and obstruction of justice. Unfortunately, Mr. Weiss had skipped a court appearance the previous month, but he was sentenced in absentia to consecutive terms totalling 845 years in federal prison.
An Interpol alert was filed and a world-wide fugitive hunt was launched, including in the United Kingdom and Austria. Mr. Weiss was finally tracked down and captured last October in Austria.
RANDY BEIMEL
Another notable alleged P.I. client is Mr. Beimel, fined $150,000 and barred by the National Association of Securities Dealers in 1997. Mr. Beimel and co-defendant Joe Chester were vice-presidents in charge of the Pittsburgh office of notorious bucket shop Hibbard Brown & Co., a brokerage expelled in 1994.
Hibbard Brown was a high-pressure bucket shop which trained its brokers to make aggressive sales calls on a well-orchestrated three-call system, with the initial cold call, a second series of sizzle calls and a third series of calls to hook unsuspecting suckers. Hibbard's senior management in New York, including its president, national sales manager and research director, rallied the troops with conference calls to prep them just before the third round of hook-the-sucker calls.
Hibbard's house stocks were mostly speculative OTC Bulletin Board stocks of success-challenged tiny companies. Brokers were also given prepared scripts to use for closing sales during "sell week" phases. The NASD notes that in the Pittsburg office, the scripts were generally dictated by Mr. Beimel or Mr. Chester. Brokers were told to make their own handwritten notes, to prevent a paper trail leading to management.
"The brokers working in the Pittsburgh office experienced intense pressure to sell the Hibbard house stocks to customers. The expectation was for each broker to make a minimum of 10 sales every month. In the event a broker at the Pittsburgh office did not make enough sales, he was often likely to be subjected to physical and psychological abuse," states the U.S. regulator.
THE RUSSIAN CONNECTION
Pacific International's checkered client list included a number of offshore accounts used by reputed mobsters in the New York Mafia's Globus Group Inc. promotion. An 1997 indictment in the United States District Court for the Eastern District of New York credits the Vancouver brokerage as being a key conduit in the fraudulent Globus scheme. No allegations of criminal wrongdoing are made against P.I.
The Russian mob, using Pacific International as a key selling conduit, ran Globus shares up from 25 cents in January, 1996, to $8 that September. The group pulled the plug that month and by October the stock had collapsed to 40 cents.
The indictment names 18 defendants, including Alexander Shindman, also known "Shneid," "Fat Man" and "Fats," Boris Shindman, also known as "Borya," Manuel Pontones, also known as "Manny," Igor Stolyar, aka "Eric" and "Gosha," Alik Stolyar, aka "Alex," Christopher Bailey, Erik Bailey, Zorian Eric Balonik, aka "Z," Patrick Giordano, Alexander Rubinshteyn, aka "Rubai," Christopher John Cipriano, aka "Bulldog," Gary Cucuzza, Alexander Flykshteyn, aka "Pirat," Pavel Goreshatsky, aka "Paul Gorr," Rodney Kadymir, aka "Marc Vinson" and "Geno," Edward Vertsman and Rita Zakharchenko, aka "Mary."
The 22-count indictment includes 15 counts of mail fraud, three counts of wire fraud, one count of securities fraud, one count of money laundering and one count of using a telephone with the intent to commit murder-for-hire. U.S. authorities claim that Igor Stolyar and his father Alik Stolyar put out a New York hit on April 22 and 23, 1996.
While the Stolyar father-and-son team were plotting to rub out someone who rubbed them the wrong way, their associates were busy rubbing their hands with glee with their dealings at Pacific International. Between January and May, 1996, all 640,000 warrants subscribed for in a 1995 offshore financing were exercised, with the resulting shares deposited into four accounts at P.I., in the names of Marvin Kowalski, Della Ltd., Virgo Bay Ltd. and Leeward Cove Holdings Ltd.
Della was incorporated in the offshore enclave of Antigua and its director of record was defendant Mr. Vertsman. Virgo Bay and Leeward Cove were both incorporated in Nassau, Bahamas, using the address of Universal Corporate Services, a financial services company. Defendant Mr. Pontones, aka "Manny," was a principal of both Virgo Bay and Leeward Cove.
Partial proceeds from the fraudulent promotion were transferred from Virgo Bay and Leeward Cove to another Nassau company of which Mr. Pontones was a principal: Diamante Holdings Ltd., which also used the Nassau address of United Corporate Services.
U.S. authorities claim the Russians ran Globus as a classic pump-and-dump promotion, greasing a network of dirty brokers. Globus was especially pumped by Hillcrest Financial Corp. of New York, whose cold-call brokers worked the phones with scripted pitch sheets, claiming Globus had won a non-existent $12-million antitrust suit against AT&T, and also had a non-existent $3.9-million agreement to buy Kingston Operating Corp.
Silver Star Provisions Inc., a New York vehicle headed by Alik Stolyar, was used to transfer funds indirectly from Diamante to Rockwater Corp., a company which bought control of Hillcrest in December, 1995. Rockwater's principals included co-defendants Mr. Shindman, aka "Shneid," "Fat Man," and "Fats," Christopher Bailey and Mr. Giordano.
Of the 11 defendant Hillcrest brokers, only four were licensed with the firm Mr. Goreshatsky, aka "Paul Gorr," Mr. Kadymir, aka "Rodick," Mr. Rubinshteyn, aka "Rubai," and Ilgor Stolyar, one of the alleged murder contractors. Mr. Vertsman, the man behind Pacific International's offshore client account Della, was an unregistered Hillcrest broker who sold Globus shares.
Once the high-pressure Hillcrest bucket-shop boys had a sucker on the hook, they Federal Expressed out client opening forms, with a prepaid Fed Ex return envelope for payment.
The use of Vancouver brokerage Pacific International was not the only key Canadian connection to the Globus operation. On April 23, 1996, Igor Stolyar phoned from Brooklyn, N.Y., to a contact in Toronto concerning the recruitment of Canadian brokers to sell Globus shares.
(c) Copyright 2001 Canjex Publishing Ltd. canada-stockwatch.com
Well ny goodness the fraudster turningin fraud and capitilaizing on it through offshore sells by passing the rules and regulations of America.
Hmmm .. and the feds look the other way.
P2bAAAT & DSAS |
