Las Vegas lawyer Shawn Hackmanwas involved in Kanakaris
lvrj.com.
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here is a story which mentions him
BCSC H & R target Heredia cited by SEC for scalping
B.C. Securities Commission *BCSC
Shares issued 0 Jan 1 1900 close $.000
Tuesday Mar 26 2002 Street Wire.
by Brent Mudry
Another key player in Canadian career fraudster Michael Mitton's H & R
Enterprises scam has run afoul of U.S. authorities. The United States
Securities and Exchange Commission has launched a new prosecution of David
Heredia, a former Stratton Oakmont boiler room broker based in the Orlando,
Fla., suburb of Apopka.
Mr. Heredia, 31, and partner Raylen Parra, 24, of Orlando, the principals of
now defunct Norrstar Advertising Inc., have been charged with making illicit
profits of at least $3.46-million over a one-year period pumping penny
stocks to brokers through Norrstar, a former broker relations firm based in
Daytona Beach, Fla. (All figures are in U.S. dollars.)
In a complaint filed in United States District Court for the Middle District
of Florida in Orlando, the SEC claims Mr. Heredia and Mr. Parra drove their
Norrstar "broker relations executives," known locally as phone chimps, to
make hundreds of thousands of calls to registered brokers between September,
1998, and September, 1999, touting shares of Key Capital, Jreck Subs, Access
Power, Concorde Strategies Group and ISM Holding Corp., all on the
Over-the-Counter Bulletin Board. The pair made big profits scalping, or
selling into their tout-hyped market, at least 1.56 million of the 4.4
million shares they received from the five public companies.
Mr. Heredia is the seventh member of the Class of H & R, 1997, to be cited,
prosecuted, fined or jailed by securities regulators, criminal authorities
and legal officials in the past 15 months. The fraudulent OTC Bulletin Board
promotion of H & R included a debit-kiting scheme which caused the collapse
of Saperston Financial, a small upstate New York brokerage, and left the
clearing house unit of global mutual fund giant Fidelity Management,
National Financial Services, with a $9.6-million loss.
Mr. Mitton, the first to fall, was sentenced in December, 2000, to four
years in jail, a long term by Canadian standards, after he pled guilty to
all six counts in the $2.4-million Clay-Tech fraud, a 1996 debit-kiting
scheme which victimized brokerages as far afield as the Isle of Man. The
charges boosted the incorrigible fraudster's career tally to 103
convictions, dating back to 1977. Mr. Mitton pled guilty in the early stages
of what was to be a 117-day blockbuster trial, two weeks after Stockwatch
revealed his emergence in a new cheque-kiting scheme.
The next to fall were penny stock shell partners Robert Potter and Peter
Berney, who sold the H & R shell to Mr. Mitton. Last July, U.S. authorities
broadened their criminal stock fraud case against the pair. Mr. Potter is an
alleged Mafia associate and the Las Vegas case has been handled by the
Organized Crime Strike Force of the United States Attorney's Office.
New York lawyer Herbert Jacobi, who helped Mr. Mitton wire H & R proceeds
offshore to Panama, was the next to fall. Mr. Jacobi was indicted last
summer for buying stolen FBI and grand jury records for client Mr. Potter.
Mr. Jacobi, who pled guilty and agreed to surrender his law licence, was
fined $10,000 and sentenced to three years probation in January.
The fifth and sixth H & R players to fall were Florida broker Jerome Rosen
and Las Vegas lawyer Shawn Hackman. Mr. Hackman, who provided bogus H & R
share opinion letters, was suspended in December by the Nevada State Bar
amid allegations of misappropriating more than $700,000 from a client.
Mr. Rosen was cited by the National Association of Securities Dealers for
secretly controlling OTCBB Holdings, an offshore account serviced by former
Toronto brokerage McDermid St. Lawrence during the H & R promotion. Mr.
Rosen also used a related Brazilian account, which received funds
transferred from a Canadian brokerage account, as an offshore
money-laundering conduit for bribes in a separate OTC Bulletin Board rig
job, Systems of Excellence.
In the latest prosecution, the SEC takes renewed aim at Mr. Heredia. In an
earlier consent settlement in March, 2000, Mr. Heredia was banned from
association with any broker or dealer and from participating in any offering
of a penny stock, stemming from his activities at Stratton Oakmont in
1994-95, shortly before H & R.
The year after H & R, Mr. Heredia embarked on the Norrstar Advertising
broker-touting-and-scalping campaign with Mr. Parra. The SEC claims that
while Mr. Parra was the official president and chief executive of Norrstar,
he shared the direction and supervision of the broker-relations boiler-room
operation with Mr. Heredia.
The SEC claims Norrstar signed up public companies under consulting
agreements, in which it promised to build broker and public relations, aid
the companies in developing promotional plans, build nationwide interest in
the stocks and aid in the preparation and dissemination of press releases.
Norrstar had written contracts with five issuers: ISM, Concorde, Access
Power, Jreck and Key Capital, the focus of the SEC case, and verbal deals
with at least three others, all unidentified.
In the well choreographed operation, Mr. Heredia and Mr. Parra prepared
detailed phone scripts, including false and misleading information and
omissions, baseless stock price predictions, false claims of upcoming press
releases, unspecified "inside" information, and other misinformation about
their client companies. The pair then drove their phone chimps to use the
scripts in hundreds of thousands of calls to brokers.
In addition to frequently briefing their phone men, Mr. Heredia and Mr.
Parra also supervised the touting calls, listened in on conversations and
sometimes even participated in the calls themselves. "The broker relations
executives employed high pressure and aggressive tactics to tout the
issuer's stock by repeatedly calling the same registered representatives in
order to interest them in the stocks," states SEC Miami trial counsel Teresa
Rogers and Michael Rogal in the complaint.
The Norrstar phone men usually followed up their touting calls with faxed
"bullet sheets," short summaries of the public companies which the brokers
could presumably regurgitate to their clients. In many cases, the brokers
passed these bullet sheets on directly to their clients.
To generate further hype, Mr. Heredia, using an alias, also touted many of
Norrstar's client companies on an Internet stock message board, repeating
the false information from the phone scripts and bullet sheets. (The alias
and chat site are not identified in court filings.)
Mr. Heredia's Norrstar team was quite effective.
In March, 1999, shares of Concorde almost tripled from $2 to $6, as the
daily volume rose from 50,000 shares to 200,000 shares. Norrstar's bullet
sheet touted Concorde's purported planned acquisitions without disclosing
the money-losing company had no cash or financing to close the deals.
In April, 1999, shares of ISM doubled from $1 to $2 as volume rose tenfold,
from 10,000 shares to 100,000 shares. Much of the market enthusiasm was
based on Norrstar's flase claims that dog and horse racing were available on
ISM's gambling site, and ISM had strong revenues from its purported
celebrity management services division.
Shares of Access Power rose tenfold from 10 cents to $1 between March and
May, 1999, driven by Norrstar's false claims the company had a 20-per-cent
market share and it was a world recognized leader in Internet telephone
calls.
Shares of Jreck similarly doubled in February, 1999, from 25 cents to 50
cents, as volume shot up from 250,000 shares to one million shares, while
Key Capital shares rose six-fold from 75 cents to $4.50 in October, 1998.
The SEC claims that while their Norrstar phone men were pumping the five
stocks to brokers, Mr. Heredia and Mr. Parra scalped a combined total of at
least 1.56 million shares for profits of at least $3.46-million. The pair
sold their shares through multiple foreign accounts under various names,
although no details are yet public. It is not known if these foreign
accounts were in Howe Street brokerages, which are popular conduits in
abusive U.S. penny stock promotions, in Toronto brokerages, which Mr.
Heredia used during the H & R affair, or offshore.
(c) Copyright 2002 Canjex Publishing Ltd. canada-stockwatch.com |
