LMLP is a Vancouver based check processing company that had a rather unexplained run to 80ish during the bubble and subsequent dive to back to where it started in the single digits.
It has now resurrected again and with it's current market cap of 230+ million on rather paltry revenues.
Suspension fails to stop banished insiders
David Baines, Sun Business Reporter
June 7, 2000
When stock players Don Choquer and Robert Moore were banished from the B.C. stock market in March 1997, they didn't really go anywhere.
They maintained their office on the 16th floor of 1140 West Pender, just a few feet from their Vancouver-based public company, LML Payment Systems Inc.
They also retained their enormous stock positions, consisting of several million shares each.
Also, according to documents obtained by The Vancouver Sun, they continued to be actively involved in LML's affairs.
In March 1997, Choquer was suspended for two years and Moore for five years for stock- trading offences.
Such suspensions are commonly handed to stock-market offenders. They can range from a few months to life and represent the ultimate sanction that the B.C. Securities Commission can impose on players. Under the terms of their suspensions, Choquer and Moore were ''prohibited from becoming or acting as a director or officer of any reporting issuer or any issuer that provides management, consulting or administrative services to a reporting issuer.''
Lang Evans, the commission's deputy director of investigations, said in an interview that the general intention of such suspensions is to remove securities offenders from the capital markets.
''They are prohibited from acting as directors and officers because these are fiduciary responsibilities, positions of trust.''
He said persons under suspension may act as employees or consultants, ''but there comes a point where any position, although it may be called an employee or a consultant, becomes an officer or director. That's dictated by the facts in each circumstance.''
Choquer -- while serving his two-year suspension -- became one of two authorized signatories on the bank account for LML's wholly-owned operating subsidiary, ChequeMark Inc.
He also signed purchase orders on behalf of ChequeMark, negotiated lease space, attended weekly meetings and became so intimately involved in the company's affairs that he was referred to as ''general manager'' on several corporate documents.
In an interview Friday, Choquer refused to discuss the matter: ''There's nothing to respond to. I don't know what you are talking about,'' he said.
Meanwhile, Moore -- still serving his five-year suspension -- was also involved in LML's corporate affairs.
According to court documents, Moore agreed in June 1998 to give an investor-relations specialist options to buy several hundred thousand shares of LML in return for promoting the company.
Whatever their involvement, LML's stock-market fortunes improved dramatically. The stock, which trades on Nasdaq, jumped from a low of $3 last year to a high of $73 by March 27.
At that price, Moore' stock holdings were worth $365 million and Choquer's $145 million.
While the stock has performed well, LML's business -- providing cheque authorization and collection services to retail merchants -- has been a money-loser.
During the nine months ended Dec. 31, the company generated only $486,634 in revenues and lost $1.6 million. No financial statements have been issued since then.
By the beginning of May, LML's share price had dropped to the $20 level and, despite general market turbulence, has moved laterally since. It closed Tuesday at $20.94 on heavy volume of 699,900.
Moore's regulatory problems date back to 1994, when the B.C. Securities Commission cited him for failing to report the purchase and sale of millions of shares of two VSE-listed companies: Cam-Net Communications Network Inc. and Hovik Medical Corp.
The commission also alleged Moore and several associates were involved in a scheme to enable him to illegally margin his controlling share position in Hovik, and thereby finance trading in both Hovik and Cam-Net shares.
The associates were Choquer, Gaines, Ness, Phyllis Moore (Robert Moore's sister) and James Stallwood.
In March 1997, Moore settled the allegations against him by admitting he bought and sold shares of Cam-Net and Hovik without filing insider reports. He also admitted he entered into an illegal trading scheme with Choquer.
Moore agreed to serve a five-year suspension and pay a $100,000 penalty. Choquer agreed to a two-year suspension and $50,000 penalty.
The commission did not pursue allegations against the other respondents.
When their suspensions came into effect, Moore and Choquer remained in a private office (which they shared) just a few feet from LML's office.
They also retained their share positions. According to insider trading reports, Choquer owned 2.2 million shares at the end of April, and Moore had acquired -- or had the right to acquire -- 5. 1 million shares.
Their former Cam-Net colleagues remain involved in LML, including Gaines, who serves as president, and Ness, who handles investor relations. Moore's sister, Phyllis, also became an employee of the company and his other sister, Linda, became a director.
Choquer, despite his suspension, remained intimately involved in LML's affairs. Documents obtained by The Sun shows that:
l On May 4, 1998, Sheft Ticks, a brokerage firm in Boca Raton, Fla., issued a draft report on the company. A copy was sent to Stallwood, who forwarded a copy to Choquer with a covering note: ''Please review and get back to me ASAP.'' Choquer made several hand-written notations suggesting revisions.
l A May 25, 1998 organizational chart for ChequeMark designates Choquer as general manger of information systems and administration. Another document, entitled ''moving plan,'' indicates Choquer is to receive business cards with the title ''GM.''
l An undated corporate signature card for ChequeMark's bank account in Florida shows Choquer as one of two authorized signatories. The other is LML director Wendy Ogilvie.
l On March 30, 1998, Choquer sent a letter to Dunes East Plaza Inc., in Palm Coast, Fla., proposing that ChequeMark ''take over the tenancy of the entire second floor ... on the same terms and conditions as per the previous lease. ''
l Minutes of a June 16, 1998 weekly management meeting identify participants as Choquer; directors Gaines, Ogilvie and Linda Moore; and several others. A log book for May 1998 shows that Choquer spent long hours at ChequeMark's office in Florida.
One document indicates that Choquer was sensitive to restrictions imposed by his suspension. Notations on a ChequeMark ''to do'' list state: ''Can Don be a signee -- he is to ask lawyer, '' and, ''Can Don be on a management committee?''
Robert Hills of Lake Worth, Fla., who sold the ChequeMark patents and cheque-processing system system to LML in March 1998, said in an interview Monday that Choquer ''acted much in the capacity of chief operating officer.''
Hills said he worked with Choquer from March 1998, when LML acquired the patents and system from him, until August 1998, when his relationship with LML dissolved in acrimony and litigation.
He has since been sued by LML, which is trying to reclaim the shares that it agreed to pay him for the acquisition.
''He (Choquer)was the on-site person who made sure everything was going according to plan,'' said Hills.
''Pat Gaines was rarely there, and only a figurehead when he was. He worked almost exclusively with traders and brokers.''
Like Choquer, Moore also appears to have maintained his involvement in the company.
According to a June 12, 1998 letter, Moore -- through his private company, Destiny Petroleum Inc. -- agreed to provide Todd Moore (no relation) options to acquire 250,000 shares of LML for $1.50 US each in return for providing investor relations services for LML.
Todd Moore later filed lawsuit in Texas alleging Robert Moore reneged on the deal. He asserts that due to the share-price increase, those options were now worth more than $10 million US. Moore has denied the allegations.
On April 24, 1998, Beth MacDonald, a lawyer at McCarthy Tetrault in Vancouver, sent a letter to ChequeMark to the attention of both Gaines and Moore addressing several corporate matters.
''I will need clear instructions on the first nine issues set out below before a new marketing rights agreement can be prepared, '' she wrote.
Hills told The Sun that Robert Moore was involved in virtually all major decisions, negotiations and legal matters: ''If there was anything of substance, he would be updated or actually participate. He would call, or I would call him because I recognized him as the one who was responsible.''
He said Choquer and Moore talked to each other regularly on the phone: ''I referred to it as 'bowing to the west,''' he said.
Phone records show that in May and June 1998, 10 calls were placed from ChequeMark office in Florida to Lancia Investments, Moore's private company in Vancouver.
Malcolm Toomer, who worked at ChequeMark on a contract basis from March to May 1998, also said Moore ran LML's affairs.
''If Patrick Gaines or Don Choquer or Wendy Ogilvie wanted an answer on any major matter, they had to call Bob Moore,'' he said in an interview from Savannah, Ga.
He said that, after Robert Hills was turfed from the company, Moore came to ChequeMark's office: ''He came here for several weeks. He took over Bob's desk. What he was actually doing, I don't know.''
Evans declined to say whether commission investigators are reviewing Choquer's and Moore's involvement in LML's affairs while under suspension. |
