Judge says Oval's principal can't take Fifth
Don Bauder
April 25, 2002
A federal judge here has ruled that a person subpoenaed to testify and produce records on behalf of a company may not take the Fifth Amendment.
Therefore, National City's Oval Financial & Investment Group – which has offshore bank connections – has been ordered to turn over corporate documents to the Securities and Exchange Commission.
The SEC, which is investigating the possible sale of fraudulent and unregistered securities by Oval, has been seeking the documents since December.
For months, the company's principal, O. (Obasi) John Valentine, kept the agency at bay by not appearing at arranged meetings and proposing to take the Fifth Amendment.
Finally, this month, U.S. District Judge Judith N. Keep ruled that Oval "is not a 'person' within the meaning of the self-incrimination privilege and may not invoke it."
Valentine did not return telephone calls to inquire if he intends to comply with the SEC's order.
Last May, the California Department of Corporations issued desist and refrain orders to Valentine.
He was ordered to stop claiming that Oval manages mutual funds, that Excelsior International Bank & Trust guarantees Oval's clients' interest and principal, that brokerage accounts are insured up to $11 million, and that the company has $1 billion under management.
Excelsior International Bank & Trust is based in the offshore tax haven of Barbados. In 1997, the Federal Deposit Insurance Corp. warned in a special alert that Excelsior was soliciting deposits on the Internet, and deposits in Excelsior are not insured by the FDIC.
Excelsior was claiming that its deposits were insured. The statement was "false and misleading," said the agency.
That same year, the Office of the Comptroller of the Currency warned that Excelsior was not authorized, supervised or regulated by any U.S. financial institutions regulator.
The offshore tax haven of Belize has its own Web site.
It indicates that Oval has business there, although the link to Oval is no longer operative. Still another Web site indicates that Oval has business in Liberia, but the link no longer clicks. Oval's own Web site appears to be shut down.
One Web site quotes Oval as selling "16 percent bond hot tax havens." Another offers tax lien certificates paying 8 percent to 40 percent. The SEC won't comment on the offshore aspect.
Looking into Oval, the San Diego Better Business Bureau "was unable to locate any licensing required to conduct the sale of investments, securities or insurance," according to a BBB report.
Computerized records reveal that Valentine went into Chapter 7 liquidation bankruptcy in 1996. There have also been criminal cases and a paternity suit against him in local courts. The severity and outcome of the charges have not been determined.
J.T. Wallenbrock
The heads of J.T. Wallenbrock, the Pasadena operation that the SEC says is almost certainly a Ponzi scheme, have taken the Fifth Amendment. As much San Diego money may have gone into Wallenbrock as into J. David, the notorious La Jolla-based Ponzi scheme of the 1980s.
Larry Osaki, who owns almost all of Wallenbrock, took the Fifth Amendment at his deposition April 12, according to James H. Donell, court-appointed Wallenbrock receiver. Shortly thereafter, two other officials, Van Ichinotsubo and David Daggett, also took the Fifth.
Wallenbrock was telling investors they were making 20 percent a quarter. But Wallenbrock officials admitted to both the SEC and to Donell that the company took in $230.1 million from investors, gave them back $102.6 million in interest and principal, and passed more than $124 million to Citadel Capital, a company in the same office funding corporate start-ups. Investors were told their money was going into accounts receivable factoring in Asia – not to Citadel Capital.
The bankruptcy attorney for Citadel Capital cited attorney-client privilege and refused to answer substantive questions at his deposition, according to Donell.
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Union-Tribune Library researchers Dwight Donatto and Danielle Cervantes assisted with this column.
Don Bauder: (619) 293-1523; don.bauder@uniontrib.com |
