SEC seeks to award Perusquia a lifetime ban
2002-09-17 08:53 PT - Street Wire
by Brent Mudry
Convicted big-league broker Enrique Perusquia faces the potential prospect of a lifetime ban from the brokerage industry, after pleading guilty to using offshore accounts in the British Virgin Islands to defraud a wealthy Mexican client of $68-million relating to a number of Howe Street gold mining penny stock promotions. (All figures are in U.S. dollars.) The United States Securities and Exchange Commission launched an administrative proceeding against the former Lehman Brothers and PaineWebber broker on Monday.
Mr. Perusquia, a former high-level broker with Lehman and PaineWebber, defrauded client Francisco Lerma of Mexico City, who lost more than $68-million over a six-year period ending in 1998, by stuffing his accounts with shares and convertible debentures of American Resource Corp., two of its subsidiaries: American Pacific Minerals and Red Rock Mining Corp., and Northern Orion Explorations, a subsidiary of Vancouver promoter Wally Berukoff's Miramar Mining, in return for secret offshore kickback commissions. No allegations of wrongdoing have been against by any of the public companies or other parties.
The case is believed to be the biggest-ever single-client fraud related to Howe Street, the centre of dealings for the former Vancouver Stock Exchange, dubbed Scam Capital of the World by Forbes magazine a decade ago. "We were assisted in our investigation by the British Columbia Securities Commission and the Ontario Securities Commission," SEC attorney Christopher Cooke of San Francisco told Stockwatch. Mr. Perusquia, who worked with Lehman in Zurich and with PaineWebber in New York and San Francisco, moved in recent years to Jackson Hill, Wyo., where he lived until he was sent to prison on June 22.
Mr. Perusquia pled guilty to two counts of securities fraud on Feb. 11, less than two weeks after being charged in United States District Court for the Northern District of California. The criminal charges capped a two-year investigation by the Federal Bureau of Investigation and coincided with the filing of a civil complaint by the SEC. In his guilty plea agreement, Mr. Perusquia admitted he received more than $1.3-million in cash and more than 600,000 shares in undisclosed commissions from American Resource and American Pacific for his unauthorized trades for Mr. Lerma, the wealthy Mexican client he serviced and fleeced.
Last November, the New York Stock Exchange won a record $429.5-million arbitration award against Mr. Perusquia in the Lerma case. The NYSE panel awarded $208.7-million in actual damages, $1.1-million in expenses, $11-million in attorneys' fees and $208.7-million in punitive damages. The arbitration award came after Mr. Lerma reached undisclosed settlements with PaineWebber, Lehman and Chase Manhattan Private Bank (Switzerland).
In the SEC administrative proceeding launched this week, the regulator seeks an order permanently banning Mr. Perusquia from any future involvement with any broker or dealer. A hearing date has not yet been set.
bmudry@stockwatch.com |
