Here is an interesting Khashoggi story
Mr. Fraser and Mr. Takkas, however, are perhaps best known for their 1986
roles as directors of Adnan Khashoggi's Skyhigh Resources Ltd. promotion on
the VSE. The Saudi arms merchant and Iran-Contra figure's aura helped
promote Skyhigh shares sky high to about $20 before collapsing. More
recently, Mr. Khashoggi has been a key associate of fugitive Thai financier
and offshore pro Rakesh Saxena.
Ontario Securities Commission - Street Wire
IDA's Xinos case just missed intriguing offshore world
Ontario Securities Commission *OSC
Wed 27 Feb 2002 Street Wire
See Investment Dealers Association of Canada (*IDA) Street Wire
by Brent Mudry
With securities regulators raising the heat on offshore accounts, the
Investment Dealers Association of Canada hopes its rejigged "know your
client" rule, requiring brokers to know more about the beneficial owners of
offshore accounts, will curb abuses. However, the IDA itself showed little
interest in offshore dealings in its latest case against a Howe Street
broker who serviced offshore accounts, when it fined John Anastasios Xinos
$27,500 last August.
The IDA notes little more than the fact that Mr. Xinos racked up losses of
$75,000 in unauthorized trading shares of Java Group Inc., Borneo Gold
Corp., International Capri Resources Ltd. and Winspear Resources Ltd. in
the account of client Euro-Trade International Ltd. between July, 1996, and
Jan. 23, 1997.
A Stockwatch peek into the untold Xinos/Euro-Trade story, however, reveals
considerable offshore activity.
Although unrelated to the IDA affair, in late June, 1996, a few weeks
before Mr. Xinos began his unauthorized trading in the Euro-Trade account,
Euro-Trade also signed a marketing agreement with an OTC Bulletin Board
promotion called Pro Tech Communications Inc.
Regulatory filings in the United States note that Euro-Trade operates out
of a postbox in the Cayman Islands, a popular offshore penny stock retreat,
and its representative was Howe Street promoter Donald Fraser. The same
day, Mr. Fraser and fellow Howe Streeters Costas Takkas and Martin Goldberg
each received options for 200,000 Pro Tech shares.
Besides Euro-Trade, Mr. Fraser showed up as a shareholder of Eurovest
Securities, Euro Investments and Euro Commercial between 1989 and 1993,
amongst other private companies.
Mr. Fraser and Mr. Takkas, however, are perhaps best known for their 1986
roles as directors of Adnan Khashoggi's Skyhigh Resources Ltd. promotion on
the VSE. The Saudi arms merchant and Iran-Contra figure's aura helped
promote Skyhigh shares sky high to about $20 before collapsing. More
recently, Mr. Khashoggi has been a key associate of fugitive Thai financier
and offshore pro Rakesh Saxena.
While Mr. Takkas and Mr. Fraser's Pro Tech associate, Mr. Goldberg, was not
involved in Skyhigh himself, he was a shareholder of Financial Multi-Media
Group, an offshore account operating out of a Grand Cayman postbox. A
Financial Multi-Media employee, Linford Pierson, served as a director and
officer of Skyhigh, alongside Mr. Takkas and Mr. Fraser, in 1986.
When Mr. Fraser, Mr. Takkas and Mr. Goldberg joined Pro Tech in 1996, the
company featured two interesting shareholders. The second biggest
shareholder, a Kansas-based chap called Harvey M. Burstein, held 350,000
shares, an 8.8-per-cent stake, while now defunct Harris McLean Financial
Group of the Cayman Islands held 220,000 shares.
Both subsequently suffered misfortunes. Harris McLean, once a familiar face
in Vancouver stock promotions, collapsed a few years ago in the wake of
Michael Mitton's 1996-97 Howe Street fiascos. Mr. Burstein was targeted
last August by the U.S. Securities and Exchange Commission.
In an unrelated prosecution, five days before the IDA quietly released its
Xinos settlement, the SEC launched administrative cease-and-desist
proceedings against Mr. Burstein and James D. Loeffelbein. The SEC cited
the pair with a host of violations involving trading of a penny stock,
Edgerton Musical Amplifiers Inc., in 1997, when they were working at BMA
Financial Services Inc., a registered broker-dealer.
Mr. Burstein and Mr. Loeffelbein allegedly bought discounted shares from
Edgerton, then started touting the stock to their clients and scalping by
dumping their own shares. Neither have yet settled, and it is possible they
are entirely innocent of the serious charges.
While Mr. Xinos's star offshore Howe Street client Euro-Trade was busy with
Pro Tech in 1996, that year also marked an interesting period for
International Capri, as several notable Howe Street faces entered the
stage. (The IDA claims Mr. Xinos traded Capri without authorization for
Euro-Trade, buying 20,000 shares on Oct. 17, 1996, and selling these shares
on Jan. 23, 1997.)
In the spring of 1996, one Clair Calvert joined International Capri as a
consultant and controversial Calgary broker Ron Brimacombe of Yorkton
Securities became a shareholder.
Mr. Calvert, an ex-broker, is best known for his role in Cycomm
International with close associate Phil Garratt, a controversial expatriate
Australian promoter who lives in West Vancouver's British Properties, one
of Canada's priciest neighbourhoods. Mr. Garratt is known for promoting a
ropeless, floatless, self-propelled crab trap and non-existent electronic
devices which once served as the key assets of Cycomm and its
predecessor-dog, Sonatel.
The previous fall, in October, 1995, an offshore backer, Sparten
Establishment AG, took a shine to International Capri as an investor.
Sparten, which operates from a postbox in the secluded offshore enclave of
Vaduz, Liechtenstein, has been represented by London-based financier John
Cathersides, a former broker from Kent who ended up grinding tires on the
VSE and pensioners at home.
Mr. Cathersides was a familiar name in Howe Street deals a decade ago, most
notably serving as a director of Pineridge Capital, the disastrous flagship
of VSE graduate Harry Moll, in 1989 and 1990. Sparten itself was a backer
of Mr. Moll's Cross Pacific Pearls.
Mr. Cathersides has been cagey about who he is fronting for with Spartan, a
secretive offshore trust. "Based on my understanding of Liechtenstein law I
am not at liberty to divulge the specific assets of Sparten but I am
permitted to state that the trust has assets valued in excess of
$20-million (U.S.)," stated the former British broker in a court affidavit.
Sparten's court-filed corporate resolution states that its principal
director is Dr. Alfred Steinbrugger, who has appeared in other Howe Street
deals, including in early 1999 representing Corevalor Investments & Finance
Establishment, the largest buyer in a private placement of Biometric
Security shares.
Corevalor bought 2.3 million units, priced at 15 cents, of Biometric, a
Vancouver Stock Exchange promotion of Patrick McCleery, an old associate of
Mr. Cathersides's old colleague, promoter Mr. Moll. Another offshore
company associated with Dr. Steinbrugger, Juricon Truehand Anstadlt,
received a finder's fee in May, 1998, for a private placement of shares of
Vancouver promoter Don Farrell's Air Packaging Technologies.
While this 1995-96 International Capri cast of Mr. Xinos, Sparten, Mr.
Brimacombe and Mr. Calvert might seem dated, the company maintains an
interesting flavour.
International Capri changed names in July, 2000, to Apiva.com Web Corp.,
soon after naming Patrick McGrath as a director, while Capri backer Mr.
Calvert joined Apiva's board earlier this year.
Mr. McGrath, like Mr. Calvert, is a key associate of Mr. Garratt, the
Sonatel-Cycomm crab-trap man. Mr. McGrath, 30, recently served as chief
financial officer for Shopping Sherlock, an OTC Bulletin Board promotion of
Mr. Garratt. After bottoming out at 15 U.S. cents last April, Apiva shares
traded at 43 U.S. cents on the pink sheets last August, down from a high of
$1.08 (U.S.) the previous September.
Apiva's current paltry plight pales by comparison with Mr. Calvert, Mr.
Garratt and Mr. McGrath's 1999 promotion of C3D Inc., also known as
Constellation 3D. After Mr. Garratt's group of offshore associates bought
three million shares of C3D at 12.5 U.S. cents in early 1999, the shares
soared from $1.75 (U.S.) that April to a peak of $98.37 (U.S.) on Dec. 30,
1999.
While Mr. McGrath merely served as an "independent consultant" to C3D, the
company's New York-based legal director, Michael Goldberg was not shy of
praising Mr. Garratt and Mr. Calvert for their contribution to his company.
"I have only nice things to say about these guys," he told Stockwatch.
Another notable West Vancouver promoter, Rene Hamouth, showed up in late
1999 as the signatory for Winnburn Advisory, a C3D backer based in the
secretive offshore haven of Nevis in the West Indies. Although Mr. Hamouth
is based in Vancouver, C3D is based in New York and Winnburn is based in
the Caribbean, the offshore company used a Swiss address care of David
Craven, using post office box 691 at the Geneva airport.
Years earlier, another much-more-famous Geneva postbox was a favourite mail
drop for the backers of Mr. Garratt's Cycomm. This other drop, post office
box 423 at the Geneva airport, was used both in the Cycomm promotion and
Asil Nadir's disastrous Polly Peck International, the subject of a major
investigation by Britain's Serious Fraud Office.
Polly Peck shares were sold through a number of Swiss letterbox companies
established with the help of Michael Laidlaw, the former head of a London
brokerage, and Rhone Finance executive Roger Leopard. In the aftermath of
Polly Peck's collapse, Mr. Nadir fled Britain for the sunnier climes of
Cyprus, which enjoys no extradition treaty. Mr. Laidlaw remains active on
the Canadian Venture Exchange, or CDNX, the successor to the VSE, to this
day.
As for Mr. Xinos, while his termination by CT Securities in January, 1997,
marked the end of his brokerage career, he still pops up in bulletin board
deals from time to time.
Mr. Xinos joined NetworthUSA.com Inc., joining the reactivated shell as
sole director, president, secretary and treasurer on July 15, 1998, and
kept the seat warm until January, 1999. NetworthUSA changed names to Ebux
Inc. in 2000 and arranged several deals with companies in the offshore
enclave of Luxembourg.
Mr. Xinos also served a six-month stint in the latter half of 1998 as
president, secretary and treasurer of Ibiz Technology Corp., another OTC-BB
promotion.
The IDA's $27,500 fine of Mr. Xinos last August appears to be one of the
less interesting aspects of Mr. Xinos's business.
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