*** LENTS-IVSOE RAY DIRKS/MOB International
Standards Group**
IVSO: DJN: DJ IN THE MONEY: Investco CEO's Link To 'Mob On Wall Street'
(Dow Jones 05/06 13:55:47)
By Carol S. Remond
A Dow Jones Newswires ColumnNEW YORK (Dow Jones)- Joseph Lents has a problem.
U.S. securities regulators have halted trading in the shares of the latest
company he runs, a financial startup called Investco Inc. (INVSO).
That trading halt follows a report by this newswire that a key acquisition
the company says it made never happened.
But it's not the first time a company headed by Lents has caught the
attention of federal authorities. In the mid-1990s, Lents entered into a
deal with a man who was later identified as a figure in the infamous "Mob on
Wall Street" affair.
The Lents involvement in that case began in the summer of 1994 after an
aggressive short seller named Philip Gurian began putting pressure on the
shares of the company Lents ran at that time called International Standards
Group Inc.
Gurian recalls having his first talk with Lents while Gurian was vacationing
at the swanky Byblos Hotel in St. Tropez on the French Riviera.
During that telephone conversation, according to Gurian, the two agreed that
Gurian would stop short selling shares of International Standards Group. In
exchange for that promise, Lents would issue shares of International
Standards Group at a steep discount to firms in the Bahamas controlled by
Gurian and his associates under a U.S. securities provision called
Regulation S, which allows sales of unregistered stock to foreign investors.Gurian and four others were charged in 1999 in a 21-count federal indictment
including charges of mail fraud, wire fraud, securities fraud, interference
with commerce by extortion, conspiracy to commit money laundering and
witness tampering. Lents has never been charged with wrongdoing although the
stock transactions with firms controlled by Gurian and others were mentioned
in the federal indictment. Lents has not been available to answer questions.
A lawyer representing Lents has declined to comment on Lents' previous
involvement with Gurian.
Gurian pleaded guilty to one count of conspiracy to commit mail fraud, wire
fraud and securities fraud and one count of mail fraud. He is awaiting
sentencing.
According to the indictment by the U.S. District Court for the Middle
District of Florida, here's a typical way the scam worked:
Several small U.S. companies issued deeply discounted stock under Regulation
S to several mob-controlled firms in the Bahamas. These firms would turn
around and, through two Florida companies secretly controlled by Gurian -
Sovereign Equity Management Corp. and Falcon Trading Group Inc.- sell the
shares back to the U.S. public at market value, reaping a huge profit.
Published reports have indicated that Gurian controlled Sovereign Equity and
Falcon Trading on behalf of Philip Abramo, a man who federal investigators
identified as a captain in the DeCavalcante organized crime family from New
Jersey.
The 1999 indictment alleges that around November 1994, Lents filed false and
fraudulent subscription agreements for a Regulation S distribution of stock
to Caspian Consulting Ltd., one of the Bahamas corporations set up by Gurian
and others.
The indictment also states that between Jan. 1, 1995, and July 23, 1997,
Lents filed false and fraudulent Regulation S registration statements with
the Securities and Exchange Commission, selling International Standards
Group stock for 50 cents a share to Caspian Consulting, Maraval & Associates
Ltd. and Limelight Ltd., two other Bahamas corporations.
The SEC declines to comment on International Standards Group and its
issuance of Regulation S shares.
Lents later told the government that Gurian threatened his life if he told
the truth to federal agents, according to the indictment. Gurian told Dow
Jones Newswires he never threatened Lents.
SEC filings show that from September 1995 to December 1996, International
Standards Group and its successor company, Total World Telecommunications
Inc., sold $37.9 million worth of stock under Regulation S.
So much stock that by September 1996, Caspian Consulting and another
Bahamian firm called Reinerman Holdings Ltd., had become major shareholders
of International Standards Group, seemingly controlling 3% and 6% of the
company's stock, respectively.
International Standards Group's transactions with mob-controlled offshore
companies didn't stop at Regulation S stock issuance. A press release shows
that Lents' company entered into a joint venture with Maraval in September
1995 to market real estate and financial services via the Internet through
Florida Homes Info-Net, a wholly owned subsidiary of International Standards
Group.
The SEC amended Regulation S in early 1998, acknowledging in a release to
the public that it's "been used as a means of perpetrating fraudulent and
manipulative schemes, especially schemes involving the securities of thinly
capitalized or 'microcap companies'." Specifically, the SEC lengthened the
period during which offshore buyers of U.S. securities must hold shares
bought under Regulation S to one year from 40 days, making it much more
difficult to quickly profit by reselling those securities.
The 1999 Federal indictment that detailed Lents' Regulation S activity named
five defendants: Gurian, Abramo, Glen Vittor, Louis Consalvo and Barry
Gesser. Abramo and his bother-in-law Consalvo were separately indicted in
2000 in New York on charges including securities fraud and murder. Abramo
and Consalvo are trying to withdraw their Florida plea agreements.
Now, Lents is chief executive of Investco. Trading in Investco's shares has
been halted by the SEC until May 10. As reported by Dow Jones Newswires last
month, the reported acquisition of a Costa Rican insurance company by
Investco never took place, a fact the company failed to tell investors. The
company had touted the purchase in press releases as the cornerstone to its
plan to transform itself into a financial services provider.
Dow Jones Newswires also raised a number of questions about the number of
Investco shares outstanding and about Michael Zapetis, chairman of
Investco's controlling shareholder, First International Finance Corp.
Zapetis is a convicted drug smuggler who had a couple of run-ins with
Florida state banking regulators, none of which was disclosed to Investco
shareholders in any of the company's public SEC filings or press releases.
Lents has not been available for comment about Investco's activities. And
the SEC declined to comment further about the trading halt.
On Monday, the SEC halt of trading in Investco stock appears to have cost
the company its listing on the Over-The-Counter Bulletin Board. Nasdaq
delisted the company because there was no active quote for Investco shares
for four consecutive days.
By Carol S. Remond; Dow Jones Newswires; 201 938 2074;
carol.remond@dowjones.com. |
