| | OSC bans Weltman from trading
Former Laser Friendly CEO reaches deal that bars him from top corporate spots
By KAREN HOWLETT
Thursday, January 9, 2003 – Print Edition, Page B3
TORONTO -- Larry Weltman, one of two Ontario businessmen convicted in the United States of defrauding a British bank of $32-million (U.S.), has been banned for life from trading securities in the province and from acting as an officer or director of a public company.
Under a settlement agreement with the Ontario Securities Commission, Mr. Weltman has also agreed to resign any position he holds as an officer or director of any public company and pay $30,000 toward the commission's costs.
The settlement, which was approved by a panel of commissioners at a hearing yesterday, relates to allegations by the OSC's enforcement arm that Laser Friendly Inc., an Internet gambling company run by Mr. Weltman and Jack Banks, misused share certificates back in the mid-1990s.
The company's shares traded on the Toronto Stock Exchange at the time.
Mr. Banks, who along with Mr. Weltman was indicted in the United States on charges of grand larceny and fraud in connection with Laser Friendly's operations, has not reached a settlement with the commission.
At yesterday's hearing, OSC staff lawyers argued that Mr. Banks' U.S. guilty plea should be submitted as evidence. But Edward Greenspan, Mr. Banks' lawyer, argued that the plea should not be used against his client because he has hired a U.S. lawyer to bring an action to overturn the conviction and he felt he had no choice but to plead guilty.
Mr. Banks and Mr. Weltman were facing 10 years in prison if they didn't plead guilty, Mr. Greenspan said, adding that Mr. Banks spent several months in jail, including three weeks in maximum security at Rikers Island, N.Y.
"Faced with this grim and astounding information, they understandably each pled guilty to one count and a fine in order to get out of the clutches of an unbelievably harsh system of justice," he said.
But OSC lawyer Karen Manarin told the hearing there was no record of an appeal filed in the United States and that the deadline for taking such action had long passed.
The OSC statement of allegations says the Laser Friendly scheme involved raising money by issuing millions of dollars worth of share certificates, without actually issuing the shares. The scheme was exposed, the OSC alleges, when one of the companies that had purchased the Laser Friendly certificates tried to use them as security for a loan.
Laser Friendly, which made lottery products, was later known variously as Gaming Lottery Corp., GLC Ltd. and GalaxiWorld.com Ltd.
The OSC settlement notes that the U.S. Securities and Exchange Commission has found that the Laser Friendly scheme contributed to fraudulent activity, and that Mr. Weltman pleaded guilty to unrelated fraud charges in September, 2000.
In the plea bargain, Mr. Weltman and Mr. Banks each agreed to pay $500,000 (U.S.), $100,000 of which went to New York state and $400,000 toward compensating shareholders of Gaming Lottery who sued the pair separately.
In addition, they were placed on probation for five years and cannot return to the United States unless required to by court order.
The two were convicted of stealing $32-million from the New York office of a subsidiary of National Westminster Bank PLC, by artificially inflating the value of their company's stock.
They led the bank to believe they had the regulatory gambling licences needed to operate gambling companies in Washington but they did not.
Mr. Banks, a Moroccan native who is also known as Jacques Benquesus, was chief executive officer of Laser Friendly. Mr. Weltman was chief financial officer.
The hearing continues today. |
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