SEC files new $2.35-million (U.S.) Durante suit
B.C. Securities Commission *BCSC
Tuesday January 21 2003 Street Wire
See Securities and Exchange Commission (U-*SEC) Street Wire
by Brent Mudry
In the latest development featuring Vancouver's most famous money laundering account, the United States Securities and Exchange Commission has filed a new $2.35-million collection suit against Mafia-linked career fraudster Edward Durante, his offshore accounts and Terry Neal's Exchange Bank and Trust, which operated out of the same busy postbox in Nevis. (All figures are in U.S. dollars.)
In a statement of claim filed Friday in the Supreme Court of British Columbia in Vancouver, the SEC seeks $2.35-million, including $1.94-million in disgorgement and $413,000 in prejudgment interest, against Mr. Durante and four of his offshore companies: Berkshire Capital Partners Inc., Dottenhoff Financial Ltd., Galton Scott & Golett Inc. and Commonwealth Associates Ltd. Of this amount, the suit seeks $1.26-million, including $1.04-million in disgorgement and $222,000 in prejudgment interest, against Exchange Bank, representing the specific Durante funds traced into this money laundering account.
"The funds deposited with EBT are held in a bank account in the name of EBT located at a branch of the Bank of Montreal in Vancouver, British Columbia," states the suit. Exchange Bank and Trust, an Olympics-sized laundering operation, purportedly registered in Nevis and Nauru, has had its main operating account at Bank of Montreal frozen since April, 2000, by the British Columbia Securities Commission, on behalf of the SEC.
The latest collection suit to help put B.C. on the map follows a Jan. 8 final judgment in United States District Court of the Southern District of New York. The allegations in the B.C. action, filed by Vancouver lawyer Gregg Rafter of Skwarok & Breivik, have not yet been proven in court and no statements of defence have yet been filed. The SEC had not yet announced any Durante settlements.
The current suit is believed to stem from the SEC's action against Mr. Durante in the fraudulent promotion of U.N. Dollars Corp., one of several stocks the career violator traded through Vancouver broker Trevor Koenig of Union Securities. In a related case, Mr. Durante later pled guilty, ratted on his alleged partners in crime, and set up Mr. Koenig and former Vancouver offshore accountant Michael K. Graye in separate stings. After several delays, Mr. Koenig, in custody since his border arrest on the Labour Day weekend in 2001, faces sentencing on Thursday in New York.
The latest action comes two months after the SEC launched a landmark bid to seize $17.53-million from Mr. Durante from the frozen EBT account at Bank of Montreal, as part of a $39.88-million default judgment against the fraudster-turned-fink in the WAMEX Holdings Corp. case. In a parallel criminal proceeding, Mr. Koenig helped send WAMEX former chief executive officer Mitchell Cushing to jail after singing in court last June.
In other related cases with a Vancouver flavour, Itex Corp. fraud mastermind Mr. Neal, who founded and heads Exchange Bank, was arrested Dec. 27 in his hometown of Portland, Ore., on tax evasion charges, and a separate Internal Revenue Service probe reveals $115-million was funnelled through the EBT account at Bank of Montreal in a two-year period before the account was frozen. Offshore bank peddler Jerome Schneider, who sold Mr. Neal the EBT shell, was indicted Dec. 19, and his co-accused, Los Angeles lawyer Eric Witmeyer, pled guilty on Friday and agreed to rat on Mr. Schneider.
Mr. Durante's U.N. Dollars was a particularly outlandish promotion, even by OTC Bulletin Board (or Vancouver) standards. In early 2000, the company, based in Jacksonville, Fla., claimed to have broad real estate interests, a major gypsum deposit in Wyoming, suppliership rights for purported revolutionary gyproc panel, and pending deals to acquire California mining claims with several million ounces of gold and silver reserves and a West Virginia-based oil and gas operation with reserves in excess of $3-billion.
U.N. Dollars also claimed a pending deal with a Colorado oil and gas company. "This company controls operations in Utah, Australia and Vanuatu, an island in the South Pacific," stated U.N. Dollars. "Preliminary estimates put reserves of the Vanuatu concession in excess of $4-billion."
To run this supposed billion-dollar empire, U.N. Dollars had a lean operation, with just two employees, Ronald E. Crews, its chairman and chief executive officer, and Harold F. Harris, its executive vice-president and treasurer. Although U.N. Dollars was originally formed in 1994 when Mr. Crews did a reverse takeover of Ophir Gold Mines, a Colorado penny shell, the company was reincorporated in 1996 in the Dominion of Melchizedek.
Records from this jurisdiction are hard to obtain, as the Dominion of Melchizedek, the first country to exist solely in cyberspace, was hatched years earlier by another fraudster, and the only promotions using Melchizedek are either scams or spoofs. Nonetheless, U.N. Dollars filed a bankuptcy protection application in Melchizedek in 1998.
In U.N. Dollars' purported gold-and-silver deal, the supposed vendor was Countryland Wellness Resorts Inc., another colourful penny stock promotion, which featured a bogus prospectus cut-and-pasted from Akamai Technologies, a California gold property, gold missing from a storage locker, dubious gold certificates, suspended shares, an electrical contractor and an intriguing longevity treatment. Countryland also featured one director, broker Lewis Akmakjian, who in 1995 ended a five-year management stint with Toluca Pacific Securities Corp., a notorious brokerage with numerous links to career felons and organized crime.
Besides the Melchizedek connection, U.N. Dollars also featured as its key tout Henry Weingarten, 54, of New York, an investment adviser, not registered with the SEC or any state, who is a self-described "financial astrologer." Mr. Weingarten, who owns and operates the Astrologers Fund Inc., touted U.N. Dollars on his stock-picking site, www.afund.com, but forgot to mention he was paid to do so.
Mr. Weingarten also touted such Durante promotions as WAMEX and Absolutefuture.com, and such non-Durante Howe Street promotions as Roger Abou-Rached's International Hi Tech Industries, now insolvent stox.com Inc. and Doug Mason's Clearly Canadian Beverage. In an SEC consent settlement last March, the astrologer-tout was fined $15,000 and censured in the U.N. Dollars case.
The biggest asset of U.N. Dollars, however, was promoter Mr. Durante, posing as "Ed Simmons," who received millions of shares through offshore nominee accounts to promote the worthless stock.
The SEC's civil complaint in the U.N. Dollars, filed in October, 2001, makes numerous references to Mr. Durante's Vancouver dealings, mainly with Union Securities and Exchange Bank and Trust's Bank of Montreal account. (The only other brokerage noted, RBC Dominion Securities of Toronto, allegedly serviced another offshore account controlled by Mr. Durante, Prudential Overseas Co. Ltd. of the Turks and Caicos Islands.)
The SEC claims that between December of 1999 and February of 2000, Mr. Durante transferred 5.8 million U.N. Dollars from various accounts held in the names of the offshore entities he controlled to three brokerage accounts at Union Securities in Vancouver." The Union accounts that received these shares were opened in the names of Berkshire, Galton and Dottenhoff. Durante also used the Commonwealth account to trade UNDR shares," states the regulator.
The SEC claims also claims that starting in December of 1999, Mr. Durante began buying U.N. Dollars shares in his offshore Union accounts "to create an artificial market" for the penny stock. Starting the next month, Mr. Durante bought and sold U.N. Dollars shares in the Berkshire, Galton, Dottenhoff and Commonwealth accounts, creating the appearance of a market for the securities. "He was responsible for the majority of the buy and sell orders on multiple days of trading," states the SEC. "By March 13, 2000, when the commission suspended trading, Durante had created artificial volume by purchasing over three million shares of UNDR in the Union accounts, and by selling more than 3.2 million shares from the Union accounts."
"Profits from stock trading in brokerage accounts held in the names of Berkshire, Dottenhoff, Galton and Commonwealth were transferred to EBT's bank account at the Bank of Montreal. In April 2000, the British Columbia Securities Commission froze EBT's account at the Bank of Montreal on evidence of money laundering," states the SEC in its complaint.
"Between February and April, 2000, Durante transferred over $19-million of trading profits, including the profits on the UNDR sales, from his Union Securities accounts to an account at Bank of Montreal in Vancouver, British Columbia, maintained in the name of Exchange Bank & Trust," states the SEC.
"According to documents produced by the British Columbia Securities Commission, of the approximately $19.6-million deposited by Durante at EBT, in the names of his offshore entities, approximately $18.2-million remains on deposit at EBT," stated the SEC in October, 2001.
bmudry@stockwatch.com
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