DJN: =DJ IN THE MONEY: HiEnergy And A Man Named Gurian
(Dow Jones 02/21 10:16:56)
By Carol S. Remond
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--HiEnergy Technologies Inc. (HIET) is like a lot of
small companies looking to break into the big time.
It's short on earnings, it pays a lot of bills by issuing new stock and it
carries a "going concern" statement by its auditor.
And the development stage company has big plans. It has developed a
technology called "Atometer" which it says can be used for many things that
have become relevant to all of us today - airport security screening, border
patrol, customs drug and contraband screening and chemical weapons
detection, among other things.
Oh, and a couple of investors have a connection to Philip Gurian, a man who
has pleaded guilty to federal charges that include mail fraud and conspiracy
to commit securities fraud. He awaits sentencing.
And a one-time market maker in the company's stock, Metro Trading Inc., also
has a connection to Gurian. A number of its employees had worked at
Sovereign Equity Management Corp. Sovereign, with Falcon Trading Group Inc.,
are two shuttered brokerage firms in which the federal government alleged
Gurian had a hidden interest and exercised control over trading decisions.
The charges against Gurian came in connection with the "Mob on Wall Street"
case in the U.S. District Court for the Middle District of Florida.
Published reports have identified him as a front man for Philip Abramo, a
captain in the Decavalcante organized crime family. Abramo awaits trial on a
series of charges, including murder and conspiracy to commit securities
fraud.
Gurian declined to comment on HiEnergy.
The Gurian connection with the company begins with a person named Rheal
Cote, who, according to filings with the Securities and Exchange Commission,
at one time controlled almost 10 million shares, or 61% of SLW Enterprises
Inc. As part of a reverse merger through which SLW acquired HiEnergy, Cote
agreed to cancel most of his stock and by late April owned 300,000 shares in
the newly public HiEnergy. SEC filings also show that Cote was issued a
warrant to purchase 150,000 shares of HiEnergy at $1 a share in May 2002.
Attempts to reach Rheal Cote didn't lead anywhere. Except to an address
listed as his in SEC filings. The address is that of a condominium owned by
a woman named Jeannine Gurian. She is Phil Gurian's mother. She didn't
return a telephone call.
Then there is an entity called Benil Finance Ltd., which lists an address in
the Bahamas. Benil at one point controlled 8.6% of SLW, according to SEC
filings. But you can't learn much more about it. For starters, it should be
registered with the Bahamian company registry according to that country's
securities commission. But an official with the commission said it isn't
registered.
Benil's address, listed in an SEC filing, happens to show up in documents in
proceedings brought by Edwin Mishkin, the court appointed trustee in the
bankruptcy of Adler Coleman Clearing Corp. Benil's address is the same as a
number of offshore firms named in the "Mob on Wall Street" case that Gurian
and others allegedly used to fraudulently obtain discounted stock that was
sold into the market for a profit through Falcon and Sovereign.
O.B. Pindling, the lawyer whose office is located at Benil's address in the
Bahamas, declined to comment.
A document in a case brought by the trustee of Adler against Gurian and a
number of Bahamian firms identifies Pindling as a "Bahamian who works for
Gurian". Adler collapsed after the demise of brokerage firm Hanover,
Sterling & Co. and Mishkin filed a number of suits, accusing shortsellers,
including Sovereign, Falcon and Gurian of causing Hanover's failure. No
claim was brought against Pindling in that case.
It's unknown what Benil and Cote's interests in HiEnergy are currently.
Benil Finance has not filed any reporting documentation since its original
ownership filing in March 2002. HiEnergy's vice president Michal Levy
declined to comment on the company's investors.
Back in the United States, one of the market makers in HiEnergy stock late
last year was a firm called Metro Trading Inc., a small Deerfield Beach,
Fla. brokerage which back then wrote a positive report on HiEnergy.
A handful of Metro employees had worked previously at Sovereign, a brokerage
firm which according to federal court and NASD documents, was controlled by
Gurian.
Despite HiEnergy's lack of revenues, Metro Trading's officer Christopher
Tavares gave the company a buy rating and a six-month price target of $3.50
to $4 share last October due to its "highly sought after and breakthrough
bomb-scanning technology."
Florida incorporation documents show that Metro was registered to do
business in Florida in early 2000. Florida Department of State Division of
Corporations documents show two principals for Metro Trading, Tavares and
Greg Vittor.
Greg Vittor is the little brother of Glen Vittor, a man who was indicted
with Gurian and Abramo back in 1999.
Gurian, Abramo, Glen Vittor, Louis Consalvo and Barry Gesser were indicted
in Florida 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.
Abramo and his brother-in-law Consalvo were separately indicted in Federal
Court in Manhattan in 2000 on charges including murder and securities fraud.
The two had first pleaded guilty in the Florida case but are fighting to
have their pleas withdrawn. Glen Vittor and Gesser remain defendants in the
Florida case.
Greg Vittor wasn't involved in the Florida "Mob on Wall Street" case in
which his brother is a defendant.
But Greg Vittor was embroiled in a NASD case in 1998.
In that case, the NASD found that Greg, his brother Glen, Sovereign, Falcon,
John Fiero and others took part in a manipulative bear raid against now
defunct brokerage firm Hanover Sterling. NASD documents show that Greg
Vittor in April 1999 settled with regulators. He consented to the finding
that he repeatedly failed to make the required affirmative determination
that certain securities he sold short should be delivered and he was fined
$20,000 and suspended for 30 business days. Gurian's name appears numerous
times as a participant in the bear raid in the NASD's findings about
Hanover's failure. But Gurian wasn't named in the case since he was not a
NASD member.
Earlier in 1995, the NASD had fined and suspended Glen Vittor and Falcon for
failing to complete trades. That time, Gurian was also fined by NASD which
alleged that he participated in and was compensated for trading activities
at Falcon while not properly registered.
Like Gurian, Glen Vittor is now permanently barred from the securities
industry by the NASD. Falcon and Sovereign were expelled from NASD
membership in 1997. NASD documents show that Jeannine Gurian, Phil Gurian's
mother, was one of Falcon's owners.
Greg Vittor's NASD registration shows that he's been working at Metro since
1996. Before that he worked with his brother at Sovereign.
At least two other Sovereign alumni have worked at Metro Trading. NASD
records show that Alfred George Marchetti worked at Metro Trading from
September 1997 until December 2002. Marchetti had worked at Sovereign from
1992 to 1997. Late last year, Craig Summa joined Metro Trading. Summa had
worked at Sovereign from December 1995 to July 1996.
NASD records show that Tavares and Marchetti are presently under
investigation by the NASD. NASD documents show that Tavares is under
investigation for "personal trading in a company('s) stock that a research
report was written on", while Marchetti is being investigated for "alleged
violation" of the affirmative determination rule that guides how market
makers can sell stock short. No action has been taken by the NASD against
either traders.
Back to HiEnergy itself. There are a few things here that investors should
note as well. First, the company had 24 million shares outstanding as of
Dec. 6, 2002. But that doesn't include another 10 million shares that it has
committed to issue because of things like stock options, warrants and
convertible preferred stocks.
HiEnergy's SEC filings show that it is quickly running through cash, having
burned through $1.15 million in the six months ended Oct. 31. HiEnergy had
$1.95 million in cash and equivalents on its books at the end of October.
The company had net losses of almost $2 million for the six months ending
Oct.31 and an accumulated deficit of $5.5 million. Finally, a filing with
the SEC shows that some early shareholders are poised to sell more than 7.7
million shares of HiEnergy into the market. HiEnergy's Levy said an amended
filing with the SEC would be filed "in the next few weeks" to clear the
sale.
The company's stock was recently trading at $1.68 a share.
By Carol S. Remond; Dow Jones News; 201 938 2074; carol.remond@dowjones.com |
