OSC target Valentine's offshore front Lemmon sentenced
2003-02-28 20:34 ET - Street Wire
by Brent Mudry
In the first Bermuda Short sentencing of a Canadian defendant, Paul Lemmon, the trusted offshore front of former Thomson Kernaghan head Mark Valentine, has been sentenced to 21 months imprisonment for his role in a sting conspiracy to bribe undercover operatives, posing as corrupt mutual fund officials, to buy millions of dollars of worthless penny stock promotions. Mr. Lemmon was also fined $7,500. (All figures are in U.S. dollars.)
In a devastating setback for Mr. Valentine, Mr. Lemmon, who runs the Voyager Group in Bermuda, pled guilty in mid-December in a negotiated deal with the U.S. Department of Justice and agreed to fully co-operate with authorities, including assisting in the prosecution of Mr. Valentine. In his plea deal, Mr. Lemmon pled guilty to one count of conspiracy to commit wire and securities fraud, while the other two counts on his grand jury indictment were dropped at sentencing.
Mr. Valentine and Mr. Lemmon were trophy targets in Operation Bermuda Short, an undercover sting inspired by penny stock dealings through Bermuda and Mr. Valentine's legendary shorting prowess. Mr. Valentine was arrested on Aug. 14 at the Frankfurt airport in Germany, while most of the other targets, including Mr. Lemmon and 18 other Canadians, were arrested in U.S. soil.
Mr. Lemmon, who had been held in custody since his arrest on Aug. 13, was released in late December on a $100,000 personal surety bond co-signed by his wife Darlene Lemmon and his father George Lemmon, and a $50,000 corporate surety bond.
Mr. Lemmon was sentenced Feb. 21 by Judge Wilkie Ferguson of United States District Court for the Southern District of Florida in Miami. His sentence includes two years of supervised release after he gets out of prison.
In an unusual move, Mr. Lemmon was sentenced before the trial of Mr. Valentine. The judge ruled on Feb. 18 to deny Mr. Lemmon's bid to continue, or delay, his sentencing. In most flip-roll-and-rat cases, defendants are sentenced after, not before, the trials of their associates.
In Mr. Lemmon's plea agreement, he pledges his full co-operation with authorities, and he will presumably have quite a bit to tell about how Mr. Valentine operates, especially in the disgraced broker's lucrative offshore shorting and death spiral financings.
Mr. Valentine is currently set for a court calendar call of March 17 and a trial start date of March 24, although he filed a motion this Tuesday to continue the delay and set a new date. The judge has not yet ruled on the court application.
The Valentine-Lemmon indictment centres on three deals: C Me Run Corp., one of the companies in the stable of Mr. Valentine's close associate Cameron Chell, a controversial Calgary-based penny stock promoter, SoftQuad Software Ltd. and JagNotes.com Inc. The indictment claims that starting in late 2000, the dirty fund manager agreed to buy $9.4-million worth of C Me Run stock and $10-million worth of both JagNotes and SoftQuad stock from Mr. Valentine and Thomson Kernaghan, in exchange for Mr. Valentine and Mr. Lemmon agreeing to pay cash bribes or kickbacks of 25 per cent to 30 per cent to the undercover agent and two co-operating witnesses posing in their real-life roles of dirty stock promoters.
With Mr. Valentine and Mr. Lemmon taking the bait, the undercover FBI agent hooked his trophy catch with "test trades" resulting in the pair making initial stock bribe payments of $25,000 for C Me Run buying and $10,000 for SoftQuad buying. Both were charged with one count of securities fraud conspiracy, with a maximum penalty of five years in jail and a $250,000 fine, and two counts of securities fraud, with a maximum penalty of ten years in jail and a $1-million fine. |
