Hope is a wonderful crutch...eom
Medinah's Price hopes to impress jury with his big gold deposit
Medinah Minerals Inc
Thu 15 May 2003
Street Wire
by Brent Mudry
Howe Street penny stock promoter Les Price hopes to impress a Miami jury
that his flagship company, Medinah Minerals, which doubled this week to a
penny a share, is truly sitting on a major gold deposit in Chile worth more
than $400-million. (All figures are in U.S. dollars.) In a recent court
filing, Mr. Price confirms he expects an expert witness to testify that
Medinah's Lipangue gold project holds vast quantities of gold, silver and
copper worth an estimated $433.7-million.
Mr. Price's two-week Bermuda Short stock bribery trial, currently set to
start on May 19, is now expected to be delayed until September, due to
other commitments of his defence lawyer Paul Donnelly and Assistant United
States Attorney Richard Hong, the lead prosecutor.
Mr. Price was arrested on Aug. 13, after he was lured down to Florida for
the Bermuda Short arrest operation. The two-pronged Operation Bermuda Short
-- one for bribing fictitious mutual fund officials, the other for drug
money laundering -- was unveiled Aug. 15, with the unsealing of 23
indictments and arrests of 58 targets, including 20 Canadians. All parties
remain presumed innocent until and unless proven otherwise. A number of the
targets have pled guilty, some have been acquitted at trial, a few have had
their charges dropped or stayed, and many, including Mr. Price, maintain
their innocence to the charges.
North Vancouver-based Mr. Price, then the head of Medinah Minerals Inc., a
Howe Street penny stock mining play, was arrested in the mutual fund
bribery sting. His sole co-defendant is Joseph R. Huard Jr., a founder and
officer of Shamrock Partners Ltd., a brokerage based in Media, Penn. Mr.
Price faces a total of 14 charges, including one count of conspiracy to
commit wire and securities fraud, 10 counts of wire fraud, two counts of
securities fraud and one count of money laundering, the latter relating to
the stock scheme. He faces a theoretical maximum of five years imprisonment
on the conspiracy and wire fraud charges, 10 years for securities fraud and
20 years for money laundering.
The indictment claims Mr. Price agreed to arrange for Mr. Huard, the
undercover agent, the co-operating witnesses and the fictitious corrupt
fund manager a total of $1.5-million in undisclosed kickbacks in return for
the fictitious fund buying $5-million worth of overpriced Medinah shares.
Only a small fraction of these large planned amounts ever changed hands, in
what authorities call a "test trade." The indictment claims the fictitious
fund wired $25,000 to purchase 25,000 Medinah shares, and Medinah, on Mr.
Price's instructions, wired back an alleged bribe of $10,000, less a $20
bank fee, to the undercover agent's account in Miami.
In a recent filing in U.S. District Court for the Southern District of
Florida, Mr. Price reveals his star expert witness will be consulting
geologist Gordon House, a fellow North Vancouverite and Medinah employee.
Mr. House's resume indicates his primary focus for the past five years has
been Medinah. "Managed exploration/drilling programs for Medinah Minerals
Inc. in Chile. Consulting for other clients on an as available basis,"
states his resume, detailing the period from July, 1998, to present.
"The professional geologist/expert witness will explain to the jury various
terms and/or concepts known to a geologist and/or miner concerning Medinah
Minerals' Chilean assets such as breccia pipe, manto, placer properties,
geophysical surveys, geophysical anomalies, diamond drill program,
mineralization, mineralized porphyry body, etc. that may not be commonly
known or understood," states lawyer Mr. Donnelly in the filing.
"In addition, the proposed expert will explain the various evaluations and
reports he has undertaken and competed for Medinah Minerals Inc.
Specifically, said expert has supervised three diamond drill programs on
the Lipangue Breccia Project (known as Phases I, II and III) and completed
reports for each testing," states the lawyer.
Mr. Price hopes his Medinah employee Mr. House will impress the jury with
big numbers.
"The witness opines that there are over 722,000 ounces of gold contained
within this resource, as well as 6,500,000 ounces of silver and 180,000,000
pounds of copper. The witness will further opine, based on experience,
training and analysis, that the total gold equivalent content of 1,172,279
troy ounces of Gold, at the recent price of $370.00/ounce of gold, puts a
Gross Metal Value of $433,742,860.00 on the resources outlined in the
breccia pipe by the three phases of drilling on Lipangue Project carried
out to date," states the defence filing.
Mr. Price also expects the jury to hear that Mr. House recommended more
than two years ago, in a Jan. 15, 2001, report that Medinah embark on a
fourth-phase diamond drilling program, with more than 3,500 metres of
drilling, to follow the mineralization to depth. "The expert predicts that
further drill programs will be required to test for the mineralized
porphyry body believed to be the source of the hydrothermal fluids
causative of the breccia pipe and the mineralization intercepted to date,"
states Mr. Donnelly.
Hopefully the members of the jury, who are lay members of the general
public selected at random, will be quick learners. After this crash course
in geology, Mr. Price hopes to give them a thorough, but brief, education
in the intricacies of the securities industry.
The second expert witness the Vanccouver stock promoter hopes to call is a
mystery person lined up to lecture the jury on "general securities markets
and securities industry practice." This expert's identity is not revealed
in a court filing, but he, or she, is described as a former enforcement
officer with the United States Securities and Exchange Commission and a
current securities litigator.
"Based on said expert's professional experience and training in the
securities field, the expert will introduce and explain terms and concepts
used in the securities market/industry that may not be commonly understood
or known by a jury," states defence lawyer Mr. Donnelly in another recent
filing.
"Such terms and/or concepts said expert will explain include, but are not
limited to, common/preferred stock, convertible shares, ratios, fiduciary
duties, broker/dealer, pink sheets and pink sheet companies, mutual fund,
disclosure duties and private placements," states the lawyer.
The jury may also get a few tips and pointer on how penny stock rig jobs
work.
"The expert will also explain general concepts of corporate finance
including, but not limited to, the valuation of stock within various
context, what determines a stock price in the securities market, and
whether stock prices are/have been manipulated in the markets," states the
defence filing.
After this lecture, the mystery expert will then tell the jury how "various
securities industry professionals and issuers interact with each other
concerning the sale and purchase of stock, including any applicable
disclosure requirements."
After this, the jury will hear all about the "applicability of securities
regulatory requirements to the transactions at issue in the instant
indictment, including broker/dealer, investment company and corporate
issuer provisions."
The last part of the lecture may be the most intriguing.
"The expert will explain how securities are issued, sold and traded in the
markets, and whether a transaction involves any irregularity," states the
defence filing.
Both experts may have some time to prepare and polish their pitches to the
jury. While the trial was set to start on May 19, prosecutor Mr. Hong and
defence counsel Mr. Donnelly recently filed a joint application to delay
the trial for months.
On the prosecution side, Mr. Hong has just learned that two government
witnesses will be unavailable as they will be busy testifying in several
other trials. Mr. Hong himself was recently ordered to start another trial
on May 7, while the key FBI case agent, who may also testify, also has a
busy schedule in May.
On the defence side, two of Mr. Price's witnesses are not available in
June. One, has several securities litigation matters in Texas, while the
other, a Canadian, is set for the latest round of chemotherapy for lung
cancer he has battled for two to three years.
In addition, defence counsel Mr. Donnelly has an unrelated trial set for
June 2, while prosecutor Mr. Hong expects to start the trials of alleged
Bermuda Short money launderers John (Jack) Purdy and Martin Chambers on
July 7 and Aug. 11, respectively.
"Due to the foregoing issues of witness unavailability, trial conflict and
the need to commence a final discovery conference, counsel for the
Government and Defendant Price seek a delay of the trial date," state Mr.
Hong and Mr. Donnelly in their joint application.
"Counsel for the Government and Defendant Price are not opposed to a
continuance of the trial date until September 2, 2003, or the first
available two-week trial calendar after September 2."
A new trial date has not yet been set.
bmudry@stockwatch.com
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