=DJ IN THE MONEY: SEC Investigates HiEnergy, Gurian Links
By Carol S. Remond
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--An ongoing Securities and Exchange Commission
investigation into the ownership of HiEnergy Technologies Inc. (HIET) has
found
that the mother of securities law violator Philip Gurian and her boyfriend
owned
about 80% of the company's shares in 2002.
Court documents filed by the SEC in the U.S. District Court for the
Southern
District of Florida show that the SEC is investigating a scheme through
which
Jeannine Gurian's son "controlled or is controlling HiEnergy without
disclosing
his involvement to the Commission or HiEnergy investors."
The stock of HiEnergy, a development stage company that claims to have
developed a new technology to detect explosives, fell sharply in February
after
a Dow Jones Newswires column highlighted connections between two of the
company's investors and Philip Gurian. Gurian pleaded guilty in 2000 to
federal
charges that include mail fraud and conspiracy to commit securities fraud.
He
awaits sentencing.
Court documents obtained by Dow Jones show that Jeannine Gurian
unsuccessfully
attempted to quash an SEC subpoena for her financial records earlier this
year.
Jeannine Gurian's response to the SEC subpoena shows that she refused to
produce
documents requested based "upon her privilege against self-incrimination as
guaranteed by the Fifth Amendment to the U.S. Constitution."
A judge in June ruled against her and ordered Country Home Loans, Jeannine
Gurian's mortgage company, to produce records sought by the SEC.
The SEC formally began investigating whether antifraud and/or reporting
provisions of the federal securities laws were violated by persons or
entities
in connection with the offer, sale or purchase of HiEnergy's stock in early
April.
"A person cannot escape requirements applicable to control persons by
holding
stock through a nominee," the SEC said in a motion to oppose Jeannine
Gurian's
lawsuit against the Commission.
The SEC said that information obtained during its investigation "indicates
that HiEnergy, Philip Gurian, Jeannine Gurian, and other individuals and
entities may have violated, or aided and abbetted violations of, laws
requiring
disclosure of control persons."
The Commission said it "has reason to believe that Philip Gurian
controlled,
or continues to control, HiEnergy through his undisclosed ownership of as
much
as 71% of Hienergy stock."
The SEC said it has information that Jeannine Gurian is holding or held
HiEnergy stock for her son Philip Gurian using various names and schemes.
"For example, the staff has evidence that Ms. Gurian used the alias
'Jeannine
Schnapik" to create an offshore entity called Benil Finance Ltd. and
purchase
nearly 9% of HiEnergy's outstanding common stock."
The SEC added that HiEnergy may have violated filing requirements and/or
made
filings "containing false and misleading information about the identities of
the
company's major shareholders, officers, directors and control persons."
The Commission also said in its motion that Philip Gurian may have
violated
securities laws by failing to file documents with the SEC disclosing his
acquisition of more than 5% of HiEnergy's stock using nominees.
The SEC said it subpoenaed Jeannine Gurain's mortgage lender because
Countrywide has documents that will help the SEC determine where she
maintains
bank accounts and other assets.
"The staff needs Ms. Gurian's bank records to identify the source of the
funds
she used to purchase her HiEnergy stock and where the proceeds of her sale
of
HiEnergy stock went," the SEC said.
HiEnergy said in April that it was cooperating with the SEC investigation.
A
lawyer representing HiEnergy said late Tuesday the company continues to
cooperate with the SEC investigation. "The company can only report what it
has
been told or is able to establish with reasonable efforts," said Nick Yocca,
noting that HiEnergy did what was required.
In 1999 Philip Gurian was charged with mail and securities fraud 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. In
June, Abramo was found guilty in New York court of a slew of racketeering
charges related to murder, extortion and loan-sharking. He will be sentenced
in
October.
The stock of HiEnergy was recently trading around 73 cents a share. A
number
of early investors have recently filed documents indicating their desire to
sell
large amounts of the company's stock.
(Carol S. Remond is one of four "In The Money" columnists who take a
sophisticated look at the value of companies and their securities and
explore
unique trading strategies.)
-By Carol S. Remond; Dow Jones Newswires; 201 938 2074;
carol.remond@dowjones.com
(END) Dow Jones Newswires
20-08-03 1234GMT |
