What does Jack know that we don't ???
Medinah's Price anxious to keep Purdy tape away from jury
Medinah Minerals Inc U:MDMN
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Tue 6 May 2003
Street Wire
by Brent Mudry
With his Bermuda Short stock bribery trial barely two weeks off, Howe
Street promoter Les Price has launched a heated attempt to exclude
potentially damaging evidence linking him to fellow Vancouver promoter and
long-time friend John (Jack) Purdy, who faces a separate trial in a money
laundering sting. Assistant United States Attorney Richard Hong of Miami
hopes to show the jury at Mr. Price's trial, set to start May 19, an
undercover video in which the chatty Mr. Purdy brags about his close
relationship with Mr. Price.
Defence lawyer, Paul Donnelly, is now crying foul, arguing that this tape
would unfairly smear his fine client Mr. Price. "The tape and transcript
reflect, however, that Mr. Purdy and Mr. Price are friends who have
conducted past business, but they fall short of reflecting anything of an
illegal or fraudulent nature," states Mr. Donnelly in a court filing posted
Friday in United States District Court for the Southern District of
Florida.
"Mr. Price and Mr. Purdy are charged in separate cases, and the Government
has charged neither gentlemen with conspiring with the other to commit a
crime. Mr. Price is charged under the securities fraud 'realm' of Operation
Bermuda Short, and Mr. Purdy under the money laundering end," states Mr.
Donnelly in his filing.
"The Government does not have Mr. Price on tape concerning the laundering
of drug cartel proceeds, because Mr. Price knew nothing about this alleged
activity."
The evidence fight comes up as both sides gear up for Mr. Price's two-week
trial. Mr. Price was arrested on Aug. 13, after he was lured down to
Florida for the arrest operation.
The two-pronged Bermuda Short Operation -- 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 most, including Mr. Price and Mr. Purdy, 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.
Mr. Purdy was arrested in the separate money laundering part of the Bermuda
Short sting, in which he allegedly agreed to participate in a conspiracy to
launder millions of dollars of dirty money for undercover FBI and RCMP
agents, posing as Colombian Cali cocaine cartel members. Mr. Purdy was
acquitted in his first trial in February, with the jury rejecting critical
testimony of co-defendants Kevan Garner and Harold Jolliffe, who pled
guilty and agreed to co-operate with authorities. He faces a second trial
in July on a second indictment, relating to a different time period in the
Bermuda Short operation.
While the two Bermuda Short stings operations, for stock bribery and money
laundering, were separate and unrelated, prosecutors hope to link Mr. Price
to Mr. Purdy at trial. The bid comes through Rule 404(b), or other bad
acts, evidence, in which U.S. prosecutors try to smear defendants, or show
a more complete picture of them, depending on your viewpoint, by
introducing evidence not directly related to what they were charged with in
their indictments. With this tool, unavailable to authorities in Canada,
prosecutors attempt to show a defendant's other behaviour is "inextricably
intertwined" with the conduct alleged in an indictment.
Mr. Hong, a no-nonsense hardball prosecutor, served 404(b) notice on Mr.
Price on Feb. 14. "The United States intends to introduce at trial a
videotape and transcript (tape number 1445) referencing defendant Les Price
in United States v. Purdy," states the prosecutor in a brief court filing.
"In this videotape, Mr. Purdy discusses his relationship with the defendant
Les Price and defendant Price's involvement with Mr. Purdy's activities
with NP Energy and Medina Mining/Medinah Minerals. The evidence shows the
context and background, as well as the intent, motive, plan, knowledge,
identity (modus operandi), and absence of mistake or accident."
After mulling over this potentially distressing bombshell for 2-1/2 months,
Mr. Price and his defence attorney Mr. Donnelly fired back a detailed
response this past week, seeking to exclude the proposed 404(b) evidence.
Mr. Donnelly notes that while Mr. Purdy is alleged to have agreed to
launder millions of dollars of Colombian drug money through one of his
companies, he was acquitted in February after a trial in which Mr. Hong
played excerpts of the tape in question. The undercover tape was made Feb.
21, 2002, when Mr. Purdy met on a yacht in Fort Lauderdale, Fla., with Bill
McDonald, the codename for the undercover agent, Ricardo Pagan, the
undercover FBI agent, and Michael Pizzio, an undercover operative.
Mr. Price's defence lawyer asserts that while the yacht participants
allegedly discussed the laundering of drug proceeds, at no time during the
meeting did Mr. Purdy discuss a securities deal or the transfer or sale of
any securities.
"At no point during said meeting, as reflected by tape and transcript, did
Mr. Purdy state or indicate that defendant Price knew Mr. Purdy was in
Florida negotiating any deals, knew anything about Mr. Purdy's proposed
transaction(s), or that his name would event (sic) be mentioned by Mr.
Purdy," states the lawyer in his filing. "In fact, the tape and transcript
underscore the fact that Mr. Price knew nothing of Mr. Purdy's business
venture with the agents and co-operating witness and did nothing in
furtherance thereof."
Mr. Donnelly also points out that Mr. Price has not been accused or
indicted as a co-conspirator of Mr. Purdy or alleged to be an unindicted
co-conspirator. Instead, Mr. Price is just charged with securities fraud
and related counts. Count 14 of Mr. Price's indictment relates to money
laundering, but this stems solely from the allegedly illegal transfer of
$9,980 in the Medinah deal, and not from any drug money.
"Mr. Price has never been alleged to have any dealings with drug cartels or
drug money -- only defendant Purdy."
In his filing, Mr. Donnelly argues that the yacht tape shows not a single
overt act committed by Mr. Price. "The Government proffers a videotape and
transcript which refute that Mr. Price did anything with regard to Mr.
Purdy's negotiations and/or even knew anything about Mr. Purdy's
association with the agents and co-operating witness. In sum, Mr. Price did
nothing and knew nothing -- all of which is buttressed by the proferred
evidence."
The defence attorney suggests that playing this yacht tape for the jury
would be nothing more than an unfair and improper bid to taint his client
Mr. Price.
"The defendant asserts that the only reason the government seeks to use
said proferred evidence is to show that Mr. Price is friends with and has
had past business deals with Jack Purdy, an indicted money launderer,"
states Mr. Donnelly in his filing.
"Its attempt to tie defendant Price to defendant Purdy through NP Energy
and Medinah Minerals (mentioned on tape by only Mr. Purdy) is a pretext for
its true intent of proffering said evidence; that is, to show that Les
Price associates with a reputed money launderer. It is the clearest form of
'character' evidence specifically prohibited by Rule 404(b)."
In his motion, the defence attorney seeks to throw out the yacht tape and
have it ruled inadmissible at the trial of Mr. Price.
The transcript of the Fort Lauderdale yacht meeting shows the undercover
agents trying to engage Mr. Purdy on numerous issues, including Mr. Price,
Medinah and NP Energy, and the talkative Mr. Purdy rarely at a loss for
words.
At one point, Mr. Purdy told the undercover operatives that he had been
involved with Medinah first.
"It was my company, I sold it to Les," states Mr. Purdy
"Les who?" asks the RCMP undercover officer Mr McDonald.
"Price. He's just a Vancouver guy, he's been in the markets forever, he had
a company called Cuomo trading on oil and gas," replied Mr. Purdy.
"Is he a partner of yours or ...," asks Mr. Pagan.
"Yeah, oh yeah," replies Mr. Purdy.
"And he still owns it?" asks Mr. Pagan.
"Yeah, it's his company," replies Mr. Purdy.
Mr. Purdy then pumped up Mr. Price with some modest puffery. "He's you
know. Les had a company trading at 40 dollars on the Vancouver Stock
Exchange when the biggest stock out there was two bucks."
"Well, he's just, you know, and he took Medinah and bought all the assets
around Dayton ... Dayton put 250 million dollars," Mr. Purdy told the yacht
attendees.
"What's Dayton?" asked Mr. McDonald.
"Into Chile. Dayton Mining. And then, and then lost 250 million bucks on
their, on their mines, Les went and sat down with the local guys and had
the property all around it, and stuck it out in Dayton's eye, bought all
these little key pieces all around, and he's winning now, he's making it
work. He went through a real rough time," replied Mr. Purdy.
"And he's a partner of yours, though?" asked Mr. Pagan.
"Yeah," replied Mr. Purdy.
"Well, that was something, how long has he been a partner of yours?" asked
Mr. Pagan.
"Oh, ten years," replied Mr. Purdy.
"So he's, he's somebody that can be trusted then too," asked Mr. Pagan.
"Absolutely trust him," replied Mr. Purdy.
Mr. McDonald then piped in, saying, "Cause that was, that was something."
"Same with Jolliffe and ...," added Mr. Pagan.
"The only thing you can't trust Les in, is he's not, he's not, there's one
thing that it's called trust, which means you can trust a guy he's not
gonna screw you," offered Mr. Purdy.
"Yeah," responded Mr. Pagan.
"But don't, don't, don't always go on trust. Go on brilliance. Really nice
trustworthy guys can take fucking piles of money and make them steaming
shit," Mr. Purdy told the undercover men.
"Les is too nice. I mean he's, he's too nice to people all the time. Gives
people fucking stock and you know believes that they're gonna, you know,
you know hands a guy a million shares and prays that the guy's gonna help
him get his market going. First thing the guy's gonna do is sell the
million shares," stated Mr. Purdy.
"So you're telling Les is not brilliant," replied Mr. Pagan.
"I, I, I, I said Les, I love you to death, you are one dumb shit. But I,
you know I've known him for years," stated Mr. Purdy.
"But you know, I'm just going back...," replied Mr. Pagan.
"You can do business with him, you got to do it in your terms," explained
Mr. Purdy.
"Can he, can he handle, like one of the things we talked about when I was
looking before is, is an ability to get money into the system, now you,
we're talking about using Medinah as, as getting some shares," stated Mr.
Pagan.
"Yep, and that's...," replied Mr. Purdy.
"Can that still be done?" asked Mr. Pagan.
"Yep. Yep," replied Mr. Purdy.
"Okay, what's, what's, what's Les looking for, like what's that gonna cost
me to, how much can he take?" asked Mr. McDonald. "Mmmm, and you know what,
I, I don't want to just rely on Medinah, cause one of the things I know
about it, it hasn't traded worth shit, and it's got about 80 million shares
outstanding."
Mr. Purdy was upbeat, despite the skepticism of the undercover RCMP
officer.
"It's starting to trade now. Like...," replied Mr. Purdy.
"Is it a (unintelligible)?" asked the officer.
"It, it used to be. It used to be, and now that he's getting back on his
feet again, (unintelligible) took over Dayton. She's a well-known Vancouver
mining figure, okay?" said Mr. Purdy.
"Yeah," replied Mr. Pagan.
"She took over Dayton at Christmas time. He was, he was hammer locked with
Dayton. Now he's out of that. Dayton will start moving. Medinah will start
moving. He's got a big resorts. He's got a good go resorts, it's worth
money," explained Mr. Purdy.
"Can you, can you control that (unintelligible), if we start putting money
into it?" asked Mr. McDonald.
"Yeah. Yep. Yeah, if you put money into it, I can control it, yeah,"
replied Mr. Purdy.
"Okay," said Mr. McDonald.
"What I would do is I'd put someone on the board, Les would stand down,
we'd put a good mining guy on the board, we'd throw around nickels like
they were golf... like they were manhole covers, cause you don't need to
spend a whole lot of money there, that... resort's basically developed, and
we'd go a good... on a big awareness campaign. I'd do London, Zurich...,"
said Mr. Purdy.
"And how long is that, how long is that gonna take?" asked Mr. McDonald.
"90 days," replied Mr. Purdy.
"Wow, that... okay. Cause what we're looking at, what we're looking at here
Jack, understand everything is, think of it in two streams. We're looking
at two-fold here," explained Mr. McDonald.
"Yeah," replied Mr. Purdy.
"Quick turnaround so we can use it, and then the money that we can use we
want to use it, we want to start investing it wisely, so it's... these are
our two prongs. Can Med... can Medinah do both of those for us?" asked Mr.
McDonald.
"Maybe. I know he's got, he's got some Brits that are giving him five
million bucks now. I don't know what that deal is. It's his deal. I sold
him the shell, sold him all my stock to him at two bucks," replied Mr.
Purdy.
"You're no longer part of it?" asked Mr. McDonald.
"No. Well, I've got a little bit of, I mean I see Les every day. We're
friends. You know we're partners in the NP (NP Energy)," replied Mr. Purdy.
"What'd you get out of it?" asked Mr. McDonald.
"200 grand. I sold him the shell, ah, and he went and built it. You know he
took a guy named Ian Vall (phonetic) and went and bought all these assets
in Chile, I (unintelligible)... I think 300,000 shares or something, I, I
think he paid me a hundred grand for the shell, and then I sold 300,000
shares between 50 cents and two bucks, sold the stock. And I help him all
the time, you know, and I, I, I take bits and pieces of his Medinah stock
and financing back and forth," replied Mr. Purdy. "What Les is is he's an
old time promoter."
Mr. Purdy then offered a brief fuzzy history of Howe Street regarding Mr.
Price.
"Okay? He's old school. Good old guy, you know knows everybody. He started
out with Continental Carlisle, which was before Canaccord, which was before
Yorkton. He knows when the Vancouver brokerage, he brought Peter Brown out
from Toronto, who runs Canaccord," stated Mr. Purdy.
The undercover operatives then tried to establish how much, if any, power
Mr. Purdy held with Mr. Price and Medinah, and whether he could deliver
Medinah as a laundering vehicle.
"If I said to Les, Les I want to be a part of it, I'd be part of it like
that (Mr. Purdy snaps his fingers), he trusts me, he loves me," stated Mr.
Purdy.
"We you recommend being part of it?" asked Mr. Pagan.
"I would only recommend being part of it if you had very tight control.
I've said that twice," replied Mr. Purdy.
"But how do we get that?" asked Mr. McDonald.
"Well you get it through me. I dictate policy," replied Mr. Purdy.
"How do we cont... how do, okay, but what's that gonna cost us for that
control?" asked Mr. McDonald.
"I, I don't know, I've got to sit down with him. If you want, he's got a
great conduit and he's got a great liquid stock, I don't know the status. I
know the status of his two properties, and they're good gold properties, I
don't know if he's debentured into someone else, and we ain't going there
if we don't have a good debenture on the asset. That way if something fucks
up we can pull you out," replied Mr. Purdy.
After the conversation drifted to other topics, a short while later Mr.
McDonald, the RCMP officer, brought up another of Mr. Price's companies, NP
Energy, and Mr. Purdy explained how NP could fit into the undercover
agents' plans.
The agents were quite interested in NP Energy, as it had a major stake in
Mr. Jolliffe's Bolivian Hardwood, the only company noted in the money
laundering indictments. NP Energy also named Bolivian Hardwood principal
Mr. Jolliffe to its board. There is no suggestion that Mr. Price had any
involvement or any knowledge whatsoever of any drug money laundering
operations.
In September, 2000, NP Energy acquired a 10-per-cent stake in Bolivian,
with an option to acquire an additional 39-per-cent stake. "NP Energy
Corporation plans to raise several million dollars in order to expand
operations of Bolivian Hardwood to further develop markets for the lumber
produced and to substantially increase the company's timber acreage
position in Bolivia," stated NP Energy in a press release.
"Management of NP Energy Corporation firmly believes that the acquisition
of this interest in Bolivian Hardwood Corporation and the addition of Mr.
Harold Jolliffe to the board of directors, will quickly move the company
forward following its recent reorganization that was approved at the
Special Stockholder's Meeting May 22, 2000."
With this context in the background, the undercover agents chatted up Mr.
Purdy about using NP Energy and Bolivian as potential money laundering
vehicles.
"You're gonna buy out... here's the way you do NP Energy, Les and his guys
are, are gonna want a half million bucks, and they no... negotiate them
down to 250 grand," suggested Mr. Purdy.
"He's my partner at NP," stated Mr. Purdy.
"Les is?" asked Mr. McDonald.
"Yeah," replied Mr. Purdy.
The undercover men then quizzed Mr. Purdy on his position in NP Energy.
"So you control most of it anyway?" asked Mr. McDonald.
"Oh yeah," replied Mr. Purdy.
"So we have that... what percentage do you control, so we know we're
protected?" asked Mr. McDonald.
"Oh you're really protected, but here's what we're gonna do with Les. Les
has got other things, he wants to build (unintelligible)," replied Mr.
Purdy.
"I don't mean to be, but you didn't answer his question. How much do you
own of that?" asked Mr. Pagan.
"Of NP? Ah... Good question, there was... there was, it was rolled back ten
to one, so I think there's nine million shares in the float. Okay? At the
ten to one, there's nine million out, rolled back ten to one. So there's
about, there's about nine million shares in the hands of what we call the
great unwashed. It's in the float. There's 6,000 registered shareholders,
so it's got a huge float," replied Mr. Purdy, again failing to answer the
question.
"Okay, all right," replied Mr. Pagan.
"The stock's, the stock's seen eight bucks, stock's seen one penny, the
stock's a penny now, and nobody cares," stated Mr. Purdy.
The agents then pressed Mr. Purdy on how strongly he believed in Mr. Price.
"I control a lot of companies in my building," stated Mr. Purdy.
"But you have confidence in Les?" asked Mr. Pagan.
"Absolute confidence," replied Mr. Purdy.
"Okay. All right," replied Mr. Pagan.
"Absolute confidence. If Les, Les would never hurt a soul, never," stated
Mr. Purdy.
"All right," replied Mr. Pagan.
"But if he'd printed a couple million shares cause he needed a couple
million, say, say he printed five million shares and the stock was five
cents, and he needed 25 grand, I wouldn't put it by him to fuck me for 25
grand," stated Mr. Purdy.
"And then tell me the next day, 'Jack I'm sorry, I needed the 25 grand, a
guy was gonna take the stock,' whatever," stated Mr. Purdy.
"It would have shocked you, yeah," replied Mr. Pagan.
"Well, it wouldn't shock me, I'd fucking be horrified, and I'd yell and
scream at him and then we'd get up the next day and I'd say, 'Okay, now
we're gonna but the fucking stock back at three cents," explained Mr.
Purdy.
"Right," replied Mr. Pagan.
"It's gonna cost me 15 fucking grand," stated Mr. Purdy.
"Right," replied Mr. Pagan.
"For your last bonehead move, giving those shitheads stock," stated Mr.
Purdy.
After this theoretical scenario, the agents finally pinned Mr. Purdy down
on his control of NP Energy.
"... All I'm saying is you're asking for market cap, and I can't tell you,
I don't have the book, books and records. To my knowledge there's 15
million shares printed and I've got half of it. You know," stated Mr.
Purdy.
"And how much do you control over, over the other half?" asked Mr.
McDonald.
"Well, all of it, I buy, I buy it all back," replied Mr. Purdy.
"So you basically control this play, that's what we're looking at,"
asserted Mr. McDonald.
"I absolutely... but what we do is with Les, I know he wants a half million
bucks for his due... for his stock, he's had this thing since 1976. But I
can say to him, I'm gonna leave you with a little bit of paper, I'm gonna
give you 250 grand. At that point in time, you guys own 50 per cent of the
deal, period," Mr. Purdy told the undercover agents.
Mr. Purdy then explained how he helped arrange for NP Energy to acquire 10
per cent of Bolivian Hardwood, and how this fit in with further financing
plans for Bolivian.
"The reason I gave 10 per cent is cause I wanted to see if I could use it
(NP Energy) to raise money. I printed a brochure, which laid out the story.
The story's we need to raise 10 million bucks, some guys were... six point
eight million dollars U.S., but it needs a couple million more, but I
thought, I'll put the brochure out there and see if anybody salutes,"
explained Mr. Purdy.
None of this implicates Mr. Price in any way, of course, and he was neither
involved in the yacht conversation nor even aware of it. Mr. Price's
defence lawyer, however, would much rather have this tape ruled
inadmissible than try to explain to the jury how irrelevant it really might
be.
(c) Copyright 2003 Canjex Publishing Ltd.
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