RealMoney Jon D. Markman analyst actually said Imagis Technologies was a good investment. lol Interviewed Pembridge noless. lol Why doesnt Jon update investors about the fraud he recommended to them?
Some hucksters are also name-droppers
David Baines
Vancouver Sun
Wednesday, November 03, 2004
The U.S. Securities and Exchange Commission has taken tough action in several Vancouver-related stock matters, adding support to Canada Stockwatch editor John Woods' rather caustic observation that, when it comes to stock market chicanery, the SEC is Canada's toughest regulator.On Tuesday, the SEC filed a complaint in U.S. District Court in Massachusetts against Treyton Lee Thomas of Boston, alleging that he posed as a big-league investment manager and made a bogus takeover offer for Vancouver-based Imagis Technologies Inc.This boosted the share price, enabling an offshore company connected to Thomas to blow off a mitt-full of shares at artificially high prices, the SEC claims.Imagis, whose shares were listed on the TSX Venture Exchange, was developing biometric facial recognition technology. One of its founding directors was controversial Vancouver promoter Altaf Nazerali. The company boasted that former RCMP commissioner Norman Inkster served on its advisory board, and former associate FBI director Oliver "Buck" Revell served as its chairman.The company's share price was languishing until September 2001 when the terrorist attacks in the U.S. gave the firm an opportunity to promote its facial recognition technology.The SEC alleges that, after the attacks, Thomas arranged for an offshore entity called Indo Sakura Trust to acquire warrants to buy 105,000 shares at an average price of $2.30 Cdn.In January 2002, Imagis announced it had hired Thomas' firm, Pembridge Group, to act as its financial adviser. As compensation, Imagis gave Pembridge warrants to buy 50,000 shares at $2.20 each."Pembridge manages over $600 million in capital and its funds have consistently posted some of the highest returns to investors in the alternative asset management industry," Imagis said in a release.In March 2002, the stock received a further boost when Pembridge announced it had asked Imagis' board to consider a plan to take Imagis private. Imagis shareholders would receive $4.10 US per share, a substantial premium to the market price. The stock immediately jumped to $5.36.Some reporters immediately raised concerns about the credibility of Thomas and his firm. Despite the controversy, Imagis appointed Thomas to its board in July 2002.The following month, Chris Byron, writing in now-defunct Red Herring magazine, wrote a skeptical story about the company, saying: "Remember, penny stocks don't become attractive investments just because the board has a graybeard chairman with impressive credentials. And if sitting next to him is a man who claims to run a $600-million hedge fund that may or may not even exist, then just smile politely and start backing out of the room."Imagis responded by hiring Vancouver lawyer Howard Shapray to file a lawsuit against Byron, alleging he had, among other things, implied "that the directors of Imagis did not perform reasonable due diligence on Treyton Thomas . . . before entering into an advisory agreement and offering him membership on Imagis' board."On Tuesday, Byron received a large measure of vindication when the SEC filed its complaint alleging that Pembridge was a "sham," that it did not have any financial resources to execute its proposed takeover offer, and was "simply a front through which Thomas attempted to gain credibility."The SEC also noted that, after the allegedly bogus takeover offer was made, the Indo Sakura Trust, over which Thomas had trading authority, dumped all its shares into the market.So where are we now? Thomas is now facing multiple allegations of fraud; Byron says he feels totally vindicated; Revell is still chairman; but Nazerali slipped off the board in April 2003 "due to other pressing commitments." The company is still losing scads of money, and the stock has slumped to pennies.A sad but familiar Vancouver stock story.- - -On Monday, the SEC announced that a North Carolina judge had entered default judgment for more than $10 million US against West Vancouver financial fugitive Fred Gilliland.The SEC had earlier alleged that the 52-year-old promoter, while living in St. Petersburg, Fla., had sold more than $29 million US in bogus "prime bank" investments to at least 200 investors during 1997 and 1998. The investments offered "guaranteed" returns ranging from 30 per cent per month to as high as 130 per cent for a 10-day investment.A group of investors also filed a lawsuit in Florida accusing Gilliland of fraud, conspiracy and racketeering, and a Florida grand jury indicted him for allegedly perpetrating a massive fraud.Rather than answer the charges, Gilliland fled to Canada, where he bought a $1.7-million house in West Vancouver, leased a $115,000 BMW 745i, and hired a personal fitness trainer.He also trolled the restaurants and coffee shops of West Vancouver looking for pigeons to invest in shoddy stocks listed on the notorious OTC Bulletin Board or the even more lowly "pink sheets," such as White Rock-based Fortune Oil & Gas Ltd.The U.S. Justice Department asked Canadian authorities to extradite him, but nothing was done until July 2003 when I was alerted by a Vancouver investor who had lost $25,000 that Gilliland was living a life of luxury in West Vancouver. Several days after my story was published, Gilliland was arrested by a posse of RCMP at his home and thrown in jail.In January this year, after six months behind bars, Gilliland was released on $750,000 bail after three unnamed persons posted sureties of $250,000 each. He was confined to his apartment except for medical emergencies or to see his lawyer or attend court.Those restrictions have since been relaxed to allow him to leave the premises for several hours on selected days to tend to personal matters and to dine at a restaurant within one kilometre of his apartment. He was scheduled to apply today for a further variation of these terms.Undoubtedly, the last thing Gilliland wanted to do is fly to North Carolina to answer the SEC charges. He would most assuredly have been scooped up by U.S. authorities. So in his absence, U.S. district judge Brent McKnight entered a default judgment and ordered Gilliland to disgorge $9.4 million US (representing Gilliland's profits from his prime bank scheme), plus $635,179 US in prejudgment interest, and a $110,000 US civil penalty -- for a total of $10,145,179 US.I wish the SEC luck collecting these funds.- - -The SEC has also imposed heavy sanctions on Vancouver promoters Robert Papalia and David Hunter for allegedly artificially pumping up the share price of Nano World Projects Corp., another sleazy Vancouver promotion that found currency on the OTC Bulletin Board in the United States.Robert Papalia, 58, and his twin brother, Anthony -- who is not named in the SEC action -- have a long history of run-ins with police and regulators. In 1990, they were blackballed from the Vancouver Stock Exchange.David Hunter, 49, and his brother, Daniel -- who is similarly not named in the SEC action -- are also well known to regulators. They were cited by VSE officials in 1986 for making manipulative trades in a stock called Lionheart Resources, suspended for 60 days each and assessed $30,000 in costs.Since then, they have been involved in a series of schlocky Vancouver stocks including Dimples Diapers, Cost Miser Coupons, Axagon Resources, and V-Tech Diagnostics.Last year, the SEC filed a complaint in federal court in Seattle alleging that Papalia and Hunter issued a series of false and misleading statements about Nano World's business relationships and financial affairs.Several weeks ago, the SEC announced that Hunter, without admitting or denying any of the allegations, settled the matter by agreeing not to act as an officer or director of U.S. public company for five years.Papalia appeared at trial in August and was ordered to pay a $33,000 civil penalty. More critically, he was barred for life from serving as an officer or director of any U.S. public company.Now that Papalia has been shut out of the TSX Venture Exchange and all the U.S. markets, one wonders where he will turn next.dbaines@png.canwest.com© The Vancouver Sun 2004 |
