Bradford G. Harrington was, and is, a figment of Thomas's mind. he was literally, Thomas pretending to be somebody else, namely, his own second-in-command. Thomas also pretended to be a woman (his PR spokesperson), named "Tyler Carrington." All these names were invented by Thomas to convince the world that he ran an enormous hedge fund with armies of employees. Jon Markman went for it hook-line-and-sinker and wound up writing several stories about what a genius Thomas is.
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SuperModels
3 stocks that put a face on terrorism
Companies specializing in face-recognition software were long on promise and short on returns until Sept. 11 turned them white-hot. The question now is for how long.
By Jon D. Markman
Chasing a story
Story stocks almost always sprout from a news development; they germinate in soil rich with shock and greed. At a time when most people are trying to figure out the what of an unexpected event, a clever cadre of early stock speculators zero in on how to take advantage of it.
During the week following the terror attacks, a team of research analysts and portfolio managers at the Pembridge Group in Boston took on that task by homing in on a battery of defense stocks. Bradford G. Harrington, managing director of the firm’s venture capital fund, told me in an interview that after guessing that the complexion of U.S. security had been permanently changed by the attacks, the firm decided to buy not just the usual suspects among the large Pentagon contractors, but also a variety of small-caps that might offer “parabolic” returns.
Harrington’s team did its research on their Bloomberg machines, via Internet searches and with calls to companies. They knew they didn’t have all the information they might want, but they learned enough to know that major beneficiaries of spending over the next year would be companies focused on aviation security, identity verification, vaccine development and virus therapeutics. By 9:30 a.m. on Sept. 17, Pembridge traders waded into the broad-market turmoil and spent $4 million on a basket of 18 stocks. Two months later, that basket would reportedly be worth $10 million. “We did miss a couple of names, but not many,” Harrington said.
By the end of October, however, Pembridge had decided to pare back on most of its wins. The company specializes in modeling cash flows and doing channel checks and customer surveys, so it sold its speculative biotechs first. Next to go were hardware stocks (e.g. flak-jacket makers) that had low margins and lots of competitors. And that left a handful of small aviation-focused stocks that Harrington could view as if they were private and thus might make sense as a traditional venture-capital investment.
Harrington said his boss, Treyton L. Thomas, would only let him add to those positions if he could answer the following four questions affirmatively:
Do you believe there is credible evidence that the current focus on aviation security measures will be permanent, and not ebb and flow with media headlines?
Do you believe there will be an unprecedented level of data sharing among international, federal, state and local law enforcement agencies?
Do you believe that many of the barriers of adoption to “biometrics” have dissipated since the events of Sept. 11?
Do you believe that the new order in aviation security will shift the emphasis beyond baggage and toward passengers?
After further research led them to answer yes for most of the remaining stocks, Thomas posed two more questions:
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U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18957 / November 3, 2004
Securities and Exchange Commission v. Treyton L. Thomas, et al., Civil Action No. 04-12315 (PBS) (D.MA November 1, 2004).
SEC Charges Treyton L. Thomas and Pembridge Group, Ltd. With Securities Fraud and Stock Manipulation
The Securities and Exchange Commission announced that on November 1, 2004, it filed civil fraud charges against Treyton L. Thomas, a resident of Boston, Massachusetts, and a company he founded, Pembridge Group, Ltd., for engaging in a scheme to manipulate the securities of Imagis Technologies, Inc., a Canadian software company quoted on the OTC-Bulletin Board.
In a complaint filed in United States District Court in Boston the SEC alleges that from at least 1999 through 2002, Thomas generated several false press releases in which he claimed to be the chairman of Pembridge, a purported multi-faceted investment firm that managed several hundred million dollars and provided growth capital to formative companies. In fact, it is alleged, Pembridge had no such assets under management and instead was simply a front that Thomas used to gain credibility and further his fraudulent scheme. The Commission charges that, after several of the false press releases were disseminated, Thomas manipulated the stock of Imagis by causing Pembridge to propose a fraudulent cash tender offer for all of Imagis' outstanding stock. On March 6, 2002, Pembridge publicly announced the proposed tender offer with a potential offer price of over $4.00 per share (almost double the price at which Imagis' stock was trading in previous months). Pembrdige's March 6 announcement sent the price of Imagis' stock up to a 52-week high of $3.40. As alleged, neither Thomas nor Pembridge controlled or had access to hundreds of millions of dollars let alone the resources necessary to buy out Imagis' shareholders.
The SEC further alleges in the complaint that prior to announcing the false tender proposal, Thomas had arranged for an offshore entity – known as Indo Sakura Trust – to acquire over 100,000 warrants of Imagis stock. Shortly before the fraudulent March 6 tender offer announcement, Indo Sakura converted 70,000 warrants to shares and, a few days after the bogus release, Indo Sakura exercised its remaining 35,000 warrants. Pembridge also acquired warrants to purchase 50,000 shares of Imagis stock at $2.20 (CDN) a share. In addition, Thomas advised purported clients to purchase Imagis stock. The Defendants' illicit scheme artificially inflated the value of Indo Sakura's Imagis stock, as well as the securities held directly by Pembridge and its purported clients.
The SEC alleges that Thomas and Pembridge violated Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder, by their fraudulent scheme to manipulate the market in Imagis stock. The Commission further alleges that the defendants violated Section 14(e) of the Exchange Act, and Rule 14e-8 thereunder by their false and fraudulent communication of the tender offer. The relief sought in the complaint as to each of the Defendants includes permanent injunctions from further violations of the general and tender offer anti-fraud provisions of the federal securities laws, disgorgement of ill-gotten gains with prejudgement interest, civil monetary penalties, penny stock bars, and a permanent bar prohibiting Thomas from serving as an officer or director of a public company.
sec.gov
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