Joint US-Canada settlement in penny stock case
WASHINGTON, Nov 08, 2006 (AP Worldstream via COMTEX) -- U.S. and provincial authorities in Canada on Wednesday announced simultaneous settlements with two Canadians who allegedly bilked investors in a U.S. firm that claimed to have acquired a British Columbia car dealership.
Mervin Fiessel, 61, and Robert Doherty, 42, both residents of Kamloops, British Columbia, settled with the Securities and Exchange Commission and the British Columbia Securities Commission without admitting or denying regulators' allegations of fraud and market manipulation. Fiessel was Greyfield Capital Inc.'s majority shareholder and Doherty purported to be the firm's president.
According to regulators, in the spring of 2005, the men hijacked Greyfield, a Nevada shell company, reincorporated it in Oregon, and issued hundreds of millions of new shares in the firm, which traded over the counter in the Pink Sheets. Regulators said Fiessel sold his own shares in Greyfield while issuing press releases touting its purchase of Autorama, described as fast becoming western Canada's largest car dealership. Regulators said Autorama was not even the largest dealership in Kamloops at the time and that Greyfield hadn't paid for Autorama and had no written agreement to purchase it.
When Greyfield's original owners complained to the SEC in July 2005, U.S. regulators alerted authorities in Canada and suspended trading in Greyfield stock a week later, citing questions about the company's reorganization and the identity of its officers and directors.
In a "particularly troubling" response, the SEC said Fiessel and Doherty reacted to the trading halt by issuing more false information to investors.
Joshua Felker, an assistant director with the SEC's enforcement division in Washington, D.C., said the investigation "is very much ongoing with respect to others."
Under the settlement with the SEC, Fiessel and Doherty will be barred from the penny-stock business and from serving as public company officers or directors. Fiessel will return more than $150,000 (EUR 117,408) of allegedly ill-gotten gains and interest, and Doherty will return about $26,000 (EUR 20,350) but will not pay any interest or penalty due to his inability to make the payments, the SEC said. Under the settlement with authorities in British Columbia, Fiessel will pay a fine of 144,445 Canadian dollars, or about $128,000 (EUR 100,188), and be subject to a market ban.
Attorneys for Fiessel and Doherty could not be reached immediately for comment.
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Judith Burns is a Dow Jones Newswires correspondent.
By JUDITH BURNS
Copyright (C) 2006 The Associated Press. All rights reserved.
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