Vancouver stock promoter Louis Dion charged in FBI sting
Arrested for stock fraud and bribery charges in New York City
By David Baines, Vancouver Sun December 15, 2011 6:54 AM
vancouversun.com
Longtime Howe Street promoter Louis Dion, who has a history of hyping junior stocks that crash and burn, has been arrested in New York City in an FBI undercover sting operation.
On Dec. 1, the 61-year-old promoter was arrested on stock fraud and bribery charges and thrown in jail.
He is currently being held in the Metropolitan Detention Centre in Brooklyn.
According to an FBI affidavit, an undercover agent told Dion that he represented a group of corrupt brokers who could, for a fee, arrange for their clients to buy shares in a junior company that Dion and his associates controlled.
The affidavit alleges that from Nov. 21 to 28, the undercover agent arranged to buy 273,000 shares of Siga Resources Inc. at prices ranging from 27 to 46 cents each, for a total of just under $90,000.
The affidavit further alleges that, in return for this service, Dion paid $26,000 in secret commissions to the undercover agent, and discussed plans to similarly sell another $30 million worth of Siga shares that he and his associates controlled.
Dion has been a fixture on Howe Street for the last two decades. In June, The Vancouver Sun published a five-part series on him and his stock deals, which usually involve grandiose promises, a flurry of stock market activity and subsequent stock crashes.
Many of these ill-fated ventures have involved gambling businesses. Among them have been Dion Entertainment Inc. and Double Eagle Entertainment Inc., which both enjoyed lofty share prices but eventually collapsed under the weight of cumulative losses.
More recently, Dion became involved in several hapless Internet gambling businesses, including Veridigm Inc., iVegas Gaming Ltd. and World Mobile Network Corp.
In early 2008, World Mobile - which traded on the lowly Pink Sheets in the United States - morphed into an exploration company called Guyana Gold Corp.
Later that year, the FBI set up a sting operation in which an undercover agent lured several promoters into paying kickbacks in return for arranging buyers for Guyana shares. Dion was not implicated in the scheme - he had resigned just weeks earlier - but last month he found himself in the middle of an almost identical FBI sting operation.
This time the stock was Siga Resources, which trades on the loosely regulated OTC Bulletin Board in the U.S.
According to Siga's securities filings, the company has mineral claims in Fiji and British Columbia. Dion is not listed as an officer, director or shareholder, but the FBI alleges that he and several unnamed coconspirators controlled the company.
In the affidavit, FBI special agent Kurt Dengler alleges that, starting on Nov. 4, Dion and his associates conspired to defraud investors by:
. boosting Siga's trading volume to create the appearance of active market interest;
. conducting matched trades to "walk up" the stock to the desired price;
. paying undisclosed kickbacks to brokers to induce their clients to buy shares at artificially inflated prices.
The affidavit refers to several telephone conversations between Dion and the undercover agent, including conversations in which Dion allegedly agreed to pay kickbacks amounting to 50 per cent of the purchase price, and discussed the issuance and timing of news releases to justify the apparent market interest in the stock.
In particular, the affidavit alleges that on Nov. 21, when the first purchase was being arranged, Dion told the undercover agent that "once it's done, we'd like to - send the money today."
Later that day, Dion allegedly told the undercover operator the amount of the trade was $18,720, "so what we want to do is send you 10 [thousand], just to round numbers off in good faith.
"Perfect," the undercover operator allegedly responded.
The same day, the affidavit alleges, Dion and his associates wired $10,000 to the bank account designated by the undercover operator.
The affidavit also alleges that, after the first three transactions were completed, Dion discussed plans to get the corrupt brokers to arrange for their clients to buy a total of $30 million worth of Siga shares.
It further alleges that Dion suggested an overseas bank account be set up to facilitate the transactions, and mentioned he would have to set up four different brokerage accounts to keep regulators from detecting the scheme.
None of the allegations have been proven.
dbaines@vancouversun.com
Twitter.com/dmbaines
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