CO2 Tech's Curshen asks for new trial
2012-02-22 15:09 ET - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
by Mike Caswell
Recidivist securities violator Jonathan Curshen is seeking an acquittal or a new trial after he was convicted on conspiracy charges stemming from the CO2 Tech Ltd. pump-and-dump. In a motion filed Tuesday, Feb. 21, he claims that the government failed to prove that he and others conspired to dump $7-million worth of CO2 Tech shares while the company purported to have a business relationship with Boeing. (All figures are in U.S. dollars.)
The request comes just weeks after a Miami jury convicted Mr. Curshen, 47, and Nathan Montgomery, 30, for the scheme. Those testifying during their 11-day trial included former Pacific International Securities Inc. broker David Ricci, who worked for Mr. Curshen in Costa Rica and helped him execute wash trades for CO2 Tech. (Mr. Ricci faced similar charges, but he pleaded guilty and co-operated with the government.)
Witnesses were "liars"
Mr. Curshen's request for a new trial is very brief, as it simply seeks to adopt arguments made by Mr. Montgomery in a separate motion on Monday. In that motion, Mr. Montgomery contends that the government unfairly presented evidence to the jury of other pump-and-dumps that had nothing to do with the charges, which were solely for manipulating CO2 Tech. He says this extra evidence had no legitimate value and prejudiced him before the jury. "The minimal (at best) value of any of this testimony was far outweighed by the damage this testimony had to jurors who continuous [sic] heard talk of pump and dumps, manips, and other deals when the evidence should have been focused on the CO2 Tech deal," his motion states.
He also complains that the testimony of some prosecution witnesses was unreliable. Three men who were originally indicted in the case, Ryan Reynolds, Timothy Braham and Robert Weidenbaum, testified against Mr. Montgomery and Mr. Curshen at trial. According to the motion, their evidence on trading was not consistent with actual events. "The trades did not match. Not in date or time. Not in amount. In other words, even accepting the incredible testimony of three admitted liars, while this testimony might establish some conspiracy crime, it does not establish the crime charged in the Indictment," the motion reads.
Mr. Montgomery further contends that there is no evidence he and the others were working together during the manipulation, which is necessary to establish a conspiracy charge. Portions of the conspiracy took place in 2005, but Mr. Montgomery's name did not surface until January, 2007.
These errors, as Mr. Montgomery sees it, warrant either an acquittal or a new trial. Mr. Curshen is seeking the same remedy.
For Mr. Curshen, if the conviction is upheld it would be the third time he has received civil or criminal penalties for a securities violation. Prior cases include one for the 2000 pump-and-dump of Freedom Golf Inc., in which the U.S. Securities and Exchange Commission won a $116,953 civil penalty against him as well as a permanent penny stock ban. (The trial included testimony from former Union Securities Ltd. employees Trevor Koenig and Joe Fernando, who worked at the firm's White Rock branch.) More recently, prosecutors in New York secured a 16-month sentence against him for broker bribery, which he began serving in October, 2011.
CO2 Tech charges
The CO2 Tech charges are best detailed in a parallel civil complaint that the SEC filed against Mr. Curshen and the others on Feb. 18, 2011, in the Southern District of Florida. The scheme, as described by the SEC, was run through a Costa Rican entity that Mr. Curshen controlled called Red Sea Management Inc. The SEC said the purpose of Red Sea was to provide market manipulation and money laundering services through a network of brokerage and nominee accounts it controlled in the United States and Canada.
The CO2 Tech promotion was one of several that Red Sea had carried out, the SEC claimed. It took place in January and February, 2007, after Red Sea was hired by two Israeli men, Ariav Weinbaum and Yitzchak Zigdon. The pair had control over CO2 Tech's entire public float of 22.5 million shares and were looking to sell large quantities of the shares. (Mr. Weinbaum and Mr. Zigdon also face charges from the SEC and federal prosecutors for the scheme.) Red Sea helped manipulate the stock while the company issued news releases touting its product, a purported pollution control system.
The news releases, which came out on Jan. 29 and Jan. 30, 2007, made several misrepresentations, according to the SEC. Among other things, CO2 Tech claimed that Boeing had taken an interest in one of its products. The SEC said that was completely false. The company had no communication with Boeing prior to issuing the news, and after that it only received a cease-and-desist letter from the aircraft manufacturer.
Around the time of the news releases, Mr. Curshen and Mr. Ricci "jump-started" the stock with a series of matched orders, the SEC claimed. With the assistance of Mr. Montgomery and two other promoters, they boosted CO2 Tech from 91 cents to $1.65 on volume of 12.2 million shares. The SEC said they were able to dump $5.5-million worth of stock the day of the Boeing news release. In total, Red Sea obtained $7-million in profits for Mr. Weinbaum and Mr. Zigdon, which it wired to bank accounts in Israel and Switzerland.
The complaint sought disgorgement of ill-gotten gains, appropriate civil penalties and penny stock bans against the men. In filing the case, the SEC acknowledged the assistance of the B.C. Securities Commission, the Costa Rican Police, the Israel Securities Authority, the United Kingdom Financial Services Authority and the City of London Police.
Mr. Weidenbaum previously pleaded guilty in the criminal case, and awaits sentencing. Mr. Weinbaum and Mr. Zigdon also face criminal charges but have not yet made an appearance. Mr. Weinbaum has not been arrested, and Mr. Zigdon is in custody in Germany awaiting extradition. Both men have responded to the SEC case and generally deny any wrongdoing.
Mr. Ricci pleaded guilty in a separate criminal case and awaits sentencing. He settled the SEC case by agreeing to a penny stock ban and to an order barring future violations. When he was in Vancouver, he worked at PI for five years, leaving the firm on Nov. 17, 1999. |
