CO2 Tech's Curshen loses bid for new trial
2012-03-22 14:04 ET - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
by Mike Caswell
Recidivist securities violator Jonathan Curshen, 47, has lost his bid for an acquittal or a new trial in the CO2 Tech Ltd. pump-and-dump case. He had argued that prosecutors did not present sufficient evidence to link him with a conspiracy to manipulate the stock, and that the jury was tainted by unreliable evidence. The judge, however, has sided with the prosecutors, who contended that Mr. Curshen was well aware of the manipulation. Testimony at trial showed that he discussed details of the scheme during a meeting in Vancouver, and was carefully monitoring employees who were carrying out trades as part of the manipulation.
The loss is contained in an order handed down on Tuesday, March 20, by Miami Judge Richard Goldberg, who also presided over an 11-day trial against Mr. Curshen and others. The judge did not provide his reasons for denying the motion, simply issuing a one-page decision.
During the trial, prosecutors argued that Mr. Curshen and the others conspired to dump $7-million worth of CO2 Tech shares after the company claimed to have a relationship with Boeing. (All figures are in U.S. dollars.) The jury convicted Mr. Curshen of the charges on Jan. 31, 2012, and he awaits sentencing.
Mr. Curshen filed his motion for a new trial on Feb. 21, 2012, adopting arguments made by another of the defendants, Nathan Montgomery. Among other things, he argued that three of his co-conspirators who pleaded guilty ahead of trial and testified for the prosecution were unreliable witnesses. The men were "three admitted liars" whose testimony "might establish some conspiracy crime [but] it does not establish the crime charged in the Indictment."
He also contended that the government was unfairly allowed to present evidence of pump-and-dumps other than CO2 Tech. Such evidence had minimal value, and only served to prejudice the jury, the motion stated.
Prosecutors, for their part, said that the testimony at trial left little doubt that Mr. Curshen was aware of and participated in a conspiracy to manipulate CO2 Tech. Those testifying against him included former Pacific International Securities Inc. broker David Ricci, who had worked for Mr. Curshen in Costa Rica. He testified that he knew CO2 Tech was being manipulated, and he exchanged e-mails with Mr. Curshen that confirmed the fact. In one example presented at trial he alerted Mr. Curshen to the stock falling in price, and asked if a "medic is on the way." Mr. Ricci explained that his message was a question about whether somebody would manipulate the stock upward.
Another witness, Michael Bahar, testified about a meeting in Vancouver during which Mr. Curshen discussed details of the CO2 Tech manipulation. The men talked about how Mr. Curshen's Costa Rican company, Red Sea Management Ltd., would sell the stock, and how Red Sea would wire out the proceeds from those sales. (It is not clear why the meeting was in Vancouver, although prosecutors presented evidence that Mr. Curshen did a significant amount of banking here. They said Red Sea routed $91.5-million in proceeds from several pump-and-dumps through an account at HSBC Bank in Vancouver.)
Finally, prosecutors said that during the manipulation, Mr. Curshen was looking over the shoulder of one of his traders in Costa Rica, Ronny Salazar. He gave him specific instructions, such as which market-maker to use, the government claimed.
With the loss of his acquittal motion, the CO2 Tech charges will remain part of Mr. Curshen's record of securities violations (barring a successful appeal of course). Prior cases include a civil action for the 2000 pump-and-dump of Freedom Golf Inc., in which the U.S. Securities and Exchange Commission won a $116,953 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 jail sentence against him for broker bribery, which he began serving in October, 2011.
CO2 Tech charges
The charges that Mr. Curshen and the others faced are best detailed in a parallel civil complaint that the SEC filed on Feb. 18, 2011, in the Southern District of Florida. According to the complaint, Mr. Curshen carried out the CO2 Tech promotion on behalf of two Israeli men, Ariav Weinbaum and Yitzchak Zigdon. The pair had control over the company's entire public float of 22.5 million shares, and Mr. Curshen had agreed to help them sell those shares.
As part of that agreement, he and Mr. Ricci executed a number of wash trades that "jump-started" the stock, the SEC said. They entered the trades on Jan. 29, 2007, the same day as the company issued a news release in which it falsely claimed that Boeing had taken an interest in one of its products, a pollution control system. The combination of the trading and the news boosted the stock to $1.65 from 91 cents, on volume of 12.2 million shares. That same day, the men were able to dump $5.5-million worth of stock, the complaint stated.
In total, Red Sea was able to obtain $7-million in illegal profits for Mr. Weinbaum and Mr. Zigdon (who also face criminal and civil charges), the SEC claimed. Red Sea sent this money to accounts in Israel and Switzerland.
The complaint sought disgorgement of ill-gotten gains, appropriate civil penalties and penny stock bans. 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.
While Mr. Curshen is now awaiting his sentence in the criminal case, two of his co-defendants have yet to go on trial. They are Mr. Weinbaum, who has not yet been arrested, and Mr. Zigdon, who is in custody in Germany awaiting extradition. Both men have responded to the SEC case and generally deny any wrongdoing.
Also charged in the scheme was Mr. Ricci, who pleaded guilty to criminal charges on Jan. 23, 2012, and awaits sentencing. He settled the SEC case by agreeing to a permanent penny stock ban. When he was in Vancouver, he worked at PI for five years, leaving the firm on Nov. 17, 1999. |
