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Dear Andrew, "Bet the jockey, not the horse" is one of those Howe Street truisms, and until THE PENNY STOCK GURU! 'fesses up and identifies the promoter he/she calls only the "BIG R", those interested in playing Chandeleur stock will have to be content examining the track record of those others whose history is recorded on the public record. (On the "AAA STOCKS THAT SHOULD DOUBLE IN A MONTH!!!" SI thread, THE GURU! says that a "Texas billioner" is rumoured to be taking over East West Resources at $2.00 per share. It could be Ross Perot, who knows? Then again, the East West "billioner" isn't capitalized -- THAT"S BIG LETTERS TO Y'ALL!!! -- and the Chandeleur backer IS, so maybe they're just two different rich and powerful individuals who both love THE GURU!'s penny stock picks.) While THE GURU keeps pumping out misspelled touts and exclamation marks !! and keeps us all in suspense it may be worth reviewing some Chandeleur jockeys, stable-hands and bettors -- past and present. On August 25 1993 The Vancouver Sun published a feature titled "Classic sting undoes beautiful friendship based on laundering money." It told the story of how an undercover U.S. Customs Agent, posing as a big-time New York drug dealer, met several times with then Chandeleur Bay director Richard J. Bowes and an associate who were offering money laundering services. The Sun reported on one meeting held on August 9 1988 in a Dallas hotel room: "Bowes outlined an elaborate plan whereby a VSE company that he controlled, Chandeleur Bay Production Company, would serve as an on-going laundering vehicle." Bowes told the agent he thought was a high-volume heroin dealer: "The VSE has a shitty reputation. In fact, a lot of people you do business with will probably stand higher in reputation. But, on the other hand, there's a lot of practical advantages... There's very little regulation from that standpoint, and it accomplishes our goal." Discussions were held about setting up a crayfish farm in Louisiana that would be merged with Chandeleur Bay and used to wash the dirty money. "Bowes proposed to sell control of Chandeleur and the crayfish operation to the New York drug dealer for $325,000 US, but stay on as a business consultant." The undercover agent, however, opted for a route that involved a smaller individual cash outlay. Instead of going the public company RTO route, the Customs officer gave cash in several installments to Bowes and his partner to be laundered through Bowes' private companies, RJB Oil and CBP Production. In February 1989 the sting operation was terminated. Bowes' partner, Myron Palermo, was arrested and agreed to testify against the Chandeleur director. Bowes resigned from Chandeleur Bay's board in August 1989 and was indicted by a Federal Grand Jury in Louisiana in May 1991. In August 1993 the long-time VSE promoter was convicted on five criminal counts relating to his laundering activities. The history of other Chandeleur players has been comparatively sedate. Canada Stockwatch "market summaries" (including those dated July 10, September 12, and September 24 1996) offer insight into the current CYJ stock play (which, the journal notes, is moving in tandem with Megastar Ventures). Here's a sample of the Stockwatch commentary available @ canada-stockwatch.com: for July 10 "In a few days in May, the stock almost tripled on heavy volume but little significant news, then fell back just as quickly. Chandeleur now trades at about the same price it did a year ago. The May rally was weird and short-lived, nothing a stock exchange would be proud of... The current activity may be related to the first anniversary of a private placement, coming later this month. Chandeleur sold 2.66 million units at $0.15 in July 1995." Buying 1.08 million of these $0.15 units (1 share plus 1 warrant) was Rahn & Bodmer Banquiers. Stockwatch noted "Rahn & Bodmer is a familiar player - a front for others some might say - with many VSE promotions... The most troubled company in Rahn & Bodmer's portfolio was Nesmont Precious Metals and its successor, International Nesmont Industries." After summarizing the Nesmont scam in which brass bars were substituted for gold bars to fool company auditors, Stockwatch names numerous other, less colourful, VSE investments made by the Swiss banking team. Other interesting background on Rahn & Bodmer can be obtained through the Australian and British courts. Investigators in those countries reviewed Rahn & Bodmer's role in connection with Malcolm "Jockey" Johnson and the Independent Resources Limited (IRL) group of companies and hoped to have Messrs. Rahn and Bodmer appear as key prosecution witnesses at trial. The IRL scheme is considered the largest stock swindle ever in Australian history -- an estimated Cdn. $500 million disappeared through a collection of penny stocks involved in that country's junior market in the mid-late-1980s; more recently, on September 12 1996, Canada Stockwatch has reported on a private placement of flow-through units in Chandeleur Bay sold at $0.23 each. The largest purchasers of these CYJ units "Len Fiessel, a shareholder of McDermid Miller before he got into trouble at LOM Western Securities, took 105,000; and 581407 Alberta, owned by Mr. Fiessel and Robert Shull bought 450,000 units." Background on ex-broker Fiessel and his partner Shull can be found in such sources as SEC documents, Bloomberg wire stories and the Wall Street Journal. Of note is the coverage after September 1994 when the SEC made public its investigation of a kickback scheme from Phoenix to Boston involving five brokers at PaineWebber and Prudential Securities (who quickly became ex-brokers at their firms). The SEC cited Shull and Feissel as having "used a variety of means to make undisclosed payments to the brokers named in the case." The SEC said "these payments were made in cash, shares of Fairmont stock, or in one case, gambling chips for a Las Vegas casino." It was alleged that, as insiders of Alberta-listed Fairmont Resources Inc. (since renamed Endeavor Resources), Shull, Feissel, and his spouse, paid U.S. brokers who touted the stock -- which rose from $.30 to over $3.00 a share before collapsing. As well, it was charged that Shull and the Feissels had gained control of the majority of Fairmont's outstanding shares at pennies a piece before beginning to buy and sell hundreds of thousands of Fairmont shares as the stock rose to $3.10. The SEC noted that both Feissels had previously been investigated by the VSE for manipulating penny stocks. There's plenty more info on these individuals and cases available from those sources noted in this post which can add to what's summarized here. I've found that these SI threads have trouble receiving lengthy posts -- so I'll save the rest of this historical review and any background on the track record of Chandeleur directors, vendors and others for another day. Hope you'll all stay tuned for the conclusion of this cliff-hanger. Who knows, by the time this text has been digested, THE GURU may even have named the very powerful promoter he/she talks to everyday, the BIG R!!!!!!!!! All fun aside, I hope this helps anybody interested in why penny stocks may go up or down. Whatever happens, you can become a part of the VSE's entertaining history with every sale or purchase. Just keep those Racing Forms handy... |
