Hi TLC
Check this out. On May 13th I posted this article exchange2000.com, on the YBM thread. I knew and so did alot of others that it was a scam and yelled as loud as we could to SHORT-BAIL-OUT-SHORT-BAIL-OUT:-)
Now, a few days later look what I found:-)))))))
OHCH>>> YBM Magnex International Inc -
Questions abound on Bay Street
YBM Magnex
International Inc
YBM
Shares issued 44222901
1998-05-13 close
$14.35
Friday May 15 1998
GRIFFITHS' MILLION-SHARE BLOCK, A
DELAYED HALT AND A CONFERENCE
CALL
by Brent Mudry
One of the many whodunnits in YBM Magnex
International's last day of trading Wednesday
on the TSE involves Griffiths McBurney &
Partners' million-share cross less than an hour
before the FBI raided the magnet maker. The
current value of this $14.25 million block is
anyone's guess, but mutual fund managers
have put a theoretical base value of $5 million
on the cross, leaving the buyer (or buyers) with
an instant loss of at least $9.25 million. The
timely trade -- timely from the sellers' point of
view -- came a day after Canadian regulators
made the decision to halt the stock, but,
unfortunately for the buyers, this decision was
not immediately implemented.
The timing of the trade is sure to cause
comment. YBM shares opened at $13 at 9:30
am Wednesday, and the Griffiths
million-share-cross went through five minutes
later, at $13.25. With the large overhang out of
the way, the stock started rising. YBM shares
reached $14.15 at by 10:30, when five dozen
federal agents, from the FBI, the U.S. Customs
Service, the U.S. Immigration Office and the
International Revenue Service, barged into
YBM's headquarters in Newtown,
Pennsylvania. The Toronto Stock Exchange
did not halt trading until 23 minutes later, at
10:53, at the urging of the Ontario Securities
Commission. The OSC followed with a cease
trading order, effectively suspending the stock
until further notice.
While it first seemed the Canadian halt was
based on the FBI raid, in reality, the decision
by the OSC to cease-trade the stock was made
at least a day earlier, on Tuesday. "We knew it
was coming a day before," Charles Blakey of
the Alberta Securities Commission told
Stockwatch. It remains unclear why the OSC
stalled for a day and what, if anything, it knew
about the U.S. Attorney's Organized Crime
Strike Force four-agency probe into YBM.
The FBI and the Customs Service were
granted their search warrant, sealed in court,
on May 6, when the stock traded at about $17.
Based on the 23-minute delay in halting the
stock and Mr Blakey's remark, it appears likely
the halt was based on YBM's week-old
disclosure of Deloitte's discomfort letter, and
not directly on the FBI probe. On May 8,
coincidentally two days after the sealed FBI
warrant was signed, YBM itself revealed the
existence of Deloitte's April 20 discomfort
letter to the OSC. The OSC claims it never
received this letter and related documents until
9 pm on Tuesday, after repeated requests to
YBM. Presumably unaware of the 60-agent
force about to strike in Pennsylvania, the
Ontario regulator let the stock trade for more
than an hour the next day, before halting it. It
is not known exactly when or if the OSC
received any investigatory alert from Deloitte,
prior to the package received at 9 pm on
Tuesday. OSC officials continue to refuse to
even confirm or deny they are investigating
YBM. Deloitte's North American
spokesperson, Ellen Ringel, based in Deloitte's
"national" office in Wilton, Connecticut, was
unable to confirm when her firm first alerted
Canadian regulators.
Also apparently unaware of what was coming,
Griffiths, a big booster of YBM, was preparing
to clean up a million-share block that was
hanging over the market. The depressing
overhang was no secret to Canadian fund
managers on Tuesday, although the identity of
the timely seller is. It is not known whether the
block was picked up by a single buyer, or a
number of Griffiths clients, or whether the
brokerage took all or part of the stock for
itself.
One firm that was definitely not involved was
Connor Clark and Lunn, the Vancouver-based
pension fund manager now taking the biggest
hit on the YBM debacle. "We saw it but we
don't know who it was," analyst Kaan Oran
told Stockwatch. Mr Oran, a big booster of
YBM as a First Marathon analyst, moved over
to Connor Clark, YBM's biggest institutional
holder, about a month or so.
"I cannot comment on YBM," the new Connor
Clark employee told a reporter. Connor Clark
bought more than $48 million of YBM
five-year debentures in a private placement last
August, convertible at $12 per share. In a
statutory filing made at the same time, Connor
Clark stated that it held 6.53 million shares on
behalf of clients' funds and accounts,
fully-diluted. At the time, this worked out to a
16.09 per-cent stake in YBM, fully-diluted.
The debentures would convert into four million
shares, indicating Connor Clark had purchased
2.52-million shares prior to this private
placement.
Although pension fund manager Connor Clark
was so heavily exposed, it opted to stay out of
the 20-strong conference of mutual fund
managers on Thursday, which set a $5 to $7
value on the stock. The post-raid pow-wow
was hosted by the Investment Funds Institute
of Canada. The call was supposedly restricted
to mutual fund managers, but one pension fund
"snuck in there," according to IFIC spokesman
John Caszel. He refused to identify the firm, or
one other pension fund which contacted IFIC
for a post-call briefing, but he confirms that
Connor Clark was not involved.
Faced with an opening range of "zero to
$14.35," the fund managers hammered out a
consensus of $5 to $7. IFIC said the fund
managers worked from YBM's own financials
and "reports issued by the analysts." Mr Caszel
added, "there had to be some kind of basis" for
a valuation. Based on this information, the fund
managers ascribed a value of $225 million to
$315 million on YBM, down from its peak
market cap of $900 million.
(c) Copyright 1998 Canjex Publishing Ltd.
canada-stockwatch.com
DOUBLE OUCH...LOL
Documents link YBM to Russian mafia
Company is under investigation by various U.S. agencies and
the Ontario Securities Commission.
David Baines, Sun Business Reporter, with files from Adrian
du Plessis Vancouver Sun
<Picture>
------------------------------------------------------------------------
(Ownership web revealed).
------------------------------------------------------------------------
While it was going public on the Alberta Stock Exchange in
1995, YBM Magnex International Inc. was linked to alleged
money-laundering operations with the Russian mafia.
But after a six-week trading halt, ASE officials cleared the
company to
resume trading.
The stock price soared and the company moved to the
Toronto Stock Exchange where it became a favorite of some
of Canada's top analysts, underwriters and mutual fund
managers.
The love affair came to a crashing halt Wednesday when
about 60 agents from the Federal Bureau of Investigation,
U.S. customs and immigration service and the Internal
Revenue Service raided the company's headquarters in
Newton, Pa.
The Ontario Securities Commission -- citing the raid and
evidence of
criminal activity uncovered by the company's auditors --
issued a cease trade order, freezing nearly $650 million worth
of YBM stock certificates.
The purpose of the U.S. investigation has not been officially
revealed, but the Philadelphia Inquirer quoted an unnamed
law enforcement officer as saying it relates to allegations of
money-laundering, securities fraud, and customs and
immigration violations.
According to documents obtained by The Vancouver Sun, the
founders of YBM and its subsidiary companies are alleged to
be high-ranking members of Russia's most notorious mafia
gangs.
Their current links, if any, to the company are not known.
YBM
vice-president James Held said Friday he is "not
knowledgeable enough" on YBM's original shareholders to
comment.
He said he would make inquiries and call back, but did not
respond by press time.
- - -
According to disclosure documents filed with the Alberta
Securities
Commission, YBM went public in 1995 by acquiring an
ASE-listed shell company called Pratecs Technologies Inc.
The transaction was structured in two stages. First, Pratecs
would acquire Canadian rights to distribute products of YBM
Magnex Inc. of Pennsylvania. Then it would acquire all of
YBM's outstanding shares.
According to disclosure documents, YBM owned Arigon
Company Ltd. of the Channel Islands which, in turn, owned
Magnex RT of Budapest and Arbat International of Russia.
Magnex was the main operating company. According to
unaudited statements, it had sold $20.6 million US worth of
magnets in 1993 and earned $1.8 million US in net income.
Of this amount, $4.3 million US, or about one-fifth of the
company's sales, was said to have been generated in Canada.
There was, however, no evidence that any sales had actually
been made in Canada.
To complete both stages of the transaction, Pratecs would
issue 110 million shares at a deemed price of 20 cents to the
shareholders of YBM, putting them firmly in control of the
public company.
According to disclosure documents, the largest shareholder
would be Jacob Bogatin, then YBM's group vice-president
and now YBM's president and CEO. Bogatin purportedly
holds two science doctorates from universities in Russia.
Others YBM shareholders who would receive large blocks of
Pratecs stock included Semeon, Titania and Mila Mogilevitch.
Together they would receive 16.5 million of the 110 million
shares.
According to a May 1995 FBI report. Mogilevitch is a
high-ranking member of the Russian mafia.
"Semion (Note: Russian names are often spelled differently
when translated to English) Mogilevitch runs an extensive
prostitution operation out of the Black and White Nightclubs
in Prague and Budapest. Foreign law enforcement agencies
have documented Mogilevitch's prostitution operation as the
centerpiece of his operations in Europe," the report states.
The report notes that Eurasian criminal organizations use
false
documentation "to facilitate travel or residency in furtherance
of criminal activities. Many of Semion Mogilevitch's
lieutenants and Mogilevitch himself hold Israeli citizenship
and carry Israeli passports."
More crucially for YBM shareholders, the report also linked
Mogilevitch to Arigon:
"A number of individuals associated with Semion Mogilevitch
in the Los Angeles area received wire transfers from Arigon
Ltd. The use of
individuals to receive small deposits may be a method by
which Mogilevitch is disguising larger transactions from
criminal proceeds.
The use of residential addresses for a number of front
companies in Los Angeles is another indication of money
laundering."
Other YBM shareholders who received large blocks of
Pratecs stock included Semion's ex-wife, Galina Grigorieva;
Konstantin Karat; Anatoly and Tania Kulachenko; and Alexei
and Valentina Alexandrov. No background information on
these people was provided.
The transaction, which would turn the shell company into an
active
business, was sponsored by Yorkton Securities in Calgary.
Signing on behalf of Yorkton was Michael Prew, a Yorkton
vice-president and former chair of the ASE board of
governors.
On June 22, 1995, before the second stage of the transaction
was completed, Pratecs "voluntarily" halted trading due to
information it had received on an unnamed subsidiary
company. The nature of that information was not disclosed to
shareholders.
Days earlier, CTK National News Wire (a Czech news
agency) reported that members of two Russian gangs --
Solntsevskaya, based in Moscow, and Solomonskaya,
operating in Ukraine and Israel -- had met in the U Holubu
restaurant in Prague on May 31, 1995 to celebrate the
birthday of a high-ranking gang member.
The wire service said the restaurant "is the seat of Arigon Cs.,
daughter company of Arigon Ltd."
It said Czech police raided the meeting because it had
received an
anonymous tip that Mogilevitch, described as boss of one of
the gangs, was to be murdered. Police said that two large
refrigerating vans had been parked outside the restaurant,
possibly for the removal of dead bodies.
Two hundred people were detained during the raid, but all
were eventually released without indictment.
The wire service said a team of British police specialists
subsequently
went to Prague: "Their stay was connected with the arrest of
British lawyer Charles Churchwald in May who was
suspected of laundering $80 million gained by the Russian
organized crime by means of the British Arigon Ltd.
company."
On June 6, 1995, the High Court of Justice in London issued
orders freezing the assets of Arigon and several people who
were allegedly shareholders of Arigon.
They were Adrian Churchward (correct) and YBM
shareholders Galina
Churchward (nee Galina Grigorieva, who was reportedly
Mogilevitch's former wife), Mogilevitch and Konstantin
Karat.
There were also allegations that two other YBM shareholders
-- Anatoly Kulachenko and Alexei Alexandrov -- had
criminal convictions in the Ukraine.
It was this court action that caused ASE officials to halt
trading, but the allegations were eventually dropped, the
freeze orders lifted and trading in the ASE company resumed
without any public disclosure of disclosure of what the
allegations were about or who was involved.
- - -
As part of its corporate reorganization, Pratecs consolidated
its shares on a five-for-one basis, then proceeded with a stock
offering of 7,075,000 shares at $2 each underwritten by First
Marathon Securities and Griffiths McBurney & Partners.
Four months later, First Marathon vice-president Owen
Mitchell, who
certified the prospectus on behalf of his firm, became a
director of YBM.
That prospectus contained audited statements for 1992, 1993
and 1994. Those statements revealed that during 1993 the
company hadn't sold any magnets in Canada.
This contradicted the company's earlier assertion that
Canadian sales had totalled $4.3 million US. There was no
attempt to resolve that discrepancy.
On Nov., 3, 1995, the company announced that the
acquisition of YBM Magnex and stock offering had been
completed. That meant that Mogilevitch and the other YBM
shareholders had received their 110 million shares (22 million
post-consolidation).
On Nov. 26, 1995, Edinburgh-based Scotland on Sunday,
published an article entitled, "Western businesses bought as
front for Russia mafia."
"In a bid to widen its share of western markets," the article
stated, "the Russian mafia has moved is forward
money-laundering operational bases to central Europe,
flooding laundered money from criminal activities into the
new democracies."
"According to Budapest police officers investigating the
affairs of the
Magnex electronics firm, Budapest and Prague have become
the focal point of Russian mafia money-laundering operations
because of easy access, the weakening of traditional
institutional structures and the great protection afforded to the
depositors by commercial banks," said Scotland on Sunday.
"Police also claim that Mogilyevich (correct) has several
'action men' who worked mafia operations in Central and
western Europe. One of them was named as Igor
Anatolyevich Tkacsenko, who has been linked to a series of
serious crimes in region, but as the witnesses observe the rule
of 'omerta' (code of silence), he cannot be brought to book."
The article continued: "According to both Budapest and
Moscow police, one of the key figures behind the
money-laundering is Sergei Mikhailov (who is) head of
Moscow's dominant crime syndicate, the Solntsevo gang."
In November 1996, a well-regarded Russian magazine,
Ogonyok, published the names of Russian "godfathers,"
known to be living in Budapest, who have been accused of
money laundering and other crimes by the Russian
authorities.
One was Mikhailov, who was said to have helped establish
Arigon, Magnex and Arbat.
Mikhailov was arrested in Geneva on Oct. 15, 1996, and
charged with money-laundering, visa violations, illegal real
estate dealings and being a member of a criminal
organization. He has been in custody ever since.
After YBM went public, it reported rapidly increasing sales.
Last year, the OSC raised questions about the company's
1996 audited financial statements and asked for a re-audit to
confirm its reported sales and the identity and ultimate
location of its customers.
That re-audit, conducted by Deloitte & Touche in
Pennsylvania, confirmed the total sales figures but found that
instead of selling $13.6 million US worth of magnets in North
America, as previously reported, it had sold only $1.8 million
US.
The re-audit also discovered that YBM had given $5.2-million
US worth of diesel oil to an unnamed party. Payment was not
to be made until the oil had been consumed by end users.
Why the company made such an arrangement, or why it was
dealing in diesel oil was never explained.
These adjustments did not deter analysts such Nesbitt Burn's
Peter Sklar or First Marathon's Kaan Oran, who continued to
recommend the stock.
In March, the company issued unaudited statements showing
that 1997 sales had jumped 53 per cent to $138 million US
and net income nearly doubled to $25.6 million.
The stock soared to a high of $19.90, raising the company's
total stock market value to $900 million.
Then, on May 8, the company announced it would seek a
45-day extension in filing its 1997 audited statements.
The stock crumbled to $14.35 by Wednesday.
Then, 23 minutes after the FBI raid began, the company
asked the TSE to halt trading. Later that day, the OSC issued
a cease-trade order revealing that Deloitte had uncovered
evidence of criminal activity within the firm and had
suspended its audit.
Mr Metals:-)
PS. I'm hearing this could be the second largest scam to rock the TSE since BRE-X:-) |
