PART 2
Handelskredit's knack for investing at just the right time, coupled with the dubious character of many of its clients, raised suspicions that the bank was acting as front for insiders to deal anonymously in their own stock without reporting or tax consequences. Dealings involving Handelskredit bank were among the transactions that got Mr. Charpentier into deep trouble with securities regulators in 1988. He was squeezed out of the brokerage business and suspended indefinitely from the Chartered Accountants Institute of B.C.
Mr. Hauchecorne took over his accounts, including Handelskredit, which eventually changed its name to Anker Bank. At about the same time, Continental, racked by regulatory problems, merged with Yorkton Securities.
Much like Mr. Charpentier, Mr. Hauchecorne's demeanor was as smooth as silk, and his baby-faced looks made him the picture of innocence.
As one colleague said: "You would never suspect him of doing anything wrong. He had a good sense of humor. It was hard not to get along with him."
A Swiss national, Mr. Hauchecorne spoke four languages fluently and was a functionary in the classic Swiss tradition. He didn't try to analyze stocks, and rarely recommended them. He was simply an order-taker who bought and sold on his clients' instructions.This made him a natural choice to take over the Anker Bank account.
By 1995, the bank accounted for 90% of Mr.Hauchecorne's business at Yorkton Securities. This later fell to 50% when he took on some interesting new clients from the United States.
Several years earlier, Larry Ryckman had introduced Mr. Hauchecorne to Eric Wynn. At the time, Wynn was running a 1-900 stock tip line called Traders & Investors Alert, a dubious service which some brokers dubbed the "slime line."
Wynn and his partner in the tip line, Barry Davis, subsequently ran afoul of U.S. regulators, and Davis pleaded guilty to five criminal counts of conspiracy to commit mail fraud, wire and securities fraud.
In an effort to reduce his sentence, he admitted that the tip service manipulated stocks that were connected to the Mob.
In October, 1989 Wynn was sentenced to three years in jail for stock fraud and filing a false tax return. That same month, Forbes magazine reported that "Bonanno family capo Frank Coppa, his associate Eric Wynn and other friends" had visited a stock promoter and "bashed him on the side of the head with a telephone."
"Wynn was definitely the heavy," said one stockbroker who dealt with him. "You didn't want to cross the guy. That was the aura he portrayed."
Wynn didn't stay out of trouble for long: In July, 1995 he was convicted on 13 counts of conspiracy, security fraud and wire fraud for a scheme to manipulate penny stocks, in part for the benefit of Coppa's family. He was sentenced to 52 months in jail.
Mr. Hauchecorne told the VSE hearing panel that, at some point in their business relationship, he knew Wynn was issuing trading instructions from jail, but thought he had been imprisoned for tax evasion and "left it at that."
Between jail terms, Wynn introduced Mr. Hauchecorne to Philip Gurian, a 36-year-old former tennis pro and broker who had been barred from the U.S. securities industry. Gurian told Mr. Hauchecorne he was interested in shorting stocks through a Canadian broker because the rules for shorting were less stringent in Canada.
According to Business Week, which conducted an intensive investigation of mob-related securities activity, "Gurian has long been enmeshed in the world of 'chop stocks' " -- street lingo for easily manipulated penny stocks.
In 1994, the National Association of Securities Dealers accused him of acting as an unregistered trader at Falcon Trading Group Inc. in Boca Raton, Fla., and failing to honour trades from other brokerage firms. Business Week described Falcon Trading as a sister company of Sovereign Equity Management Corp., which is allegedly controlled by Philip Abramo. In 1996, Abramo was charged with a $1-million stock fraud that swindled 300 people using offshore companies in the Bahamas. He pleaded guilty to tax evasion charges, served a year in prison and now works as a "business consultant."
"Mr. Abramo, who works from his house in exclusive Saddle River (N.J.), represents a new breed of underworld businessmen who are seeking to expand the Mob's influence into a wide range of new white-collar ventures," The New York Times reported on Jan. 17.
"According to federal prosecutors, Mr. Abramo frequently socialized with Mr. [John Gotti Sr.] before the arrest of the New York mafia boss in 1992, and is now an underboss in New Jersey's only homegrown Mafia family, the DeCavalcantes."
According to Business Week, Abramo, through Sovereign, brought several companies public in 1995, including SC&T International Inc.
Gurian was said to be "the key player in organizing the offshore financial conduits that handled the SC&T deal."
Those companies reportedly made fortunes dumping their shares before the stock price collapsed. According to evidence at the VSE hearing, some of those accounts were handled by Mr. Hauchecorne.
The panel was told that, in early 1995, Gurian introduced Mr. Hauchecorne to L. Obafemi Pindling, son of the former prime minister of the Bahamas. Pindling is in the business of setting up offshore companies that are shielded by Bahamian secrecy laws.
In February, 1995, Pindling arranged with Mr. Hauchecorne to open an account in the name of First Nassau Ltd., domiciled in the Bahamas. ....CONT'D |
