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To: Janice Shell who wrote (23363)	7/13/1999 4:21:00 AM
From: EL KABONG!!!	Respond to of 26163

The third in a series of four articles from The Globe and Mail. globeandmail.ca Pacific International's name surfaces in another U.S. case Brokerage launching review of compliance procedures Peter Kennedy British Columbia Bureau Friday, July 9, 1999 Vancouver -- Pacific International Securities Inc. has been mentioned in another U.S. indictment -- this one involving an alleged $5.3-million (U.S.) stock manipulation case -- and is hiring an independent consultant to review its compliance procedures. The consultant, to be named today, will identify areas in which Pacific International can "enhance its compliance procedures or change them," said Larry McQuid, chief operating officer at the brokerage. Vancouver-based Pacific International said accounts at the brokerage were used in the scheme and there are no allegations against the company or the broker who managed the accounts. Pacific International is going ahead with the review after being mentioned in the alleged money laundering and stock manipulation case involving Philippe Hababou, a 44-year-old French citizen and former New York businessman. A criminal complaint filed in the U.S. District Court of New Jersey alleges Mr. Hababou was a fugitive who moved to the United States in 1995 after being charged by French law enforcement authorities with securities fraud. While posing as a mergers and acquisitions consultant, he obtained control of Prime International Products Inc., a Utah company that claimed to be in the business of marketing and distributing prepaid telephone calling cards. While Mr. Hababou was not a licenced broker, he and his associates are alleged to have illegally manipulated shares in Prime and other companies by trading the shares through several accounts set up at Pacific International. According to the complaint, which has not been proven in court, they obtained large blocks of shares in Prime without disclosing their holdings to either the U.S. Securities and Exchange Commission in Washington or investors. Between August, 1995, and June 1996, the complaint alleges, Mr. Hababou and his associates netted more than $5.3-million by selling the stock and transferring most of the proceeds to personal accounts via a casino in Atlantic City and a currency exchange in New York. Mr. Hababou and his associates allegedly conspired to transfer about $4-million of Prime share proceeds from accounts they controlled at Pacific International to their own personal accounts. Mr. Hababou, arrested last December, is charged with stock manipulation and money laundering. News of the Hababou indictment came about a week after two Pacific International brokers were arrested in Seattle in connection with an allegedly massive U.S. stock manipulation scheme headed by the Colombo organized crime family and the Russian mob. After being released on bail, Pacific International investment advisers Dirk Rachfall and Michael Patterson will appear in a New York District court later this year to face a series of charges, including conspiracy to commit securities, mail and wire fraud. Mr. Rachfall and Mr. Patterson are also accused of conspiring to commit money laundering and conspiracy to engage in unlawful monetary transactions. Pacific International's Mr. McQuid said there is no connection between the two indictments as far as he is aware. Mr. Rachfall and Mr. Patterson have both been suspended from the brokerage pending a resolution of the case against them. While Pacific International said its compliance checks exceed industry requirements, Mr. McQuid said all financial institutions face significant challenges in detecting unlawful activities when individuals are determined to deceive them. "We do thousands of transactions every day for hundreds of clients," he said. "Nonetheless, we have launched a complete and independent review of all our compliance measures with a view to making improvements if possible." The decision to launch the review, he said, was taken by Pacific International's board of directors and did not involve any input either from the Vancouver Stock Exchange or British Columbia Securities Commission. Pacific International said a large brokerage and New York bank were also allegedly victims in the Hababou case. KJC