BCSC to hold hearing into P.I. brokers
B.C. Securities Commission
BCSEC
Shares issued 0
1899-12-30 close $0
Tuesday Jul 13 1999
Also National Bank of Canada (NA)
Also Vancouver Stock Exchange (VSE)
IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418
AND
IN THE MATTER OF DIRK ALAN RACHFALL ("Rachfall")
AND MICHAEL KEVIN PATTERSON ("Patterson")
(collectively, the "Respondents")
Temporary Orders and Notice of Hearing Under Section 161
1. Whereas it appears to the executive director that:
1.1
The respondents are, and were during the period between
September, 1995, and March 6, 1998, (the relevant period),
registrants under the Securities Act, R.S.B.C. 1996, c. 418 (the Act)
and employed by Pacific International Securities Inc.
1.2
Orlando SuperCard Inc. and Legend Sports Inc. are not reporting
issuers under the Act and shares of Orlando and Legend Sports
traded on the Over-the-Counter Bulletin Board operated by the
National Association of Securities Dealers in the United States
during periods in the relevant period.
1.3
On June 22, 1999, a complaint relating to the respondents was
sworn by Gary J. Pontecorvo, special agent of the Federal Bureau of
Investigation, United States.
1.4
In the complaint, Pontecorvo stated, among other things, that:
1.4.1 -- during the relevant period, the respondents, together with others,
knowingly and wilfully conspired to use and employ manipulative and
deceptive devices and contrivances in violation of securities and other
laws of the United States, by: employing devices, schemes, and artifices
to defraud; making untrue statements of material facts and omissions of
material facts necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading;
and engaging in acts, practices, and courses of business which would
and did operate as a fraud and deceit upon members of the investing
public in connection with the purchases and sales of shares of Orlando.
1.4.2 -- a person, identified only as CW-1, has pleaded guilty to charges
related to the fraudulent sale of several securities, including the
securities of Orlando, and has signed a co-operation agreement with the
government. CW-1 has provided information related to the operation of
several corrupt brokerage houses and the fraudulent sale of securities,
including the securities of Orlando. The information provided by CW-1
has been corroborated through tape recorded conversations and
documents and has proven to be reliable and trustworthy.
1.4.3 -- CW-1 states that the respondents managed several nominee
accounts that CW-1 maintained at Pacific International. CW-1 used these
accounts to "park" stocks whose price CW-1 and others were
fraudulently manipulating. The respondents knowingly executed trades of
these stocks through these and other accounts in order to inflate the
stocks' price, to create an artificial market for the stocks and to control
the sale of these stocks in order to prevent them from being sold on the
open market.
1.5 -- Based on information contained in the complaint, the respondents
may have been involved in: a debit "kiting" scheme relating to trading in
the shares of Orlando, pursuant to which shares would be moved among
brokerage houses to avoid payment being made for the shares by those
involved in the scheme; and a scheme to obtain apparently undisclosed
control of the outstanding shares of Orlando, artificially inflate the price
of the shares, and sell the shares to unsuspecting investors.
1.6 -- Pacific International suspended the employment of the respondents
effective July 1, 1999, on the basis of the complaint, and as a result of
the employment suspensions by Pacific International, the registrations of
the respondents were suspended by virtue of section 40 of the Act.
1.7 -- On or about July 6, 1999, an indictment was filed in the United
States charging the respondents with committing, during the relevant
period, a number of offences in violation of securities and other laws of
the United States, including offences relating to matters set out in the
complaint.
1.8 -- The indictment charges the respondents with: conspiracy to
commit securities, mail and wire fraud; securities fraud in relation to the
securities of Legend Sports; securities fraud in relation to the securities
of Orlando; conspiracy to commit money laundering; and conspiracy to
engage in unlawful monetary transactions.
1.9 -- The complaint and indictment contain information indicating that
the respondents have engaged in or participated in a transaction or series
of transactions relating to trades in or acquisitions of shares of Orlando
and Legend Sports that: the respondents knew, or ought reasonably to
have known, resulted in or contributed to a misleading appearance of
trading activity in, and an artificial price for, the shares of Orlando and
Legend Sports; perpetrated a fraud on persons; and was contrary to the
public interest.
The executive director considers that the length of time to hold a hearing
under section 161(1) of the Act could be prejudicial to the public
interest, if temporary orders are not made with respect to the
respondents.
The executive director, considering that it would be in the public interest
to do so, orders under section 161(2) of the Act, (the temporary orders),
that: any or all of the trading exemptions described in sections 44 to 47,
74, 75, 98 or 99 of the Act do not apply to Rachfall or Patterson;
Rachfall and Patterson resign any position either holds as a director or
officer of any issuer; Rachfall and Patterson each be prohibited from
becoming or acting as a director or officer of any issuer; Rachfall and
Patterson each be prohibited from engaging in investor relations
activities; and Rachfall's and Patterson's registrations under the Act are
suspended.
A hearing will be commenced before the commission on July 22, 1999,
at 10:00 a.m. to consider the temporary orders.
At the hearing, commission staff will bring the following applications:
this hearing be adjourned and the temporary orders in this matter be
extended to allow the staff to gather necessary information to complete
its investigation.
Rachfall and Patterson may be represented by counsel at the hearing and
may make representations and lead evidence. Rachfall and Patterson are
requested to advise the commission of their intention to attend by
contacting the Secretary of the Commission.
Determinations may be made in this matter if Rachfall and Patterson or
their counsel do not appear at the hearing.
(c) Copyright 1999 Canjex Publishing Ltd. |
