This article indicates a much larger cast of characters are
involved in NCDR than has been mentioned thus far:
June 21, 1999
by Brent Mudry
Controversial Vancouver stock promoter Rene Hamouth led Corsaire Inc. into a
variety of aborted deals before launching Net Command Tech Inc. with horse
shampoo peddler Roger Dunavant, a promotion which peaked at $30 (U.S.)
before being halted a week ago at $15 (U.S.) by the United States Securities and
Exchange Commission. Although Corsaire had short-lived flings with multi-level
marketing shells and a barter promotion in Vancouver and a crab plant in Mexico,
the company's biggest pre-Dunavant deal sheds a spotlight on the intriguing
behind-the-scenes world of Howe Street finance, offshore dealings and nominee
accounts.
Mr. Hamouth and Corsaire are now mired in litigation over this deal, which
involves the aborted vend-in of Zeolite Mira S.R.L., a major European producer
of zeolite, an "environmentally-friendly" phosphate substitute in detergents. Zeolite
Mira S.R.L., an Italian company near Venice then owned by Serbian scientist
Dusan Vucelic and the Yugoslav government, was vended into Ikon Ventures
Inc., another OTC Bulletin Board promotion, after Mr. Hamouth's Corsaire deal
fell through.
THE CAST
The cast of characters reads like a "Who's Who" of Howe Street graduates, with
Mr. Hamouth, Nelson Skalbania, Shafiq Nazerali and Bobby Miller in starring
roles; Sam Belzberg, Eugene Sirianni, Carlo Rahal and Ralph Olson in secondary
roles; Jean Claude Hauchecorne, Axel Fundulus and Joe Eberhard meriting
honourable mentions; and Jim Lenec and Luigi Aquilini given passing reference.
The key players are no strangers to controversy. Mr. Hamouth was eased off the
Vancouver Stock Exchange after a series of questionable stock issuances in 1990
and 1991, and acquitted of stock manipulation charges from an earlier case in
1993. Mr. Skalbania rebounded from a spectacular collapse as Vancouver's
leading property flipper with ventures in the penny stock realm before his recent
conviction of theft of $100,000 from a real estate partner.
Mr. Nazerali has bounced back from his days as a Bank of Credit and Commerce
International figure and alleged Irving Kott associate to become another successful
Howe Street stock promoter. Mr. Miller, an expatriate Vancouver stock
promoter, now resides in the Miami area after a stint a few years back in Uruguay,
where his close associate Ricardo Requena, an accountant, is based. Mr. Sirianni,
another expatriate Vancouver stock promoter, now promotes bulletin board deals
from Lugano in Switzerland, after he was banned for 15 years by Canadian
regulators in 1991 for stock manipulation.
THE DEAL
The Corsaire Zeolite case traces back to the fall of 1996, when Mr. Skalbania
picked up the Zeolite deal and gained the interest of Mr. Belzberg, a corporate
greenmailer of the Milken-Boesky era, and Mr. Nazerali. The
flipper-turned-finder then shopped the deal around further and struck a tentative
vend-in deal with Mr. Hamouth in Corsaire. Mr. Miller and his associates then
came aboard before negotiations broke down in spring 1997. After the deal fell
apart and Mr. Nazerali's Ikon picked up Zeolite, Mr. Hamouth accused all the
key players of a grand scheme of misappropriation of opportunity, tied in with an
alleged short-selling attack on Corsaire. The spurned promoter filed a high-stakes
suit in the Supreme Court of British Columbia in March, 1998, with court filings
offering a rare view into the intrigue of Howe Street dealings.
The defendants, who deny Mr. Hamouth's key allegations, include Mr. Nazerali,
also known as Mr. Nazerali-Walji, First Capital Invest Corp., his offshore British
Virgin Islands company, Mr. Skalbania, his offshore Bahamian company, Lyths &
Hangers Ltd., Ikon and Mr. Vucelic. The named brokers are Mr. Olson and
Cohig & Associates, an Englewood, Colo., brokerage he owns or controls, Mr.
Rahal and Mr. Hauchecorne, along with the Vancouver brokerage they worked
for, Pacific International Securities. Mr. Hauchecorne was recently banned for life
by the Vancouver Stock Exchange for his handling of offshore Bahamian accounts
of reputed mobsters, Phil Gurian and Phil Abramo, came to light.
The suit, filed by Howe Street lawyer Mr. Shapray, also cites several "John
Does": a number of unknown market players who allegedly participated in the
short selling scheme. The action also mentions Anker Bank, August Roth Bank
and Raifinanz AG, three Swiss financial institutions which allegedly provide
anonymous anonymous securities trading services to Mr. Nazerali through
Vancouver brokers, and Mr. Eberhard, Mr. Fundulus and Mr. Ponti. The trio,
described as "Nazerali's Swiss nominees," allegedly served as his broker at the
three Swiss banks, respectively. (VSE followers will recall Mr. Fundulus's banking
roles in controversial promoter Harry Moll's Pineridge Capital Group, while Mr.
Eberhard, the Anker Banker, was recently credited with saving the bacon, or
perhaps the life, of his key Vancouver broker, Mr. Hauchecorne, by negotiating a
settlement to retrieve the missing funds of Mr. Gurian and Mr. Abramo.)
THE DETAILS
In a court-filed affidavit, Mr. Skalbania notes he first became aware of an
opportunity to purchase Zeolite Mira in September, 1996, when he was
approached by two Vancouver-area men, Michael Slamaj and M.H. Jeraj Badru,
who were looking to raise funds for Zeolite. Armed with an Aug. 21, 1996, letter
from Professor Vucelic authorizing them to "approach any legitimate financial
institutions for negotiating or executing a loan or an investment" in the project, the
pair called on Mr. Skalbania, then facing his well-publicized theft prosecution.
The detergent deal sparked Mr. Skalbania's interest, and he immediately began
negotiations with Mr. Vucelic, even before flying to meet the entrepreneurial
scientist the next month, in October. (Zeolite was owned 50 per cent each by the
Holding Institute of General and Physical Chemistry in Belgrade, controlled by
Mr. Vucelic, and Birac, a subsidiary of the Bosnian government.) The pair capped
their negotiations with Mr. Skalbania's Nov. 5, 1996, offer to purchase 50 per
cent of Zeolite from Mr. Vucelic for $6-million (U.S.), through his offshore
Bahamian company, Lyths & Hangers.
Mr. Skalbania began shopping this typical Howe St. opportunity around in
September, starting off with associates Mr. Belzberg, Vancouver property tycoon
Mr. Aquilini and Mr. Nazerali. Mr. Belzberg was particularly interested, and Mr.
Skalbania embarked on his initial due diligence work. The Vancouver financier
was impressed with the Serbian professor. "I like the guy; he is a highly intelligent,
cultured individual who has a touch of the 'absent-minded professor' syndrome,"
Mr. Skalbania told Mr. Belzberg in an Oct. 30, 1996, project review/character
analysis. On the plus side, Mr. Skalbania noted the deal was "marvellously
structured - little cash down, balance as shareholder loans plus earn-out shares."
The dealmaker was also quite enamoured with the location. "Offshore business -
near Venice!," he stated, as one of six key positives.
Within a month, however, Mr. Belzberg was balking. "In early December, 1996, it
became apparent to me that Mr. Belzberg would not provide the financing. At that
time, I became aware that Hamouth had a Nasdaq-OTC shell company,
Corsaire, available," states Mr. Skalbania in an affidavit. In his own affidavit
signed in June 3, 1998, Mr. Hamouth notes he has known Mr. Skalbania for
about four years. "In recent years, (Mr. Skalbania) has been earning his living by
locating deals and opportunities for persons operating companies the shares of
which are publicly traded in exchange for finders fees, often paid to him or an
offshore holding company in the form of stock in public companies," states Mr.
Hamouth.
Mr. Skalbania claims that Mr. Hamouth pledged to arrange financing for the deal,
including an initial $250,000 (U.S.) deposit, but never came through, and Corsaire
even failed to pay a key Italian lawyer $25,000 (U.S.). (In a legal costs ruling in
January, a B.C. judge noted Mr. Hamouth has a track record of slow payment of
lawyers, and any B.C. assets he uses are shielded through a $2-million family
trust. In the April, 1993, trust agreement, Mr. Hamouth is the settlor for the
Hamouth Family Trust, while Howe Street promoter Mr. Lenec, the son of Alex
Lenec, is trustee.
NAZERALI
By Dec. 17, 1996, with Corsaire trading in the $2 (U.S.) range, Mr. Hamouth
and Mr. Nazerali had an agreement to be equal partners in Corsaire for the
Zeolite vend-in, according to assorted court documents. The pair have known
each other for more than eight years. "Throughout the history of my dealings with
Nazerali, I have learned from him that much of his investing and stock trading is
executed through numerous nominee accounts. Nazerali uses agents and nominees
at various European, Canadian and American brokerage institutions, to effect
trades on his behalf," states Mr. Hamouth in an affidavit.
"I have attended many times at Nazerali's office in Vancouver and, on those and
other occasions, heard him place orders for the sale or purchase of stocks which
he was then involved in through various accounts operated by various corporate
entities and/or fund managers which he often referred to as 'my guys'. . . on
several occasions, I asked Nazerali what these accounts were and he replied, in a
tone of voice which suggested that he was bragging, that 'I (Nazerali) do not deal
in my own name'," states Mr. Hamouth. The Corsaire promoter claims these
Nazerali nominees include Anker Bank, August Roth, Credit Lyonnais (Suisse),
RAI Finanz and ValorInvest Ltd., a merchant bank owned or controlled by Mr.
Nazerali himself. Mr. Kott's name does not arise.
SIRIANNI AND THE BOYS
Mr. Hamouth also claims Mr. Nazerali told him on several occasions that he uses
Mr. Olson, a principal of Cohig, to trade through one or more accounts through
nominees. "On several occasions, Olson mentioned to me that he was involved in
transactions with Nazerali and Eugenio Sirianni, a stock trader who has been
banned from acting as a director or officer of reporting issuers in B.C. after he
was found guilty of debit kiting and trading in a manner which created the
misleading appearance of trading activitiy. Olson often referred to Nazerali and
Sirianni in an affectionate manner as 'the boys'," states the West Vancouver stock
promoter. (During his days as a securities violator on the VSE, Mr. Sirianni used
several offshore banks, including Handelskredit Bank, later renamed Anker
Bank.)
"I once asked Olson why he chose to associate himself with a person who had
been banned from trading in his country and he replied that he liked Sirianni and
that he was a 'good guy'. . . similarly, Nazerali referred to Sirianni on several
occasions to myself and others as his partner in various business ventures and
public companies," alleges Mr. Hamouth. (Mr. Sirianni's former VSE brokers
have described him as a prince of a fellow.)
In mid-December, soon after Mr. Hamouth and Mr. Nazerali partnered on
Corsaire, expatriate Vancouver stock promoter Mr. Miller came aboard and the
duet became a threesome. Miami-based Mr. Miller and his associates, Mr.
Requena, based in Uruguay and Costas Takkas, based in the Cayman Islands,
tentatively agreed at one point to raise $5.5-million (U.S.) on a best-efforts basis
for Corsaire, in return for 700,000 of Mr. Hamouth's 2.02-million shares.
Mr. Miller notes that his own knowledge of Zeolite traces back to a meeting in
Zurich in late October or November, when he met Messrs. Skalbania, Vucelic
and Nazerali, before Mr. Hamouth was in the picture at all. In his affidavit, Mr.
Miller states he has known Mr. Hamouth since 1986 and "I have had previous
commercial dealings with him," although the details are not identified. The
Miami-based Mr. Miller also notes he has had previous commercial dealings with
Mr. Nazerali, again with no details noted.
HAMOUTH'S CONSPIRACY THEORY
After initial progress, the Corsaire deal for Zeolite began unravelling in spring
1997. While several of the defendants claim Mr. Hamouth and Corsaire failed to
come up with the required money, the West Vancouver promoter claims Mr.
Skalbania, Mr. Nazerali and Mr. Vucelic conspired to misappropriate the
opportunity and shift the Zeolite project into Ikon, a bulletin board deal controlled
by Mr. Nazerali and his associates. (Ikon successfully completed its acquisition of
Zeolite in the months of May and June, 1997.)
The Corsaire promoter also claims that the defendants, especially Mr. Nazerali
and Mr. Miller, ganged up to short Corsaire when he refused to yield control,
pushing the stock down from $7 (U.S.) to less than $3 (U.S.). Mr. Hamouth
traces his troubles back to early 1997, shortly after the stock peaked at $7
(U.S.), when he was summoned to Mr. Nazerali's office to discuss the Zeolite
acquisition. The meeting was attended by Mr. Nazerali, George Wareham, one of
his employees, Messrs. Skalbania, Olson and Rahal, Steven Kerr, an associate of
Mr. Olson, and several others. Mr. Hamouth refused to resign, and soon after this
fateful meeting, he received an ominous call from Dick Newburg of Alexandre &
Co., a market maker. Mr. Newburg was concerned why Corsaire shares were
being hammered. "They are giving it to you from everywhere," the market maker
told the promoter.
Mr. Hamouth claims that after reviewing trading records, he believes a group of
individuals with insider information sold a substantial number of Corsaire shares
short from January to June, 1997. The Corsaire promoter claims Mr. Olson, Mr
Nazerali's Colorado broker, was likely a key player. "On one occasion, Olson
threatened to 'clobber your deal'. . . on another occasion, he stated, in an ominous
manner, that 'I've got guys in New York who can sell three times your float',"
alleges Mr. Hamouth.
The promoter claims he that several calls he made to Mr. Olson corroborate his
theory that Mr. Olson and Cohig probably participated in a conspiracy with Mr.
Nazerali, Mr. Skalbania, Mr. Sirianni and others to misappropriate the
opportunity and short-sell Corsaire shares. "While Corsaire was still negotiating
with Vucelic, I reached Olson in a New York hotel room where I heard
recognizable voices in the background. I asked him whether Nazerali and Sirianni
were with him. Olson replied that he was with them. . . I asked him what he was
doing with Nazerali and Sirianni and he told me that he was working on another
deal," states Mr. Hamouth in an affidavit.
Mr. Sirianni was having his own troubles around this time, according to Mr.
Hamouth. "On or about May, 1997, I was informed by Alessio Vianello,
Corsaire's Italian attorney, that Sirianni was at Zeolite Mira's plant and he asked
me whether I was aware of this and whether I knew that Sirianni was then under
investigation by Interpol. Vianello also informed me that he had had a conversation
with Vucelic in which he had been informed that a new purchaser was then visiting
the plant. Vianello and myself then concluded that Vucelic was negotiating with
Sirianni," states the West Vancouver promoter.
Mr. Hamouth claims Mr. Nazerali was likely a key player in this alleged illegal
shorting campaign. "This is consistent with what I verily believe is Nazerali's
background in manipulating the public markets. Nazerali told me and I verily
believe that he had been 'trained' by Irving Kott and that he had 'worked the
phones in Montevideo'," claims the promoter. (By coincidence, Mr. Miller's
partner Mr. Requena is based in Montevideo.) "Cott (sic) is well known as a
notorious member of the Canadian underworld and a stock market manipulator.
The reference to 'working the phones' is a reference to the 'boiler room'
operations run from offshore locations by which public markets are illegally
manipulated," states Mr. Hamouth. Mr. Nazerali denies all of Mr. Hamouth's key
allegations. This spring, lawyers for Mr. Hamouth and Mr. Nazerali reached an
agreement for a consent dismissal order to dismiss all claims against Mr. Nazerali.
Mr. Hamouth describes his own awareness of stock manipulation, developed over
his 16 years in the business of stock promotion. "Over the said 16 years, (I)
acquired an in-depth knowledge of the securities industry and the manner in which
stocks and other securities are promoted and traded in the public markets as well
as the means by which the price of securities can be manipulated or controlled
through various market activities," states the West Vancouver promoter.
Mr. Miller claims Mr. Hamouth's shorting conspiracy appears unlikely at best. "At
no time did I ever acquire the impression that someone was shorting stock in
Corsaire," states the Florida promoter in an affidavit. "It is not unusual for the
stock in a speculative company like Corsaire to decline where there is a
considerable delay in completing a transaction and the purchaser has no
established history of successfully concluding commercial transactions," states Mr.
Miller, himself something of an expert in that area.
With the multi-level marketing, barter and Zeolite deals, Mr. Hamouth decided to
go fishing in Mexico. "After the acquisition of the Zeolite Mira assets by the
defendant Ikon Ventures, Corsaire purchased a crab plant in Mexico. This plant
only operates during crab fishing season which is set to resume in September,
1998. The crab plant is up for sale and I expect that its sale will generate
approximately $1-million (U.S.) in proceeds and $400,000 (U.S.) in profits after
payment of all related liabilities," stated Mr. Hamouth in a June 25, 1998, affidavit.
Mr. Hamouth and Corsaire filed their broad conspiracy suit in March, 1998, and
the action has kept numerous legal teams and process servers busy. The litigation
has been hard-fought on all fronts, starting with the service of legal papers. One
process server describes his unsuccessful attempts to serve Mr. Skalbania at
various locations, including his home, in April,1998. "A young man came to the
door and told me that Nelson Skalbania was out and not expected until 10 p.m. at
the earliest. A young boy of approximately three or four years of age yelled out
'he's up there' and pointed at the upstairs part of the residence, where Eleni
Skalbania was before she quickly walked out of sight," states the process server,
who failed to meet the international financier in person.
A few months after putting Corsaire's million-dollar Mexican crab plant on the
block, Mr. Hamouth recruited Mr. Dunavant, a partnership that would boost
Corsaire's stock to $30 (U.S.), with a peak market capitalization of $420-million
(U.S.) this spring. |
