Vancouver Stock Exchange -
VSE's Canaccord accused by SEC of being crooks' conduit
Vancouver Stock Exchange VSE
Shares issued 0 1899-12-30 close $0
Tuesday Nov 16 1999
by Brent Mudry
In the latest in a string of United States penny stock prosecutions featuring Vancouver brokerages as key conduits for alleged illicit stock dealings, Canaccord Capital is a major player. In a recent suit, the Securities and Exchange Commission notes that the three ringleaders of a 17-defendant scheme all dealt through Canaccord. The star clients included a Grant Curtis, a bank fraudster now in jail on the penny stock case, Leo Mangan, a former career coke conspirator, and Timothy Masley.
The SEC alleges that from at least 1994 through 1996, the trio exercised undisclosed control over three U.S. companies: Windswept Environmental Group, ICIS Management Group and Pilot Transport, in a scheme that generated illicit proceeds of more than $8-million (U.S.).
Readers wishing further details on the players can refer to a Streetwire dated Nov. 15. The 49-page SEC suit traces out the ring's share dealings and highlights the use of Canaccord and several other Canadian brokerages, of which only two are named: Union Securities and Levesque Beaubien Geoffrion.
The SEC notes that a second trio of defendants: former SEC attorney James Nearen, Raimond Irni and Pedro Dibrito Gomez, assisted the trio of Canaccord clients in this scheme. Mr. Nearen allegedly prepared false and misleading public statements and acted as legal counsel to Mr. Curtis, Mr. Mangan and Mr. Masley. "Irni and Gomez participated in the scheme by acting as a conduit and disposing of the fraudulently issued stock using phony foreign corporations, paying undisclosed compensation to brokers and buying and selling stock in foreign and domestic brokerage accounts, usually through the use of nominees," states the SEC.
WINDSWEPT
The SEC notes that from 1994 through 1996, Mr. Curtis, Mr. Mangan and Mr. Masley controlled all aspects of the business affairs of Windswept, including its stock issuances. In a series of transactions through this period, the trio of Canaccord clients caused Windswept to issue more than four million shares of Windswept to various foreign shells.
These foreign shells include Rang Tuck Morgan, Sampson Leasing, two Venezuelan companies headed by Mr. Gomez, Piedmont Securities, an Irish shell headed by Mr. Irni, Abet Investments, a Bahamian company, Hersilia Investments, a British Virgin Islands company, and Broadcast Communications, a Liberian company. The SEC claims that Mr. Curtis, Mr. Mangan and Mr. Masley, the three Canaccord clients, controlled each of these shells, except for Broadcast Communications, which was controlled by co-conspirator Donald Kessler.
According to the SEC, over 3.4 million shares of the four million shares of Windswept issued to the foreign shells were sold to the public for total proceeds of more than $5-million (U.S.)
On July 14,1994, Windswept issued 200,000 shares to Abet in an option agreement for services performed, although the non-operational Venezuelan shell never performed any services and never paid for the stock. The SEC claims these shares were deposited into two accounts controlled by Mr. Curtis, Mr. Mangan and Mr. Masley at Canaccord. Under the trio's direction, the shares were sold to U.S. investors at an average price of $1.95 (U.S.) per share, for proceeds of at least $389,000 (U.S.).
A further 500,000 shares were issued to Sampson, another Venezuelan shell, for no consideration. In October of 1994, Mr. Gomez deposited 300,000 of these shares into Abet's account at Canaccord and the other 200,000 shares into Sampson's account at J.W. Charles Clearing, a brokerage firm in Boca Raton. Both accounts were controlled by Mr. Curtis, Mr. Mangan and Mr. Masley. These shares were sold to U.S. investors at an average price of $1.42 (U.S.), for proceeds of at least $711,500 (U.S.).
In similar offshore paper deals, 200,000 Windswept shares were issued each to Rang Tuck and Piedmont, and deposited into Canaccord accounts. The Rang Tuck sales through the Canaccord conduit netted proceeds of $430,600 (U.S.), while the Piedmont proceeds netted $330,600 (U.S.).
The trio's big payoff came with Hersilia, which received one million shares of Windswept between May 17 and July 28, 1995. Of these shares, at least 500,000 were deposited into the Canaccord accounts, and sold through the Canaccord conduit to U.S. investors for proceeds of at least $1.46-million (U.S.), according to the SEC.
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