You know, we never have found out why Patterson and Rachfall claimed to be shareholders of Titan Investments in their BCSC filings. Anyway, looks like they're back in the news again, albeit a minor mention only...
B.C. Securities Commission - Street Wire
BCSC takes Seifert to court in Patterson probe
Also Donner Minerals Ltd (DML)
Also Sleeman Breweries Ltd (ALE)
by Brent Mudry
Disgraced Vancouver lawyer Michael Seifert, fined $450,000 last December
and effectively kicked out of the securities industry for 12 years, now
faces a court wrangle over his lack of full co-operation with the British
Columbia Securities Commission's offshore probe into prominent Howe Street
promoter David Patterson, his long-time associate.
In a petition filed Tuesday in the Supreme Court of British Columbia, the
BCSC seeks a court order to compel Mr. Seifert to answer sensitive
questions about controversial offshore share dealings linked to Mr.
Patterson, over which the lawyer claims privilege for his mysterious
offshore clients.
While the BCSC's broad Patterson probe covers the promoter's offshore share
dealings from 1994 to 1997 in five companies listed on the former Vancouver
Stock Exchange, including his Voisey's Bay flagship, Donner Minerals Ltd.,
Mr. Seifert is refusing to answer questions regarding Consolidated
Platinum, renamed Allied Strategies Inc. Allied changed names to Sleeman
Breweries Ltd. in May of 1996, after a reverse takeover and a 5:1 rollback.
Mr. Patterson, who is vigorously fighting a BCSC citation issued last
December, is the third of four targets in the commission's Channel Islands
Ryco/Integro investigation. The Ryco probe has sent broad ripples through
Howe Street, the centre of dealings on the former VSE, the exchange dubbed
Scam Capital of the World by writer Joe Queenan in Forbes magazine a decade
ago.
While offshore account holders have long been shielded from exposure, a
number of offshore jurisdictions, unhappy with the growing perception of
being havens for insider dealings and money laundering, have opted recently
to co-operate with authorities in Canada, the United States and other
countries.
"Of course an offshore account is only offshore because it is intended to
cheat the tax department, money launder, or insider trading," panel
chairman Barry McLoughlin told a VSE hearing last year, probing the
dealings of former Pacific International Securities broker Jean-Claude
Hauchecorne, who handled offshore accounts for U.S. mobsters Phil Gurian
and Phil Abramo, a capo in the DeCavalcante family.
Mr. Hauchecorne, fined $295,000 by the VSE and banned for life in June of
1999, was also given a 20-year ban by the BCSC two weeks ago. The P.I.
broker frequently knowingly accepted collect calls from jail from notorious
stock fraudster Eric Wynn, but claimed he thought his well-publicized
client, accused of market manipulation, broker intimidation and organized
crime connections, was in prison just for tax evasion.
Officials in the Channel Islands enclave of Jersey, an offshore haven off
the coast of the United Kingdom, were particularly helpful in cracking the
Arakis Energy case, opening the doors and the books of offshore trusts and
piercing the previously-invincible veil of secrecy.
The BCSC's No. 1 Channel Islands target, Terry Alexander, the controversial
Howe Street promoter of Arakis and Delgratia Mining, was fined $1.2-million
in February of 1999 and banned for 20 years in a negotiated settlement.
The No. 2 target, Mr. Seifert, the once-respected prominent Vancouver
securities lawyer, agreed on Dec. 17 to a $450,000 fine and a 12-year ban
on making any filings to the commission or the new Canadian Venture
Exchange, for his key roles in offshore share stuffing and shuffling in Mr.
Alexander's Arakis scandal in 1995, then one of the biggest stock collapses
in Canadian history, and several other VSE promotions.
Despite Mr. Seifert's admissions of guilt, and the consent settlement, a
Canadian precedent, the Law Society of B.C. has not yet drafted any
citation or disciplinary notice against him, and he remains a member in
good standing. Mr. Seifert has been involved in a stable of OTC Bulletin
Board shells with his close New York legal associate Joseph Sierchio.
On Dec. 21, a few days after the Seifert settlement, the BCSC unveiled its
No. 3 target, Mr. Patterson.
The fourth target, prominent Vancouver stock promoter Doug Mason of Clearly
Canadian Beverage Corp., was exposed in early July, when the BCSC filed a
court challenge against Mr. Seifert's law firm, Maitland & Co., in a bid to
thwart the cloak of privilege enshrouding Maitland's top-secret dossier on
Mr. Mason's alleged offshore holding company, Forthdale Investments Ltd.,
also known as "JC573."
The Mason matter has not yet been heard in court, although Maitland filed
an appearance on Aug. 11. The contents of the dossier, known as "file
number 94258," remain a closely-guarded secret, although Clearly Canadian
notes Mr. Mason strongly rejects the commission's allegations and he is
eager to clear his name.
In its latest court challenge, the BCSC hopes to get a judge to break Mr.
Seifert's silence on a number of sensitive questions relating to Mr.
Patterson.
While the BCSC launched its Patterson prosecution on Dec. 22 with a formal
notice of hearing, the commission has now released its underlying
investigation order, signed June 29, 1999, by chairman Doug Hyndman.
The order reveals the probe covers the promoter's dealings in accounts at
two Vancouver brokerages: National Bank's Pacific International and Bank of
Montreal's Nesbitt Burns, allegedly trading shares of Donner, Crazy Horse
Industries Inc., NDT Ventures Ltd., Allied and Zicor Mining Ltd. through an
account in the name of Bray International.
Crazy Horse's other backers include former P.I. brokers Michael Patterson
and Dirk Rachfall, who face New York jail sentences after April guilty
pleas of securities fraud in dirty-promoter-turned-informant David Houge's
Mafia boiler-room promotions, which featured members of the Colombo family
and New York's Russian Bor mob.
Donner's other backers include Mr. Seifert and his wife, and secretive
Swiss financier Carlo Civelli, a well-placed player of countless VSE deals.
Allied was quite a favourite of fugitive Thai financier Rakesh Saxena, now
holed up in Vancouver under $500,000-a-year self-financed house arrest,
awaiting a decision in the lengthy extradition battle launched after he was
arrested in Vancouver in 1996 in the wake of Stockwatch revelations, for
his alleged key roles in massive frauds in the $2-billion (U.S.) collapse
of the Bangkok Bank of Commerce, a scandal which helped topple the Thai
government and trigger the country's economic collapse.
The Patterson probe focuses on the promoters dealings through Bray
International Ltd., a British Virgin Islands company, which was
incorporated in 1990, and administered by the Ryco Trust, and later the
Integro Trust, on Jersey in the Channel Islands. Ryco and Integro assigned
Bray the code number "JC516."
After building its Patterson probe for a year, the BCSC came knocking on
the door of his lawyer, Mr. Seifert, on June 7, with a formal invitation
for an interview on June 14.
Mr. Seifert appeared on the appointed date, accompanied by his own counsel,
respected criminal defence lawyer Marvin Storrow, who is also retained by
Maitland to assert potential solicitor-client privilege on the top-secret
Forthdale dossier, and who bailed Mr. Rachfall and Mr. Patterson from a
Seattle jail last year after their ill-fated golfing trip with the
well-wired Mr. Houge.
In the court petition, Sasha Angus, the BCSC's director of enforcement and
chief litigation counsel, notes that Mr. Seifert complied with the summons
to the extent that he showed up for the formal chat with investigators, but
he refused to answer certain questions on the basis of solicitor-client
privilege.
The sensitive questions to which Mr. Seifert has refused to provide answers
cover four main issues.
The first is whether Mr. Seifert was authorized by Mr. Patterson to deal
with Ryco/Integro, a third party, on Mr. Patterson's behalf.
The second is whether Mr. Seifert was authorized by Mr. Patterson to
exercise the share purchase warrants received by Bray as part of its
participation in a private placement of Consolidated Platinum, a third
party, at the time of Cons. Platinum's reorganization into Allied
Strategies.
The third is whether Mr. Seifert was authorized by Mr. Patterson to agree
on behalf of Bray that the allocation of Allied shares to Bray by
Ryco/Integro was fair, in a meeting held at Maitland's Vancouver offices
between Mr. Seifert, Mr. Patterson and a Ryco/Integro trust officer, in
June of 1994.
The fourth line of questioning is whether Mr. Seifert was authorized by Mr.
Patterson to approve the taking of a loan by Bray from Insco Holdings Ltd.,
a third party.
In court-filed excerpts of Mr. Seifert's June 14 interview, the disgraced
securities lawyer was extremely cautious in his answers.
When asked about a phone call he had with Ryco director Michael Fielding
about the transfer of funds to exercise warrants of Cons. Platinum, Mr.
Seifert was reluctant to confirm whom he represented. "I was more of a
conduit just providing information," Mr. Seifert told BCSC investigator
David Martin and Robert Abrams, a manager of investigations.
Mr. Seifert did assert that in this call he was not representing Bray,
Forthdale or two other Ryco accounts: Cardogan Ltd. and Slade Securities.
"So there must be some other clients out there. Is that what you're
saying?" Mr. Martin asked. "You said who. A corporation can't phone me, so
it has to be a person," replied Mr. Seifert. After a time-out huddle with
Mr. Storrow, Mr. Seifert declined to offer specifics.
Mr. Seifert also went mum on JC516, or Bray, the Ryco account through which
Mr. Patterson allegedly secretly traded.
"And we see JC516, who would have agreed or recommended on behalf of JC516
that that would have been fair?" Mr. Martin asked. "I don't think I'm
allowed to comment on that," Mr. Seifert replied, asserting
solicitor-client privilege.
Mr. Seifert was marginally more helpful on questions regarding Bray twice
asking Insco for a loan.
"In that instance of a loan between Insco and Bray, who would have been the
persons who agreed that that would take place?" asked Mr. Martin.
"I can answer half of that. Subject to the trustees agreeing to it, the
advice or recommendation could have come from myself in that, that, Insco
and because of solicitor client/privilege, I can't mention the other side,"
Mr. Seifert replied.
Left unstated is whether a loan from Insco to Bray may have effectively
been a loan from Mr. Seifert to his client Mr. Patterson.
Insco was incorporated in another offshore haven, the British Virgin
Islands, on Aug. 9, 1990, with legal title vested in Ryco as trustee of the
Seifert Trust.
The Vancouver securities lawyer agrees that from September of 1989 through
September of 1995, he periodically gave instructions to Ryco and Integro
for trading through his Seifert Trust Insco in shares of VSE companies,
including Delgratia, Dencam, Allied and Arakis.
Mr. Patterson's own troubles trace back to the same offshore dodge which
tripped up Mr. Seifert, in Jersey in the Channel Islands.
The BCSC claims the stock promoter, who set up a secret Jersey account in
September of 1990, exactly one year after Mr. Seifert set up his own secret
account in the same house, traded shares of Donner, Crazy Horse, Allied,
Zicor, Consolidated Valley Ventures and Prairie Rose Resources, but
repeatedly forgot to make any disclosure to either securities regulators or
the general public.
In its offshore probe, the BCSC discovered that in September of 1990, the
VSE stock promoter set up the D. Patterson Trust through Ryco in Jersey.
The Patterson Trust was also known as JT167, in reference to Jersey Trust,
not Mr. Alexander, also known as J.T. Alexander.
Ryco served as trustee of the trust, with Mr. Patterson nominating his
wife, his daughter, his parents and his parents-in-law as beneficiaries.
The same month he established the account, Mr. Patterson allegedly directed
Ryco to acquire Bray International, a holding shell in the British Virgin
Islands.
(Readers wishing more details in the Patterson probe may refer to Street
Wires dated Dec. 21, 1999, and Feb. 9, 2000, under the symbol BCSEC, while
the Mason probe is noted in Street Wires dated July 6, July 12 and July
13.)
(The Seifert probe is noted in Street Wires dated Dec. 17 and Dec. 20,
1999, while the Saxena saga is noted in numerous Street Wires under the
symbol AHI.)
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