Saga continues in S.D. penny stock scene
uniontrib.com
Don Bauder
August 22, 2000
Penny stock tout William Edward "Billy" Daniel, charged along with three others with criminal stock fraud a week ago, is still at large.
Daniel has cut a large swath through the San Diego penny stock scene, and, as a native Canadian, has also been deeply involved in the Vancouver penny stock muck.
"He has not surrendered -- there is some reason to believe that he is in Las Vegas," says Steven B. Davis, deputy district attorney.
Eric Benink, enforcement counsel for the Department of Corporations, who worked on the case with Davis, says that Daniel might also still be in San Diego.
The others named in the case dealing with scams at the now-shuttered brokerage, La Jolla Capital, have been accounted for, says Davis.
Harold Bailey "B.J." Gallison, who headed the fast-buck brokerage that was closed by the Department of Corporations, will surrender tomorrow, according to Davis. Gallison has been living in Las Vegas.
Troy Flowers, an official of the brokerage and head of a purported manufacturing company, Natural Born Carvers, has surrendered and is out on bond, says Davis. Allegedly, Flowers bribed La Jolla Capital with 600,000 shares of Carvers stock; La Jolla brokers then pushed the stock on unsuspecting victims.
A fourth man, Kevin Michael Smith, will surrender for felony arraignment today.
"This has ruined people's lives," says Bill McDonald, enforcement director of the DOC in Los Angeles. "One investor committed suicide over bad investments, including Natural Born Carvers."
This column covered La Jolla Capital's antics heavily beginning in the early 1990s, and also covered Natural Born Carvers.
According to the criminal charges, Flowers, Smith and Daniel opened accounts at La Jolla Capital and Vancouver-based Union Securities through foreign and offshore companies the three controlled.
The prosecutors are still trying to get complete records of Union Securities, according to Davis.
"Billy Daniel set up a company named Brick Holdings -- it was a Cayman Islands company," says Davis. (The Cayman Islands are among the most notorious offshore tax havens.)
Many of Daniel's activities have been chronicled here. In 1996, Orange County's Comparator Systems soared and collapsed ignominiously, with La Jolla Capital in the middle of the action. San Diegan Summer Churchill, a former employee of Comparator, said in a deposition that Comparator sold stock to Billy Daniel at 1 to 1.5 cents each, and Daniel deposited it at La Jolla Capital, which sold it to the public for 6 cents.
Daniel had also worked directly for a longtime San Diego penny stock company, Exten Industries. At the time, it was headed by Kevin Smith. Smith went on to found Greenland Corp., whose shares soared and plummeted.
Two of Daniel's associates, Margaret "Maggie" Rawlinson and Barry D. Russell, were officers of Greenland. All, including Smith, are now out of the company.
Daniel, Rawlinson and Russell ran a Canadian subsidiary of San Diego's Trans Pacific Group. The longtime head of the company, Robert Maurice Bryson, pleaded guilty to securities fraud in 1981 and spent 18 months in prison for violating his probation.
Trans Pacific is now known as Fortune Oil & Gas. Linda Bryson, Robert Bryson's daughter, and an officer, has left the company and gone with Triad Industries in Rancho Bernardo. Her father is now semiretired and running Escondido Capital, she says, claiming he does not work for Triad.
It was a Ponzi
On Aug. 10, a federal grand jury indicted William F. McCray and two associates of La Jolla's International Forex currency trading operation. As related in these columns, McCray went to investor shows and falsely claimed he produced annual returns of 54 percent to 79 percent a year over six years. He took in $30 million from investors, but at the time of the firm's bankruptcy last October, he admitted that he owed investors $18 million and could not pay it.
However, some investors did get paid: "New investor money was used to pay old investors," says Stephen P. Clark, assistant U.S. attorney, and therefore it was a Ponzi scheme.
McCray sent $5.8 million of investor funds to the Bank of Bermuda, and also siphoned off some to purchase a home and an expensive automobile.
McDonald praised San Diego authorities for their work in both the La Jolla Capital and International Forex cases. |
