RE: Fugitive US Stock Promoter Peter Berney Arrested in Zurich (you can run but you cannot hide)
New York, Feb. 10 (Bloomberg) -- Peter Berney, indicted in New York and Las Vegas last year for taking in more than
$10 million in two unrelated securities fraud schemes, was arrested in Zurich on Friday, prosecutors said.
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B.C. Securities Commission - Street Wire
BCSC target Mitton's Berney-Potter trio indicted
B.C. Securities Commission BCSEC
Shares issued
Thu 19 Jul 2001 Street Wire
Also (U:USSEC)
Also (U:PWIN)
by Brent Mudry
American authorities have broadened their criminal stock fraud case against
penny-stock shell engineer Peter Berney, who sold the H & R Enterprises
Inc. shell to career fraudster Michael Mitton, jailed this January after
extensive investigations by the British Columbia Securities Commission and
the RCMP.
In a superseding five-count criminal indictment filed Tuesday in the United
States District Court for the District of Nevada, Mr. Berney's long-time
penny-shell partner, Robert Potter, has been added to a prosecution
launched two years ago against Mr. Berney and his wife Rebecca Berney.
Mr. Potter is an alleged Mafia associate and the Las Vegas case has been
handled by the Organized Crime Strike Force of the United States Attorney's
Office. Mr. Potter is currently being held without bail in another criminal
case, while Mr. Berney was tracked down and arrested in Switzerland in
February, 2000, on an arrest warrant issued Aug. 18, 1999, the date of the
original Las Vegas stock fraud indictment.
In an entirely unrelated matter, meanwhile, Alex Dolgonos, the president,
chief executive and chairman of Unique Broadband Systems Inc., and chief
financial officer Stephen Rosen abruptly resigned from the Toronto company
on Wednesday.
Mr. Dolgonos remains a key adviser to Playandwin Inc., an OTC Bulletin
Board promotion founded by Mr. Berney in 1995. There is no indication that
Mr. Dolgonos, a Russian-born technology entrepreneur who emigrated to
Canada, was familiar with all of Mr. Berney's skills and shortcomings when
he became Playandwin's technical adviser in 1999, or since.
The Unique Broadband departures come as jolt to shareholders, as Mr.
Dolgonos and Mr. Rosen were the company's two key men. "I will gladly step
down when a better president is found, but you guys just remember the
technology came from this head," Mr. Dolgonos told attendees at Unique's
annual meeting last November, pointing to his own head.
Mr. Dolgonos's AGM grilling came two days after an unflattering story by
Vancouver Sun reporter David Baines on heavy insider-linked selling of
Unique shares, largely through offshore trusts in Barbados.
Unique, Mr. Dolgonos and Mr. Rosen filed a libel suit against Mr. Baines
and The Sun on Dec. 18, claiming they were defamed by descriptions of the
transactions and that references to Unique's Russian connections suggested
that "one or more of the plaintiffs were associated with criminal elements
in Russia," especially in the aftermath of Semion Mogilevitch's YBM Magnex
International scandal.
Although the latest Las Vegas indictment notes 10 of Mr. Berney's penny
shells, including Mr. Mitton's H & R Enterprises, "among others" unnamed,
Playandwin is not on the list, at least not in its own name. U.S.
authorities, however, have frozen Berney-Potter shares of Agriceuticals,
its predecessor.
It has been a number of years since Mr. Berney, Playandwin's founder and
initial president, has been directly involved with the company, which is
based in the Toronto suburb of Vaughn. In June, 1995, the company,
incorporated as Cambridge Funding Group, issued 5.5 million shares to Mr.
Berney and two associates: two million each to himself and his brother
Andrew W. Berney, and 1.5 million to Caron A. Kelly, who shared the same
Las Vegas address.
After a failed soybean venture in 1998, the company changed names to
Playandwin in July, 1999, a few months before vending in several Ontario
gaming companies. In December, 1999, Mr. Dolgonos was named as technical
adviser to Playandwin, which described the Unique promoter as a "recognized
world leader" in the wireless equipment industry.
According to the company's latest 10K, filed June 18, Mr. Dolgonos neither
held any advisory board options nor shares in excess of 5 per cent.
The Berney associates are no longer major shareholders. As of June 7, none
of the Berney trio show up as greater-than-5-per-cent holders.
This is in stark contrast to shareholder records as of Jan. 27, 2000, which
showed Andrew Berney with 550,000 Playandwin shares, a 7.77-per-cent stake,
Caron Kelly with one million shares, a 14.13-per-cent stake, and fellow Las
Vegas resident Randy J. McDowell with 525,000 shares, a 7.42-per-cent
stake. These three Nevada residents held a total of 2.07 million shares, a
combined 29.32-per-cent stake.
Playandwin is not among the list of Berney-Potter shells noted in the July
17 Las Vegas indictment, a list which includes H & R, National Health and
Safety Inc., Terra West Ventures Inc., Health and Wealth Inc., Technoir
Inc., Torrey Pines Nevada Inc., Frozen Assets Inc., Bobernco Inc., Big Tex
Enterprises Inc. and Mattress Showrooms Inc.
Mr. Berney's best-known Vancouver shell client is Mr. Mitton.
While white-collar jail terms are rare events in Canada, Mr. Mitton, who
had 97 prior convictions, was sentenced to four years in prison on Dec. 27
for the $2.4-million 1996 Clay-Tech debit-kiting case, which defrauded
brokerages from Vancouver to Phoenix to the Isle of Man. Mr. Mitton pleaded
guilty to all six counts on Dec. 21 in the early stages of a planned
117-day trial in Vancouver, two weeks after Stockwatch revealed he was in
the midst of a new debit-kiting operation.
After picking up a Berney shell, Mr. Mitton's 1997 H & R debit-kiting fraud
led to the collapse of Saperston Financial, a small brokerage in New York,
with Fidelity Management's National Financial Services clearing unit left
holding the bag with a $9-million (U.S.) loss. Mr. Mitton, now 41, was
banned for 20 years in 1988 by the BCSC after defrauding Shearson Lehman
Hutton's Chicago office of $11-million through the Morengo Resources
debit-kiting scam.
The current Berney-Potter indictment, which covers a conspiracy spanning
from January, 1993, through Aug. 17, 1999, notes that U.S. brokerages
Barrett-Day Securities, Equitrade and M.H. Meyerson & Co. Inc., among
others, sold shares of National Health, Terra West, Health and Wealth, and
other companies for the purported owners of the shares.
The defendants allegedly opened and used accounts in the names of Watkins
Glen Development, PBA Energy Associates, Cambro Investment Group and
Sequoia Investment Group Inc. at banks, including Continental National Bank
and Bank of America in Las Vegas.
The indictment alleges Mr. Berney, his wife and his partner Mr. Potter
conspired to defraud the public through shares of the penny-stock
companies, committed mail fraud and wire fraud, and laundered funds through
transactions designed to conceal the nature, location, source, ownership
and control of the proceeds of the illegal activity.
U.S. officials claim that Mr. Berney and other co-conspirators acquired
shells with purportedly free-trading shares, merged the shells with private
companies, thus created freely tradeable shares for the merged companies,
used nominees and sold their shares without disclosing their hidden control
of the stock.
"It was a further part of the scheme to defraud that the defendant Peter
Berney and other co-conspirators installed boards of directors on corporate
entities they acquired. The boards of directors were not independent, but
instead were controlled by the defendant Peter Berney and co-conspirators,"
states the grand jury indictment, issued by U.S. Attorney Howard Zlotnick,
Assistant U.S. Attorney Kathleen Bliss and Kurt Schulke, chief of the
criminal division.
The indictment claims Mr. Berney and his co-conspirators installed nominee
officers for the shells and, using their compliant nominee directors,
exploited registration exemptions to purchase all of the freely tradeable
shares, "consolidating virtual complete ownership of the (shell) company."
The Berney group then enlisted dirty brokers at firms including Barrett-Day
to flog their shares, with the brokers alleging making false
representations about the values and futures of the companies, and failing
to disclose the Berney group's control. The proceeds were then wired to the
Berney group's bank accounts.
"It was a further part of the scheme to defraud that the defendant Peter
Berney paid these corrupt brokers in cash from the proceeds of the sales of
such securities by sending payments to the brokers by commercial interstate
courier services or by having a co-conspirator personally deliver the
payments to the brokers."
Mr. Potter was a key player, helping line up and handle the assorted
nominees and related documents, which were signed in blank. To skirt
mandatory holding periods, shareholder lists were simply backdated.
Although no lawyers are mentioned by name, the indictment claims that
co-conspirators of Mr. Berney and Mr. Potter issued fraudulent legal
opinions falsely asserting to regulators and the public that the shares
were properly free-trading. The false legal opinions also failed to reveal
the shares were controlled by the Berney-Potter group, not the stated
nominees.
Mr. Potter found the brokers at Alpine Securities in Salt Lake City and
Paulson Investment Company in Vegas particularly helping in his illegal
sales of shares.
The Berney-Potter trio allegedly made more than $10-million through the
sale of such fraudulent securities. (All figures are in U.S. dollars.)
The indictment details numerous share sales, and resulting proceeds wires,
of National Health in April, 1994, Terra West in June, 1994, Health and
Wealth in August and September, 1994, Technoir in November, 1996, Torrey
Pines in February, 1997, and Mr. Mitton's H & R in August, 1997.
In the spring of 1994, Mr. Berney bought an $85,000 Mercedes Benz with a
cheque on the Watkins Glenn account, and wrote another cheque for $678,000
to a company owned by a co-conspirator. The associate, identified only as
"Haynes," returned $500,000 in cash to Mr. Berney in Las Vegas two weeks
later.
One of the counts centres on a Dec. 14, 1998, $45,000 cheque written by Mr.
Potter and payable to a George Bartlett, representing fraudulent sales of
shares of Kanakaris Inc., formerly known as Big Tex.
The Berney-Potter trio's fondness for using domestic banks and brokerage
accounts has helped the feds seize more than $1.5-million in cash and
account values to date. The seized funds include accounts at three
different Bank of America branches in Las Vegas, with account balances
ranging up to $536,645.
Other seized accounts were valued at $350,100 at Morgan Stanley Dean Witter
in Las Vegas, $180,100 at West America Securities Corp. in Salt Lake City,
$137,900 at Stock USA Inc. in San Diego, Calif., and $27,200 at Travis
Morgan Securities Inc. in Irvine, Calif.
U.S. authorities also seek the forfeiture of a number of properties in Las
Vegas, seven Nevada vehicles including a 1999 Bentley, a 1997 Mercedes, a
1995 Mercedes, a 1998 Volkswagen, a 1997 Chevrolet Tahoe, a 1996 Chey
Suburban and a 1994 Chevy Suburban.
The forfeiture demands include various shares frozen in brokerages,
including 10,000 shares of Cel-Sci Corp., 5,000 shares of Crystallex
International Corp., 6,000 shares of Industrial Data Systems, 3,000 shares
of Kent Financial Services, 10,000 shares of Recovery Network, 500 shares
of Microvision, 50,000 shares of Saleout.Com, 83,000 shares of JG Gear.Com,
17,000 shares of Telesciences, 2,000 shares of Zitel, 16,000 shares of
Spectre Industries and 70,000 shares of Ricex.
Also frozen are 40,000 shares of Agriceuticals Technologies, held at Travis
Morgan. Agriceuticals, after its doomed soybean venture in 1998, changed
names to Playandwin.
(c) Copyright 2001 Canjex Publishing Ltd. stockwatch.com |
