CDNX member Union handled busy offshore Ramoil trading
B.C. Securities Commission *BCSC
Shares issued 0 Jan 1 1900 close $.000
Thursday Nov 8 2001 Street Wire
Ramoil Management Ltd., one of four penny stocks rigged through Union Securities of Vancouver by career fraudster Ed Durante, the star client of now-jailed Union broker Trevor Koenig, also featured a dirty lawyer and a dirty accountant, according to the United States Securities and Exchange Commission.
The SEC claims Thomas Hauke of New York, a certified public accountant and partner of Van Buren & Hauke, was paid $50,000 by New York penny stock promoter Mr. Durante to prepare a forged and fraudulent audit opinion, while lawyer Moneesh K. Bakshi, also of New York, issued a fraudulent lawyer's opinion letter for Mr. Durante's unregistered shares and made false securities filings with the fraudulent audit opinion. (All figures are in U.S. dollars.)
The SEC has been greatly assisted by the British Columbia Securities Commission in its investigations related to Mr. Durante and Mr. Koenig.
Mr. Koenig, 38, in jail in the U.S. since his border arrest on the Labour Day weekend in a related criminal case, is named as a key defendant in the SEC's civil Ramoil complaint, filed in U.S. District Court for the Southern District of New York. The Canadian broker, who ran a lucrative Union satellite office in the border town of White Rock, flogging garbage stocks for felons, especially Mr. Durante, faces a next court date of Nov. 28 in New York, for a preliminary hearing in the criminal case.
The defendants in the SEC's Ramoil case include Mr. Durante, 50, also known as Ed Simmons, seven of his offshore companies, Rodoljub Radulovic, 52, of Lighthouse Park, Fla., Ramoil's chief executive officer, Alexander Taflevich, 55, based in Florida's penny stock hotbed of Boca Raton, who was Ramoil's president from 1996 through January, 2001, Mr. Hauke and Mr. Bakshi.
The Ramoil promotion was, as usual, a lucrative one. Between March and June, 2000, Mr. Durante sold 1.8 million shares from seven offshore accounts at Union, for net profits of about $3.3-million, according to the SEC. During this same period, he wired $1.6-million to a company controlled by Mr. Radulovic, of which $1.4-million was then sent to Ramoil and its subsidiaries.
Out of the $1.4-million received by Ramoil, at least $250,000 was used by Mr. Radulovic for personal expenses. In addition, Ramoil president Mr. Taflevich sold 31,000 shares in February, 2000, at between $13.50 and $19.12 a share, for proceeds of $547,000.
Mr. Durante's offshore companies in the Ramoil promotion included Berkshire Capital Partners Inc., Dottenhoff Financial Ltd., Galton Scott & Golett Inc., Commonwealth Associates Ltd., Provident Partners Ltd. and Fairmont Consulting Inc., all based in Nevis, and Zimenn Importing and Exporting Inc., a California company based in the Philippines. The fraudster, whose criminal and regulatory record dates back 26 years, also used one of his Turks and Caicos companies, Carib Securities Ltd., which is not a defendant in the Ramoil action.
"Durante engaged in manipulative trading and sold stock at artificially inflated prices through brokerage accounts in the names of each of these companies at Union Securities, a Canadian broker-dealer located in British Columbia," states the SEC.
Ramoil, which changed names to Jump Automotive Experts Inc. on Sept. 17, was removed from the bulletin board by the National Association of Securities Dealers on March 28, for failing to file current financials. The company, now trading on the pink sheets, traded on the OTC-BB market from January, 2000, to this March.
The SEC traces the Ramoil fraud back to November, 1999, when Ramoil executives Mr. Radulovic and Mr. Taflevich began discussions with Mr. Durante regarding financing for the company. Mr. Durante allegedly told the pair that Carib could raise capital by manipulating the stock and selling shares to the public at inflated prices. Mr. Radulovic and Mr. Taflevich liked what they heard, and retained Mr. Durante's Turks and Caicos company the next month, in December, 1999.
The deal initially called for Ramoil to deliver 1.5 million shares to Mr. Durante's accounts, with an additional four million shares to follow. Carib promised to raise $25-million for Ramoil, and Mr. Durante's fee was to be 10 per cent, or $2.5-million. The agreement stated that once Carib had its initial 1.5 million shares, it would mobilize its network of market-makers, institutional and retail buyers to buy and hold Ramoil shares. To keep tight control, Mr. Durante locked out insiders from selling their share as the price rose.
With the Florida Ramoil pair in line, it was now Mr. Koenig's turn in Vancouver. Between December, 1999, and February, 2000, Mr. Radulovic had 387,300 non-restricted shares transferred to a Durante-controlled account at Union Securities in the name of Galton Scott. Mr. Radulovic transferred 57,000 of these shares from his own account and 330,300 shares from an account in the name of RCI srl, which his brother Zarko Radulovic controlled.
The restrictive legends on the RCI shares were removed with a bogus December, 1999, attorney's opinion letter, which claimed that no RCI officers were affiliates of Ramoil. In reality, Zarko Radulovic had been a vice-president and director of Ramoil since at least May, 1999.
The big batch of paper came in March, 2000, when Ramoil registered 1.08 million shares in four Forms S-8, with 270,000 shares each for four offshore companies controlled by Mr. Durante: DOC Consulting Inc., Fairmont Consulting, Provident Partners and Shropshire Offshore Consulting Ltd. The Forms S-8 falsely stated the shares were for unidentified "consulting services," but Mr. Durante's offshore companies had no such service agreements.
Mr. Bakshi, the dirty New York lawyer, drafted the fraudulent Forms S-8 and filed them with the SEC. The lawyer also issued legal opinion letters supporting the issuances, falsely stating the shares were duly authorized. Later that month, Mr. Radulovic instructed Ramoil's transfer agent to issue the 1.08 million shares, with restrictions stripped by Mr. Bakshi's fraudulent opinion letters, to a Durante account at Union in the name of Berkshire Capital Partners. Mr. Durante now directly controlled 69 per cent of Ramoil's unrestricted shares.
While it is not clear whether Union's compliance staff or senior management had any clue what was going on, the controversial Vancouver brokerage's star broker, Mr. Koenig, soon appeared on the Ramoil stage.
"In furtherance of the fraudulent scheme, Durante and his broker, Koenig, placed orders to purchase and sell RAMO stock in a manner designed to create artificial increases in the quotations for RAMO posted by market-makers on the OTC-BB. Among other things, Durane bought RAMO shares from and sold RAMO shares to certain market-makers at prices that allowed these market-makers to realized a guaranteed profit," states the SEC.
The career fraudster bought 650,000 Ramoil shares and sold 1.8 million shares in order to support the stock price and compensate the compliant and complicit market-markets. "These trades were knowingly or recklessly executed by Koenig through the following nominee accounts that Durante controlled at Union Securities: Berkshire, Dottenhoff, Galton, Commonwealth Associates, Provident, Fairmont and Zimenn," states the U.S. regulator.
Like all fraudulent penny stock promotions, Ramoil featured a stream of bogus press releases and touts.
On Feb. 10, 2000, the company falsely claimed it had met all the criteria for a coveted Nasdaq Small Cap Market listing, quite a step up from the dubious bulletin board. Not only were the criteria not met, but Nasdaq rejected the application on Feb. 22 because Ramoil had failed to pay the $10,000 application fee.
On Feb. 24, 2000, two days after the Nasdaq return, a touting company, Market Surveys International, published an upbeat profile of Ramoil, which had been reviewed and approved by Mr. Radulovic, on its Web site. Market Surveys touted a number of purported Ramoil development projects, including the so-called Saadiyat project. This project was described as a new port facility under construction in the United Arab Emirates, which was "to become a leading financial and commodities centre to bridge the time-zone difference between London and Singapore/Hong Kong."
The tout's profile predicted that Ramoil would earn revenues of a whopping $1.6-billion and operating profits of $331-million by supplying concrete to the Saadiyat project and other big construction projects in the Middle Eastern nation, all by 2004. Ramoil's own filings stated it had to invest $50-million to become a "founder" of this supposed project, but Market Surveys forgot to mention this detail or the fact that the Durante promotion had no hope of raising this money.
Ramoil's other big bogus deal, announced March 7, 2000, was a letter of intent to acquire a 45-per-cent interest in an unidentified Swiss finance company valued at more than $150-million. The Swiss company was later identified as SocoFinance SA of Geneva, and the supposed letter of intent was little more than a vague one-paragraph letter, with no terms or details.
Besides having a master fraudster, Mr. Durante, a dirty lawyer, Mr. Bakshi and a dirty broker, Mr. Koenig, the Ramoil promotion also featured a dirty accountant, Mr. Hauke.
On the service, Ramoil's 1999 Form 10-K annual remark looked unremarkable, with an unqualified audit opinion signed by Charles R. Eisenstein, a certified public accountant. In reality, no such audit had been formed and Mr. Eisenstein never signed the documents.
The SEC claims the bogus audit opinion was actually prepared by Mr. Hauke, who had been paid $50,000 by Mr. Durante in March, 2000, for his fine work. "Hauke never actually audited RAMO's financials. Instead, Hauke prepared a fraudulent audit opinion, substituted Eisentein's name for his own, and submitted it to Bakshi for incorporation into RAMO's 1999 Form 10-K," states the SEC.
The only auditor Mr. Bakshi, the dirty lawyer, dealt with in connection with this annual report was Mr. Hauke. "Bakshi had never spoken to Eisenstein before and had never even heard Eisenstein's name prior to seeing it on the forged audit opinion," states the SEC. Although the forged audit opinion contained Mr. Eisenstein's typewritten name, it did not contain an actual signature. Mr. Bakshi never received a signed audit opinion.
Although not noted in the SEC's Ramoil complaint, the regulator's action was the latest setback this year for Mr. Hauke.
The accountant was terminated by two other penny stock clients this year: National Sorbents Inc. on March 5 and Triple S Parts Inc. on Aug. 20. Mr. Hauke's report on the National Sorbents' financials for the last two fiscal years was "modified" due to uncertainty whether the company will continue as a going concern.
Mr. Hauke's firm, Van Buren & Hauke, remains as accountants for a number of other penny stock promotions, including CarsUnlimited.com Inc. Delta Mutual Inc., Highland Holdings International Inc., Enterprises Solutions Inc. and WAMEX Holdings Inc., Mr. Durante's most notable recent promotion.
Both WAMEX, a promotion linked to New York's Mafia, and the unrelated Enterprises Solutions have been regulatory targets in the past year, but Mr. Hauke is not named as a defendant in either SEC case.
In an odd coincidence, WAMEX's regulatory filings show the company hired Mr. Hauke's firm, Van Buren & Hauke, on Feb. 2, 2001, to prepare its Form 10-KSB for the year ended Dec. 31, 2000, after dismissing its former certifying accountant, Mr. Eisenstein.
The SEC shut down the Enterprises Solutions promotion with a 10-day trading halt on March 30, 2000, after the stock rose 11-fold to $21.88, and an emergency asset freeze a week later on $2.3-million of allegedly illicit proceeds in New York brokerage accounts of two Gibraltar companies. The brokerage accounts and offshore companies were soon linked to Florida stock promoter Herbert Cannon of Boca Raton, a repeat securities violator and multiple felon who secretly controlled Enterprises Solutions.
(c) Copyright 2001 Canjex Publishing Ltd. canada-stockwatch.com
old url (better for printing) |
