Says RAY Donofrio was mob linked. Does this make Regis Possino who promoted xybr mob linked as well?
Mafia-linked penny stock players Joe Garofalo and the late Ramon Donofrio.
B.C. Securities Commission - Street Wire
BCSC Eron player Graye busy juggling lawyers
B.C. Securities Commission *BCSC
Wed 31 Oct 2001 Street Wire
Also WAMEX Holdings Inc (U:*SEC)
Also Securities and Exchange Commission (*CDNX)
Also Canadian Venture Exchange (U:WAMX)
by Brent Mudry
The recent American criminal stock fraud complaint against Michael K.
Graye, snared by the same promoter-turned-informant as jailed Union
Securities broker Trevor Koenig, could not have come at a worse time for
the controversial Vancouver accountant. Mr. Graye's Toronto lawyer, Alan
Gold, is set to appear in Ontario Superior Court of Justice on Thursday to
remove himself as defence counsel in the accountant's $18-million Seven-Up
Canada tax fraud and money laundering case.
Mr. Graye and co-defendant Thomas Baker, an equally high-flying Toronto
lawyer, were committed in May, 2000, to stand trial on six counts of fraud
and one count of laundering the proceeds of crime, following a year-long
preliminary hearing. No trial date has yet been set for the Canadian
blockbuster case, but several pretrial commissions of inquiry are expected,
to gather evidence in the Cayman Islands, the pair's secretive offshore
conduit, and other locations outside Canada.
The Crown alleges the pair effectively looted $18-million in a bust-out of
four companies they took over in controversial leveraged buyouts in 1987
and 1988: Seven-Up Canada, Agnew Shoes and Pathfinder International, all in
Vancouver, and Vancouver Wharves in North Vancouver. Canadian authorities
claim Mr. Graye and Mr. Baker siphoned off $18-million from the companies
through an offshore account, Mogul Holdings in the Cayman Islands,
laundered the money back into Canada, embarked on a big spending spree
including ski chalets at Whistler, sports cars and mansions in Toronto, and
forgot to tell the tax man about it.
The case is one of the biggest and highest profile prosecutions by Revenue
Canada, recently renamed the Canada Customs and Revenue Agency, or CCRA.
Mr. Graye was arrested in December, 1996, in Vancouver by members of the
RCMP Commercial Crime Section, and flown directly to Toronto for his first
court appearance before being released on $1-million bail. The accountant
later emerged as a key behind-the-scenes player, along with controversial
former Vancouver lawyer Martin Chambers, in the $150-million Eron Mortgage
scandal. (All Eron and Canadian court figures are in Canadian dollars.)
In the British Columbia Securities Commission's Eron hearing, Mr. Chambers
was credited as being instrumental in persuading Eron head and master
fraudster Brian Slobogian to loan Mr. Graye $300,000 of Eron investors'
funds to help spring him on his million-dollar bail.
(Vancouver lawyer David Lunny protests the linking of his controversial
client, Mr. Chambers, to the Eron affair. Mr. Lunny says that Mr. Chambers
was not a key behind-the-scenes player in the Eron mortgage fiasco. During
the BCSC hearing, extensive testimony detailed Mr. Chambers's Eron
dealings, including his frequent use of an office within Eron's offices.)
Mr. Graye and Mr. Baker have been free on bail since their arrests five
years ago. Both remain presumed innocent until proven guilty.
While Mr. Graye faces the daunting prospect of preparing for what is
expected to be a mammoth Canadian criminal trial, amid finding a new lawyer
and bringing him up to speed, the controversial accountant now also faces
criminal jeopardy in New York in a new stock fraud case.
In a sealed complaint dated Oct. 1 in the Southern District of New York,
Mr. Graye and New York promoter Roger DeTrano are alleged to have conspired
to manipulate the shares of Mr. Graye's Vinex Wines Inc. through a series
of secretive offshore accounts in the British Virgin Islands and the
Philippines, between January, 2000, and this July. Both men remain presumed
innocent until proven guilty.
(In separate criminal cases, not involving Mr. Graye, Union Securities' big
producer, Mr. Koenig, and Mr. DeTrano, the New York penny stock promoter,
are named as key players in the New York Mafia-linked WAMEX Holdings Inc.
rig job, a promotion which used the Vancouver money laundering account of
Itex Corp. fraud mastermind Terry Neal's Nevis-based Exchange Bank &
Trust.)
Mr. Graye's Vinex criminal case must surely come as a shock to both his New
York Vinex lawyer, Stanley "Stan" Moskowitz, and his loyal Vinex sidekick
Charles Hong Lee. (Recent securities filings show Mr. Graye as the
president of Vinex and Mr. Lee as vice-president.) Neither Mr. Moskowitz
nor Mr. Lee are named in the Vinex criminal case.
Mr. Lee and Mr. Graye go back quite a ways together on Howe Street, the
centre of dealings on the former Vancouver Stock Exchange, dubbed Scam
Capital of the World by writer Joe Queenan in Forbes magazine a decade ago.
From about 1985 through 1993, Mr. Lee was close by Mr. Graye's side in a
number of Howe Street promotions. Both Mr. Graye and Mr. Lee served
assorted concurrent roles with Concert Industries Ltd., Global Election
Systems Inc., Ican Resources Ltd., Macrotrends International Ventures Inc.
and Nanotec Canada Inc. in the mid-1980s and early 1990s, but the pair have
kept lower profiles since.
Mr. Graye's New York lawyer, Mr. Moskowitz, meanwhile, is no stranger to
intriguing Canadian penny stock deals, although he told Stockwatch that
Canadian deals and clients "are not a major part" of his business.
This contrasts with his brief career profile on the Web site of Rosenman &
Colin, a New York law firm he joined as special counsel about a year and a
half ago, when he left Moskowitz Altman & Hughes. "He has practiced
securities and corporate law at both the federal and state levels and has
represented Canadian and other foreign entrepreneurs and companies in
accessing the United States securities markets," states Rosenman & Colin.
The New York law firm notes Mr. Moskowitz concentrates on corporate law and
the "legal aspects of capital formation." "Mr. Moskowitz represents private
and public companies, venture capitalists, underwriters and investment,
private and merchant bankers."
Mr. Moskowitz's star Howe Street client, at least until Mr. Graye came
along, was self-confessed securities violator Larry Kostiuk.
Mr. Kostiuk, a court docket-hound extraordinaire, gained national
prominence in August when a Vancouver bankruptcy court judge found that no
less than 888 bottles of vintage wine mysteriously vanished from the
bankrupt stock promoter's pricey plonk collection. "Mr. Kostiuk lacks
credibility," stated the judge, noting the penny stock promoter's habits of
lying under oath, filing false affidavits and ignoring or breaking court
orders.
Mr. Kostiuk, who served a few years as a rural RCMP officer before
embarking on a 30-year career as a Vancouver penny stock promoter, pleaded
guilty in November, 1996, to six violations of the Securities Act for false
statements, misrepresentations and irregularities in his dealings with
Evergreen International Technology, his former flagship on the former
Vancouver Stock Exchange.
Another charge was stayed, relating to Mr. Kostiuk allegedly defrauding a
close associate, Guido Bensberg, a controversial German financier who has
maintained residences in Switzerland, Florida, Luxembourg and Vancouver.
Mr. Bensberg is a regulatory star in his own right. In May, in one of the
largest trial wins in the history of the United States Securities and
Exchange Commission, Mr. Bensberg was ordered to pay more than $27-million
in disgorgement and penalties for defrauding Bank Leu and Lehman Brothers
of $10-million, part of a $200-million-plus share-leasing scheme he
allegedly masterminded.
Other notable past close associates of Mr. Kostiuk include Mafia-linked
penny stock players Joe Garofalo and the late Ramon Donofrio.
At sentencing in late 1996, the provincial court judge decided to send a
message to the stock market community by handing Mr. Kostiuk a six-month
conditional sentence. Canada, with a long and proud history of breeding,
attracting and harbouring penny stock crooks, rarely sends such white
collar criminals to jail, although occasionally they must endure the
discomfort of an electronic monitoring anklet.
Despite Mr. Kostiuk's guilty pleas, the BCSC has yet to take any action to
ban or restrict his activities in the stock market.
Within a few months of Mr. Kostiuk confessing to be a securities violator,
the New York lawyer was hard at work for the disgraced promoter and his
family. Court filings show that Mr. Moskowitz billed the Kostiuk family's
The Plant Software for work done in February, 1997, on a planned "public
offering," which never materialized.
"This conversation is at an end," Mr. Moskowitz told Stockwatch in late
1997, refusing any comment on his dealings with Mr. Kostiuk. The New York
lawyer was no more talkative on Wednesday, refusing to confirm if Mr.
Kostiuk remains a client. "I don't have any comments," he told a reporter.
Mr. Moskowitz also popped up as securities counsel a year later for
Zeppelin Software, an embryonic penny stock promotion which featured as key
director Scott Lee Kostiuk, then 28, the younger son of the securities
violator, who was fronting for his father. (Scott's Evergreen career had
ended on Oct. 26, 1994, the day the RCMP raided the offices of Evergreen
and Riva Yachts, the Kostiuk family's private holding company.)
It is not clear how much attention Mr. Moskowitz or Scott Kostiuk paid to
the facts in a mid-1999 Zeppelin registration statement they filed with the
SEC. The filing noted that Paul's of North Shore, the thread shop of
Zeppelin front president Paul Minichiello, a North Vancouver tailor who has
been sewing up Howe Street stock deals as long as he has been sewing up
suits, was currently trading on the OTC Bulletin Board. This was news to
Mr. Minichiello, who assured Stockwatch that Paul's of North Shore has been
a private company since it was founded in 1963.
While Mr. Minichiello's own record is clean, he has had an unfortunate
knack for rubbing shoulders with securities violators. Robert Palm and
Robert Poirier, fined $3-million earlier this year by the SEC for their
fraudulent 1994-95 promotion of Garcis U.S.A., emerged as associates of Mr.
Minichiello, the tailor-tout, in a disastrous bid to take his son Dino's
Minichiello Group public in late 1999.
While Mr. Moskowitz claims his Canadian deal pipeline is not a major part
of his work, he has popped up in at least two more Canadian penny stock
deals in the past year or two.
In March, 2000, while still at Moskowitz Altman, the New York lawyer filed
a registration statement for Diasys Corp. Of the three million shares
registered for resale, two-thirds were held by two Toronto shareholders:
B.H. Capital Investments L.P. and Excalibur Limited Partnership, with about
895,000 shares each. (Diasys's board includes Anthony Trowell, who became a
direct of Windswept Environmental Group in November, 1996, after the
1994-96 illegal control and pump-and-dump promotion of the company's shares
by 17 SEC targets, including eight who pleaded guilty to related criminal
charges.)
More recently, this August, Mr. Moskowitz, now at Rosenman & Colin, filed a
registration statement with the SEC for Incitations Inc., a Canadian shell
which features Montreal lawyer Dominique M. Bellemarre as president. Mr.
Bellemarre has served as vice-president and general counsel for Credit
Mutuel since 1998, the year he ended a seven-year career as a senior
partner of Bloomfield Bellemare, a once highly-respected Montreal law firm.
Mr. Bellemare himself has an unblemished reputation, so he was likely quite
shocked in April, when his former long-time partner, Harry Joseph Frederick
Bloomfield, had the misfortune of being named in a 21-count indictment by
Manhattan District Attorney Robert Morgenthau.
Mr. Bloomfield, who collects titles like some people collect postage
stamps, added three new titles to his name: indicted forger, alleged
stock-fraud co-conspirator and offshore mastermind, along with alleged
partner-in-crime Stuart Creggy, an equally prominent London barrister.
The charges capped an extensive and broad international investigation and
followed the guilty pleas of at least three associates. U.S. authorities
claim Mr. Bloomfield and Mr. Creggy set up offshore dodges for scores of
dubious Regulation S penny stock promotions.
The indictment spans 21 years, from 1980 through this March, bridging a
two-decade period which saw Mr. Bloomfield serve in prominent positions
with numerous organizations, including the Quebec Securities Commission and
the federal Business Development Bank. It is unclear whether Mr. Bellemare
had the faintest clue what his partner Mr. Bloomfield was up to.
Meanwhile, Mr. Moskowitz repeatedly denied any comment to Stockwatch on
Wednesday on any of his Canadian clients, including Mr. Kostiuk, Mr. Graye
and Mr. Bellemare.
(Readers wishing more details of Mr. Graye's New York case may refer to a
Street Wire dated Oct. 30, under the Canadian symbols *BCSC and *CDNX, and
the U.S. symbol WAMX.)
(Union's Koenig case is noted in Street Wires dated Sept. 13, Sept. 14,
Sept. 17, Sept. 18, Sept. 20, Sept. 26, Sept. 27, Sept. 28, Oct. 5, Oct. 11
and Oct. 29, under the Canadian symbols *CDNX and *BCSC.)
(Readers wishing more details of the WAMEX case may refer to Street Wires
dated June 14, 2000, June 15, 2000, and Sept. 1, 2000, and the Koenig
pieces, under the U.S. symbol WAMX.)
(Former Itex head Mr. Neal's Exchange Bank & Trust affair is noted in a
28-part Stockwatch series in Street Wires May 4, May 5, May 8, May 9, May
10, May 11, May 12, May 16, May 17, May 18, May 19, May 23, May 24, May 26,
May 29, May 30, June 1, June 5, June 15, Sept. 19, Oct. 6, Oct. 24 and Nov.
30, 2000, Jan. 19, 2001, Jan. 24, 2001, April 3, 2001, May 11, 2001, and
June 21, 2001, under the Canadian symbol BCSC and the U.S. symbol ITEX.)
(c) Copyright 2001 Canjex Publishing Ltd. stockwatch.com |
