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Pastimes : Investment Chat Board Lawsuits -- Ignore unavailable to you. Want to Upgrade?

To: marcos who wrote (3533)	8/16/2002 12:02:16 PM
From: Mr. Jens Tingleff	Read Replies (2) \| Respond to of 12465

Valentine indicted in fraud ring FBI nabs broker in Europe during sting operation By Madhavi Acharya-Tom Yew Business Reporter Former high-flying financier Mark Valentine has been indicted in Florida in connection with an alleged securities fraud ring worth some $313 million (Canadian), U.S. authorities said yesterday. As a result, the former head of now-bankrupt Toronto brokerage firm Thomson Kernaghan & Co. Ltd. is under arrest in Germany and faces extradition to the United States. Valentine, who is currently banned from trading securities in Ontario, was one of 58 executives, stock promoters and brokers — including 16 Canadians — indicted following a two-year undercover sting operation called Bermuda Short. "At this point in time, we have very limited information. Until we know more about it, it's difficult to say very much," Valentine's lawyer, Joe Groia, said in an interview. He declined to comment on the whereabouts of his client. Valentine was nabbed by FBI agents in Frankfurt while boarding a flight to Canada, sources say. Jacqueline Becerra, a spokesperson for the U.S. Attorney-General's office in Miami, confirmed Valentine was arrested "sometime in the last 48 hours." It is unclear when the extradition process will begin, she added. "We have no information as to when that will start." The U.S. indictment is unrelated to an ongoing investigation by the Ontario Securities Commission, a spokesperson for the commission said. The sting operation, detailed by law enforcement officials for the first time yesterday, was a joint effort involving authorities from the Federal Bureau of Investigation and the Securities and Exchange Commission in the United States, and the Royal Canadian Mounted Police. The resulting 23 indictments, which include wire, mail, and securities fraud conspiracy, securities fraud and money laundering, were announced at a news conference in Miami. Federal officials say that while no investors lost money, the attempted fraudulent securities sales totalled more than $200 million (U.S.). -------------------------------------------------------------------------------- `At this point in time, we have very limited information ... it's difficult to say very much.' lawyer Joe Groia, representing Mark Valentine -------------------------------------------------------------------------------- The indictments include five B.C. men: stock promoters John Purdy and Kevan Garner; Martin Chambers, a former lawyer; and Ronald Horvat and Harold Jolliffe, who do not work in the securities industry. During the first part of the undercover operation, an FBI agent posed as a corrupt securities trader employed by the U.S.-based representative of a fictitious foreign mutual fund. Some of the companies involved include Digital Concepts International, Uncommon Media Group, COI Solutions Inc. and FoneCash Inc., whose shares are publicly traded on the over-the-counter market. The second part of the sting, which resulted in three indictments, involved money-laundering transactions through U.S., Canadian and offshore banks. On May 14, a federal grand jury returned an indictment charging Valentine with one count of wire, mail and securities fraud conspiracy and two counts of securities fraud, according to U.S. Department of Justice documents. Valentine is alleged to have owned and controlled a majority of the over-the-counter stock of C Me Run Inc., SoftQuad Software Ltd. and JagNotes.com Inc. The indictment charges that Valentine and Paul Lemmon, director of a Bermuda-based financial services company called Voyager Group Ltd., conspired to sell the stock to the fictitious fund for a total of $29.4 million in return for a kickback of $7.8 million. Authorities also allege that Lemmon and Valentine "were to cause securities brokers to receive undisclosed kickbacks" in return for helping to manipulate the market prices of the stocks by selling shares to unsuspecting clients. The maximum penalty for securities fraud is 10 years imprisonment, while the maximum for conspiracy to commit securities fraud is five years. The OSC slapped Valentine with a temporary cease-trade order in mid-June after he was abruptly suspended by Thomson Kernaghan. In July, an administrative tribunal ordered that the ban, which does not extend to Valentine's personal accounts, be extended until Jan. 31, 2003. The commission and the Investment Dealers Association of Canada are currently investigating Valentine's actions as general partner of the Canadian Advantage Limited Partnership and the VC Advantage Fund Partnership. The OSC alleges that Valentine participated in so-called "death spiral" financing for Jawz Inc., which traded on the Nasdaq, and favoured one client over another in the trading of shares of C Me Run Corp. The effect of these trades, the OSC claims, was to benefit himself or his accounts to the detriment of some of the firm's clients. None of the allegations has been proved in court. Thomson Kernaghan was petitioned into bankruptcy in July, just one day after the brokerage was suspended from doing business because of a capital deficiency and lack of internal controls. Bankruptcy trustee Ernst & Young revealed earlier this month the firm faces a shortfall in assets of at least $3.3 million.

To: marcos who wrote (3533)	8/20/2002 6:10:05 AM
From: E. Charters	Read Replies (2) \| Respond to of 12465

Much of the behaviour noted in Thompson Kernaghan's demise is in fact not highly irregular at all in Canadian markets. In point of fact taking money to sell shares at inflated prices is part of what brokers consider that they do for a living in order to please clients they underwrite or work for in any capacity. Whether or not it is illegal, it is what they think they have to do in order to make a market. Another thing that purports to cause so much consternation amongst officialdom, is that brokers would with alacrity take money from people who admitted to getting it from ill-gotten gain. This is so common that it would hardly cause the average broker to keel over in a dead faint. You could see them looking at their watch as the client recounted his misdeeds in gory detail to impress. It is part of the common trade of brokers to accept cash from crooks it would seem. After all, you can hardly expect them to be investigators into that sort of thing, nor can you expect them to refuse money out of hand. They have to eat. Brokers in Canada are not a highly ethical lot. The nature of the business where one client is traded off against another lends itself to a certain two facedness that is hard to avoid. The only questions to ask, as the dominoes fall, are which ones are next, and how many will remain? We have seen in the recent past Marchement McKay departed for its aggressive sales tactics of penny stocks to widows and orphans, and some other lesser lights in Toronto for lack of supervision of brokers, but as these departures may leave a void the street that can be filled eventually. What seems may happen as the net closes on the ethics of the street is that no one will be left standing at all who would work with small companies seeking funds. It is probably the toughest job in the world to raise money from brokers on the street for a start up company. It is also fraught with danger concerning protection of business, patents, properties, reputation and access to capital. Often companies resort to using a stalking horse concept that attracts the investors in order to segue into a more confidential area once funds are raised. Changing horses is so common, they have rules to prevent it more egregious manifestations. It may be accepted that up to 30% of brokers and firms may from time to time be involved in fraud, unethical securities dealings, dubious stock promotion, taking money from known shady dealers, or out and out excessive greed. This did not start just yesterday. Remember the Robber Barons? So far anything I have seen prosecuted, or exposed, Milliken or Enron notwithstanding, hardly compares to the machinations of Fisk, Gates, Vanderbilt or Carnegie's fraudulent paper empires. This latest stuff is Boy Scout stuff compared to the papering of the street that took place with the Railroads and US Steel. Carnegie used to sell stock out of the back of Railroad cars. 75% of the shares in US Steel were never on the books of the company and were a complete rip off. Whatever is done, it should be tempered with reason. It may well be that some brokers get a "tad" offside from time to time. I am not saying that TK were angels. But in the zeal to clean up the street the politicos and authorities should remember that the greatest source of complete misprepresentation and waste of money, fraud and breach of trust is the government itself. If campaign promises were compared to a company prospectus and the use government funds in pork barrels, slush funds, and patronage were compared to company expenditures in the market and stock support, and misspent money in pay, pensions, grants and regional incentives were compared to corporate expenditures -- if the corporate CEO's would be jailed, the politicians would be hung. EC<:-}