Found the resolve of one who broke the law **inside**
From: TheTruthseeker Wednesday, Oct 30, 2002 4:21 PM
Respond to of 81303
WAMEX ex-CEO Cushing jailed eight years
2002-10-30 09:01 PT - Street Wire
by Brent Mudry
Former WAMEX Holdings Inc. chief executive officer Mitchell Cushing, convicted this summer partly by the testimony of jailed Howe Street broker Trevor Koenig, has been sentenced to more than eight years in prison on charges of conspiracy to commit securities fraud, perjury and obstruction of justice, relating to WAMEX, a 1999 New York Mafia-linked penny stock rig job which featured stock and money laundering through Vancouver brokerage Union Securities.
Mr. Cushing was sentenced Friday to eight years and one month in prison by United States District Judge William H. Pauley III in U.S. District Court for the Southern District of New York in Manhattan. The sentencing came after the former WAMEX CEO was convicted July 3 at the end of a two-week jury trial.
Mr. Koenig helped put Mr. Cushing behind bars, testifying for several hours in late June about WAMEX trading he handled at the tiny White Rock border branch of Union Securities, a controversial Howe Street brokerage. The lead prosecutor, Assistant U.S. Attorney Michael Schachter, declined to comment on whether Mr. Koenig was a star or key witness.
Mr. Koenig has been in jail since his arrest at the border on the Labour Day weekend last year, when he was nabbed in a related sting featuring his star client, WAMEX promoter Ed Durante, a career felon, as a star federal operative and informant. The Vancouver broker pled guilty to securities fraud this spring and has been co-operating with authorities since, singing like a canary. His sentencing has been adjourned several times, most recently to Nov. 25.
(Mr. Durante was not the only Koenig client linked to the Mafia. In May, Stockwatch revealed Mr. Koenig also serviced another mob-linked client, viatical fraudster James A. Capwill, an associate of reputed Mafia enforcer Eugene (The Animal) Ciasullo, unrelated to Mr. Durante. Court filings show Mr. Capwill used Union Securities as a money-laundering conduit for millions of dollars, plus penny stock shares, stemming from the $160-million Liberte Capital Group LLC fraud.)
Mr. Durante, nailed in June, 2000, in Operation Uptick, the FBI's biggest market mob bust, had most of his $16-million in illicit proceeds from WAMEX Holdings and three other penny stock rig jobs frozen in April, 2000, in a Vancouver bank account of Exchange Bank & Trust, the dirty offshore bank of Itex Corp. fraud mastermind Terry Neal. (All figures are in U.S. dollars.)
In early June, 2000, just before the big bust, the SEC subpoenaed Mr. Cushing and Russell Chimenti, WAMEX's chief administrative officer, in connection with its probe of WAMEX. "The evidence at trial showed that Cushing and Chimenti lied at several points during their testimonies in an effort to conceal the true source of WAMEX's funding and their relationship with (Ed) Durante," states the SEC.
Days after lying to the SEC, Mr. Cushing and Mr. Chimenti were arrested on June 14, 2000, as FBI agents fanned out across the U.S. to arrest more than 100 penny stock promoters, brokers, executives and Mafia associates from five different organized crime families. The WAMEX indictment showed Union Securities was a key conduit for trading of New York penny stock promoter Mr. Durante.
Mr. Cushing was the only WAMEX figure to go to trial. "Cushing's conviction was based on his participation in a scheme to manipulate the public market for WAMEX stock by, among other things, issuing false and misleading press releases concerning WAMEX's funding and regulatory approvals to operate its proposed business, an Internet-based Alternative Trading System. Cushing and his co-conspirators obtained approximately $24-million in profits by selling WAMEX stock to the public during the course of the scheme," states the SEC.
The regulator notes the trial evidence showed that in the fall of 1999, Mr. Cushing entered into an illegal financing arrangement with Mr. DeTrano and Mr. Durante, who, in return for 19.5 million shares, agreed to rig the stock, sell it to the public at inflated prices, and kick back a portion of the proceeds to Mr. Cushing and WAMEX.
Six WAMEX figures have been convicted to date. The first was Mr. Durante, who pled guilty Dec. 7, 2001, to securities fraud, wire fraud, money laundering and making false statements. Sentencing for the helpful felon has been adjourning pending his continuing co-operation with authorities.
WAMEX convict No. 2 was New York promoter and Koenig client Roger DeTrano, who was arrested a year ago on an indictment also featuring controversial Vancouver offshore accountant Michael K. Graye. Mr. Detrano pled guilty in January to one count of securities fraud and one count of conspiracy to commit securities fraud. He was sentenced Sept. 22 by Judge Pauley to 70 months, or just under six years, in prison.
The next to fall was Union Securities broker Mr. Koenig, who pled guilty in February after a number of rounds of plea negotiations over several months. WAMEX convict No. 4 was Mr. Chimenti, the company's former chief administrative officer, who pled guilty on March 5 to one count each of perjury, conspiracy to obtruct justice and conspiracy to commit perjury. He was sentenced July 19 by Judge Pauley to one year and one day in prison.
WAMEX convict No. 5 was Mr. Graye, who pled guilty March 27 in New York to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years. Mr. Graye has not yet been sentenced. He also pled guilty this spring in an epic Canadian case and testified in Toronto against his co-accused and former partner, Toronto lawyer Thomas Baker.
The Crown alleges Mr. Baker and Mr. Graye 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 (Canadian) 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 repeatedly forgot to tell the tax man about it.
Mr. Graye was also a key borrower in the Eron Mortgage debacle in Vancouver, a $150-million (Canadian) mortgage fraud. A key Eron behind-the-scenes player, controversial former Vancouver lawyer Martin Chambers, persuaded Eron officials to post part of Mr. Graye's bail, after his arrest in the Canadian case, from Eron's investors' funds. In an unrelated case, Mr. Chambers was arrested in August in Operation Bermuda Short for allegedly offering to launder Colombian cocaine cartel money. The RCMP recently linked Mr. Chambers to the Hells Angels and allege he ordered a hit on a cocaine importation figure.
Mr. Cushing was the the sixth and final WAMEX convict, and won the harshest sentence yet. As noted, Mr. Durante, Mr. Koenig and Mr. Graye all flipped, are co-operating with authorities, and are awaiting sentencing.
bmudry@stockwatch.com |
