A story which mentions Donald A. Baillargeon and Mafia-linked career felon Edward Durante
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TSX-V member Wolverton in $211,000 (U.S.) Durante suit
B.C. Securities Commission *BCSC
Tuesday February 11 2003 Street Wire
See TSX Venture Exchange (C-*TSX) Street Wire
by Brent Mudry
TSX Venture Exchange member firm Wolverton Securities has filed a $211,000 debit suit against Mafia-linked career felon Edward Durante and his once-favourite offshore bank, Terry Neal's Nevis-based Exchange Bank and Trust, as the seventh Howe Street brokerage to pop up in the EBT affair. (All figures are in U.S. dollars.) In a statement of claim filed Friday in the Supreme Court of British Columbia, Wolverton claims it sniffed out Mr. Durante in mid-1999, but broker Alan Andrews, terminated that fall, failed to close offshore nominee accounts secretly controlled by Mr. Durante.
The named defendants include Mr. Durante, his offshore account Galton Scott & Golett Inc., Exchange Bank and Trust and Mr. Andrews. (Gillian Hobson served as both Mr. Neal's front as head of Exchange Bank, and Mr. Durante's front as an officer and director of Galton.) The allegations in the suit, filed by Vancouver lawyer Robert Anderson of Farris Vaughan Wills & Murphy, have not yet been proven in court and no statements of defence have yet been filed.
Exchange Bank and Trust, purportedly registered in Nevis and Nauru, has had its main operating account at Bank of Montreal in Vancouver frozen since April, 2000, by the British Columbia Securities Commission, on behalf of the SEC. While numerous previous court and regulatory actions portray Mr. Durante as merely a star client of Exchange Bank, the Wolverton suit describes him as a key player in the dubious offshore bank, which operated largely as a money laundering account for securities violators. "Hobson and Durante were the operating minds and will of EBT and controlled the EBT (Bank of Montreal) account," states Mr. Anderson in the suit. (About $115-million moved through this EBT account at Bank of Montreal over a two-year period, according to the Internal Revenue Service.)
The suit notes that Wolverton hired broker Andrews in April, 1994. (According to registration records of the British Columbia Securities Commission, Mr. Andrews launched his brief brokerage career in February, 1993, at Georgia Pacific Securities, and left the industry when he was terminated by Wolverton in September, 1999.)
The suit claims Galton opened its first account at Wolverton on Feb. 17, 1999, with Ms. Hobson given trading authorization. (While this account was named Galton Scott & Gollett, Mr. Durante's numerous offshore nominees include a similar name, Galton Scott & Goulett.) "On or about May 4, 1999, Durante gave instructions on behalf of Galton to Andrews to wire monies from the first Galton account to Albank in New York. Wolverton was unaware of Durante's connection to Galton and the first Galton account at this time," states the suit.
Wolverton claims it first discovered Mr. Durante's reputation in May, 1999, when it found out he had been convicted of market-related fraud, he was the subject of a fraud indictment in California and he was also the target of an investigation under way by the FBI. The suit claims Wolverton ordered Mr. Andrews on May 12, 1999, to cease doing any business with Mr. Durante and shut any of the dirty client's accounts, but he failed to mention Mr. Durante's connection to Galton or to close this account.
Instead, a month later, Wolverton unwittingly opened a second account for Galton on June 10, 1999. This time, Ms. Hobson not only had trading authority but she personally guaranteed all Galton debts and liabilities.
The suit claims that from February, 1999, until the Galton accounts were closed, Mr. Durante's accounts were particularly busy trading shares of three stocks: Virtual Gaming Enterprises, PSA Inc. and Winsong Productions Inc. "Galton, Hobson and Durante and EBT defrauded Wolverton in carrying out the illegal trading," states the suit.
Wolverton apparently twigged in sometime around July 6, 1999, when Mr. Durante's signature as sender showed up on a Federal Express slip for a 500,000-share certificate it received from the company's new transfer agent. "Wolverton contacted the transfer agent to enquire about the shares and was advised that the transfer agent would have to consult with Durante," states the suit.
Meanwhile, Mr. Durante's lucrative penny stock network was about to crumble in slow motion. On Aug. 2, 1999, the United States Securities and Exchange Commission launched its PSA prosecution against Mr. Durante and his associates, including Vancouver Stock Exchange graduate Timothy Pinchin, banned for 25 years in October, 1996, by the British Columbia Securities Commission for the Howe Street rig jobs of Keywest Resources and Consolidated Brightwork Resources.
The end was near for Mr. Andrews, who was terminated for cause on Sept. 15, 1999, after an investigation by Wolverton.
The BCSC later stumbled on the EBT rat's nest in April, 2000, when it froze the Bank of Montreal account, and two months later, in June, Mr. Durante was arrested in a broad crackdown on Mafia-linked players in the penny stock market. Mr. Durante soon agreed to rat out his other associates, and snared Union Securities broker Trevor Koenig, New York promoter Roger DeTrano and Vancouver offshore accountant Michael K. Graye in stings that fall.
While Stockwatch traced out Mr. Durante's PSA and Virtual Gaming deals in 2000, little has been written about Winsong, which briefly had ambitious plans to distribute "the most profitable selection of music recordings ever offered over the Internet," purportedly including a dozen Frank Sinatra masters never before released.
On April 1, 1999, soon after Mr. Durante secretly opened his Wolverton accounts, Winsong was touted by Donald A. Baillargeon of the Emerging Company Report. Four months later, on July 27, 1999, the SEC launched a prosecution of Mr. Baillargeon for touting Alliance Industries, an eclectic promotion featuring fast-growing "paulownia" hardwood trees, a nationwide chain of chiropractic clinics, live goats and goat carcasses, none of which existed. The goat promotion peaked at $46 a share in 1996, with Mr. Baillargeon projecting 10-year revenues of $4.8-billion.
A year later, on Oct. 27, 1998, the SEC settled another case against Mr. Baillargeon and his Emerging Company Report. The tout, whose ECReport television show aired on 140 cable systems in 125 cities, agreed to cease any more securities violations, including forgetting to tell his followers he was paid up to $17,000 for every stock he touted.
bmudry@stockwatch.com
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