BCSC-known Purdy distanced by co-defendant Horvat
B.C. Securities Commission *BCSC
Thursday January 23 2003 Street Wire
by Brent Mudry
Fake passport fixer Blair Valentine is the third Canadian to plead guilty in Operation Bermuda Short, the FBI-RCMP penny stock bribery and money laundering sting, with more pleas on the way. In a brief hearing Wednesday in Miami, Mr. Valentine, 47, of Toronto, no known relation to Mark Valentine, also of Toronto, pled guilty to one count of conspiring to provide a false passport. Sentencing is set for April 4.
Mr. Valentine's guilty plea comes after Howe Street promoter Kevan Garner of Vancouver and offshore front Paul Lemmon of New Brunswick pled guilty last month. Harold Jolliffe, snared in the same money laundering sting as Mr. Garner, is reportedly expected to plea guilty, but he remains presumed innocent until such a plea change is finalized.
The identities of Blair Valentine's associates remain a mystery. In oral submissions, Assistant United States Attorney Rolando Garcia told Judge Daniel Hurley of U.S. District Court for the Southern District of Florida that Mr. Valentine conspired with other unindicted co-conspirators to provide false passport documents to the two Bermuda Short co-operating witnesses and the FBI undercover agent.
Although Mr. Garcia declined to comment to Stockwatch on whether the investigation is continuing, Mr. Valentine's plea agreement is expected to include the standard sing-and-rat-out-your-associates clauses. Mr. Valentine has been held without bail since his arrest on Aug. 14, 2002.
Meanwhile, in other Bermuda Short developments, with their trial just four weeks away, alleged secondary money laundering figure Ronaldo (Ron) Horvat has made a renewed bid to sever his fate from that of alleged Vancouver drug money launderer John (Jack) Purdy, while Mr. Purdy is on the move again. In another case, retired dentist Barry Berman of Toronto is expected to plead guilty soon.
In the Purdy case, long-time Howe Street promoter Mr. Purdy and forestry entrepreneurs Mr. Horvat and Mr. Jolliffe are set for trial on money laundering charges on Feb. 18.
Mr. Purdy, ordered to remain in Southern Florida on $5-million bail, made formal application last week to move to "more appropriate housing" in a sixth-floor condo at The South Bay Club in Miami Beach. While the move follows Stockwatch and The Vancouver Sun reporting the promoter is living in a 20th-floor condo apartment at the Yacht Club of Portofino in Miami Beach, there is no suggestion this arrangement was in any way inappropriate for the alleged drug money launderer.
Mr. Horvat, however, is trying to distance himself from Mr. Purdy. On Friday, he launched an appeal of Magistrate Judge John Sullivan's Jan. 7 decision denying his bid to sever his trial from Mr. Purdy. Mr. Horvat's lawyer, Howard Srebnick of Miami, strongly argues that his client will be greatly prejudiced if the jury hears all sorts of awful things related to Mr. Purdy.
"The disparity between the evidence against Jack Purdy and Mr. Horvat is of such a character that a severance is warranted. The government has labeled Jack Purdy a 'leader' who has a 'money laundering business,'" states Mr. Srebnick in his submissions.
"Jack Purdy is one of the main targets of this investigation who has been pursued by Canadian and FBI officials from 1999 until mid-2002. Purdy is allegedly involved in three different federal cases and the government intends to introduce evidence from Mr. Purdy's other cases," states the defence lawyer.
According to Mr. Srebnick, the only real evidence the government has on Mr. Horvat is that he accepted a bag stuffed full of cash in Miami on July 26, 2001. "As instructed by Mr. Horvat's employer, Harold Jolliffe, the money was deposited directly into Mr. Jolliffe's account at a Citibank branch in downtown Miami. Mr. Horvat deposited the money using his own name and presented his passport as identification. Mr. Horvat's participation in this case was, at best, minor," states the defence lawyer.
"Furthermore, there are allegedly express references to 'cocaine money' in the other cases in which Purdy was involved. Mr. Horvat, on the other hand, was never expressly told that the money he accepted was derived from the drug trade and for this reason Purdy will probably raise a defence which is inconsistent with that of Mr. Horvat," states Mr. Srebnick. The defence lawyer argues that with two defendants presenting different defences, a jury will be unfairly influenced against Mr. Horvat, and no "curative instruction" the judge can give the jury can solve this problem.
In an unrelated Bermuda Short case, Mr. Berman is expected to plead guilty in the bribed mutual fund manager sting involving players in ThermoElastic Technologies Inc. Mr. Berman's co-defendants include lawyer Howard Kerbel and consultant chairman Mr. Epstein, both of Toronto, who controlled a significant number of shares through nominees, promoter Melvin L. Levine, of Pompano, Beach, Fla., and New York broker Vincent Barone.
The ThermoElastic defendants face a combined 15 counts of wire fraud, mail fraud and securities fraud, while Mr. Berman and Mr. Kerbel and another accused face an additional count of money laundering stemming from a $10,000 wire from St. Michaels in the offshore haven of Barbados to the U.S.
The indictment claims the defendants agreed to sell 20 million shares of ThermoElastic at 20 cents a share, or $4-million, to undercover agents posing as corrupt mutual fund officials, in return for a hefty 30-per-cent kickback. The stock was to come from ThermoElastic and International Corporate Structures Inc., an offshore Barbados company controlled by Mr. Kerbel on behalf of Mr. Berman, Mr. Epstein and their colleague.
"Defendants Howard E. Kerbel and Barry Berman agreed to recruit two sets of securities brokers, through defendant Melvin L. Levine and defendant Vincent Barone, respectively, to assist in artificially inflating the market price of TMRO stock by making illegal payments to securities brokers who would recommend and sell shares of TMRO stock to their unwitting customers rather than shares of another company's stock," states the grand jury indictment.
Mr. Kerbel and Mr. Berman allegedly agreed to grease Mr. Barone with two million shares, which in turn the fund would buy from the dirty broker. "Barone agreed to take the $400,000 as a fee for his assistance in artificially increasing the market price of TMRO stock through illegal means," states the indictment.
Mr. Berman's Miami lawyer, Daniel Forman, recently confirmed his client may not stand trial. "The undersigned represents to the Court that there is a very good likelihood that the movant's case will be resolved as a result of a plea agreement. However, the Assistant United States Attorney assigned to the case, Richard Hong, is currently in a trial in a different court and unavailable to discuss the resolution," stated the defence lawyer in a Jan. 7 motion.
Mr. Berman won an extension of the change-of-plea agreement to Jan. 29. Last week, the deadline was extended to Feb. 4 for all defendants for all motions, including any changes of pleas. "No further extensions will be granted except in extraordinary circumstance," states Judge Paul Huck in bold letters. The trial is set for March 5.
No other ThermoElastic defendants have indicated any intent to change their pleas, but Mr. Kerbel may be considering his options. "Although the government has made a good faith preliminary offer to resolve this case, undersigned counsel and the defendant have not been able to fully investigate the possible defences and reach a decision regarding the equities of the plea offer," states his defence lawyer Roy Kahn in a recent filing.
Mr. Kahn complains that each time his client Mr. Kerbel tries to enter the United States to meet his lawyer, he has been detained. "The defendant missed his flight one time and has barely made his flight the second time as a result of this detention."
bmudry@stockwatch.com
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