B.C. Securities Commission (C-*BCSC) - Street Wire
BCSC-known Purdy babbles about $25-million (U.S.) a year
B.C. Securities Commission *BCSC
Friday February 21 2003 Street Wire
by Brent Mudry
Howe Street stock promoter John (Jack) Purdy boasted to undercover FBI and
RCMP agents that he could move $25-million a year for them, according to the
transcript of a sting meeting in the Bermuda Short money laundering case. (All
figures are in U.S. dollars.) If Mr. Purdy is convicted in his current trial
in Miami, the $25-million figure is likely to be key, as it equates to a much
heavier potential sentence under federal sentencing guidelines than lesser
amounts.
The transcript dates back to Feb. 21, 2002, when Mr. Purdy had an extensive
meeting with the undercover operatives, FBI agents called Ricardo and Michael
Pizzio, and an RCMP officer codenamed Bill McDonald, on a yacht in Fort
Lauderdale. While portions of the fateful yacht encounter transcript have
already been filed in United States District Court for the Southern District
of Florida, each juror has the full transcript, the equivalent of several
telephone directories in size, to mull over.
Early in the meeting, Mr. Purdy described how he operates his business.
"... there's companies out there constantly needing to grow. So my basic exit
is, is either by developing an asset and selling it on block, when I mean on
block all at once, we sell the whole idea to somebody, and we get cash or cash
and stock, or what we do is build a deal and we get it working and we sell
stock, we get liquid, selling, selling the bright idea. For example, if we're
doing an exploration deal, we're drilling a well, we want to be, before that
well goes down and defeats us, we want to be gone, our risk, it costs us 500
grand to drill a well, we ain't drilling till we sold 500 grand," Mr. Purdy
told the undercover agents.
"I mean, I'm not a dummy, I've, I've made lots of money, my partners make
money, we don't, we've all sat down and pissed on each other but, good
partners just have a pissing match and get on with it, you know."
One agent then talked of moving and circulating significant sums of cash.
"You'll, you'll find that here, I know, I know one of the concerns as we
talked earlier is ah ... you know at the end of the day we're business people
too, you know, and, it's ... it's assessed risk everything you do. And if
we're, if we're looking, I mean basically we, we're ... we're at two places.
We have a need to take physical cash," states the RCMP officer.
"Yeah," replies the promoter.
"And get it, get it into use. As well as ...," states the undercover officer.
"Yeah," replies Mr. Purdy.
"... it's money that we've got in the system up that we want to basically
layer it and, and get it to the point where we can use it so we can pay taxes
on it, and, and have that total legitimate," states the RCMP officer.
"Yeah," replies Mr. Purdy.
Soon after, the pair talked about fees.
"How much he gonna charge us?" asked the undercover officer.
"That's you guys' business. I don't want that business. I want your finance,
right at First Mercantile ... in Chicago, you know, you know what I want,"
replied Mr. Purdy.
The RCMP agent then talked about wire transfers, instead of cash transactions,
and stressed his people wanted to get their money out before any investment
collapsed.
"We want to either be, we don't have to be the first out, but we don't want to
be the last one out," stated Mr. McDonald, the RCMP agent.
Ricardo then piped in.
"I don't mind being out in the middle, I don't want to be the last in the
row," the FBI agent told the Vancouver stock promoter.
"I took, here's the way it works, I went all the way through this, I got one
partner, Don Sheldon. Sheldon did Bass Ticket outlets and became Ticketmaster.
That's my partner. He and I have been partners for 10 years. We own the
building together, we've had the huge, we, we lost six million bucks in (UI,
or unintelligible) ... we never blinked, we've made millions and millions in
deals, and when we're both busy, what we did is we a month end accounting,
cause I'm, I'm, I'm running all the stock and he's running all the, you know
he's running the ...," Mr. Purdy replied.
(It should be noted that no allegations of wrongdoing have been made against
Mr. Sheldon.)
A short while later, Mr. Purdy described other services he could provide.
"If we're gonna run an offshore vehicle, we will register it, if we're running
an offshore vehicle and I have anything to do with it in Canada I will
register, here it is, here's the trust fund, here's mind and management, we
will go to Thorsteinssons (the prominent Vancouver tax law firm), talk to tax
attorneys, we will tell Revenue Canada here's the way we're dealing with it,
they can't, they, they don't have to ... they have no business in knowing what
happens out there, they have business in knowing anything that happens with a
Canadian citizen and what his involvement is in it. I'm a manager, I run it, I
manage it, I manage money, I manage it for offshore investors period, done. We
report what I, what my income is, my piece of it," explained Mr. Purdy.
"The structure, that mind and management will happen when you and I are
floating not here in U.S. waters, we will float around the Caribbean, cause I
don't even ...," stated the promoter.
"That's (UI) ... I'm after layering," stated Ricardo, the FBI agent.
"Right," replied Mr. Purdy.
A short while later, the promoter stressed that the source of funds was
irrelevant, a kind of see-no-evil, hear-no-evil attitude.
"The, the only questions, the only way you will kill yourself if ever telling
me where you make your money. I don't want to know. I do not want to know. I
honest to fuck could care less. There's 50 different things that can happen, I
don't want to know. Cause it's not my business, you're a business guy, you
got, you got some ah ... some, some funds that you wanted to do some business,
that's all," Mr. Purdy told the undercover agents.
"If I know then it's, it's ... it hurts," stated the promoter.
"Sure," replied Ricardo.
"Well, I presume you've got legitimate things that are making you guys a lot
of money and you want to use it and you want to use it to your beset tax
advantage," stated Mr. Purdy.
After further chit-chat, the RCMP agent told the Vancouver stock promoter that
Ricardo, the FBI agent posing as a Colombian cocaine cartel figure, was no
small player.
"Through Ricardo and his family and his company ... companies, are generating
about one and a half million dollars a day throughout North America," stated
the RCMP agent.
"Hmmm," replied Mr. Purdy.
"So we're talking about 500 million a year being generated," stated the
undercover officer.
"Um-hmm," replied Mr. Purdy.
"We need to find a home for that, I mean obviously this kind of money,
collecting for the sake of money is stupid," stated the undercover man.
"It's got to go," replied the stock promoter.
"It's got to be set up for generations, it's got to be set up in trusts, it's
got to be set up and invested wisely, it's got to buy houses, it's got to buy
legitimacy," stated the undercover agent.
"The little things that I do we will have, here's, you asked me to make, would
I make a commitment, or what my commitment would be. I'll tell you, we'll get
a 75-per-cent-plus success rate, we're gonna operate in the one to five
range," replied Mr. Purdy.
"Right," stated Ricardo, the supposed Colombian cocaine figure.
"So we don't get hurt," replied Mr. Purdy.
"What do you mean by one to five rate?" asked Mr. McDonald, the RCMP officer.
"One to five million bucks per hit," replied Mr. Purdy.
"All right," stated Ricardo.
"We don't want to go, I don't want to do chicken shit stuff, and, and, and
sort of where we are is we don't want all the, what I call the shooters, or
the, or the what do they call 'em?" asked Mr. Purdy.
"Fly by nighters," replied the RCMP agent.
"Well not really fly-by-nighters, but every, every shooter wants to do a deal
on two million bucks, you get all of the little guys trying to dig around
doing a deal for a million. If you get up over a million, a million to five
brings you an audience of guys, four or five guys that care about the money
and they're trying to grow from five to 20. And what we want to do ...,"
stated Mr. Purdy.
"Okay, okay, I, I want to be in that audience," replied Ricardo.
"Bingo. But what we're packaging to sell to that audience," stated Mr. Purdy.
A short while later, Mr. Purdy discussed handling volumes of cash.
"Bottom line is, how much cash, cash money can you deal with?" asked Ricardo.
"You're gonna, I can't deal with much cash. Just cause I ...," replied Mr.
Purdy.
"When you said ... when you say you can't deal with much, how much is ... can
you deal with?" asked Ricardo.
"Well, I got to figure out how much Bolivian can deal with, because Bolivian
is a cash system," replied Mr. Purdy.
"We're talking about Bolivian Hardwood?" asked Ricardo.
"Yeah, Bolivian Hardwood," replied the RCMP officer.
"Yeah," replied Mr. Purdy.
"And then Masterlock's coming into play too, right?" asked Ricardo.
"Masterlock, but Masterlock is a really Canadian entity Bill gets into export.
You know, so it's not the right system. The right system is, the right system
is Bolivian Hardwood. Because it's dealing with, I mean it's all cash,"
explained Mr. Purdy.
"We deal with cash in Bolivia every day, that's all we do."
"Right, how much can you (UI) ...," asked the RCMP officer.
"We pay the truckers, we pay the lumber, we pay everything ... it's all
money," replied Mr. Purdy.
"Cash?" asked Ricardo.
"Cash," replied Mr. Purdy.
The Howe Street promoter then described the humble roots of Bolivian Hardwood,
and his grandiose plans for the company.
"850 grand of it is my money over five years. I kept the thing going, I sent
the skidders, I sent down the (UI) ... I paid for these fuckers to drive
around trying to create a market for wood, it's my dream," stated Mr. Purdy.
"But my dream is simple, if we can control a major forest asset in that
country, we'll get office. I'll get office to one of the big boys. Cause they
can't go in and, and, and be as mobile as we are. Once we create the market
for the species, which we're doing, that's all working like a house on fire,
and we create that resource, you got a, that, that is a you know three billion
dollar resource that we're gonna have intact, and we're gonna own that for six
million bucks," bragged Mr. Purdy.
"Okay, but ...," replied the undercover RCMP officer.
"And we can do it all for cash," stated Mr. Purdy.
"Harold (Jolliffe) and Ron (Horvat) will only do what you tell them to do,"
asked the RCMP officer.
"Right," replied Mr. Purdy.
The group then chatted a bit about the test transactions moved by Mr. Horvat
and Mr. Jolliffe, including the $130,000 in cash handled in a second batch.
A short while later, Mr. Purdy then pitched another ambitious project.
"No, no, what you want to do is have the cure. You want to have a legitimate
lab, like you, like the Pasteur clinic," explained Mr. Purdy.
"Right," replied Ricardo.
"That are doing legitimate research to find ways to, to find delivery systems
for the existing drugs that can be replicated quickly to safeguard this, the
world, and you want to go into de ... delivery systems for the world that will
provide immunization for other controls, should, should we have a huge
holocaust. These will be huge stocks. The first guy that comes out properly
finances one of these is gonna have a home for ... I don't know, 100 - 150
billion bucks," stated Mr. Purdy.
"Okay, Jack, Jack," replied the RCMP officer, trying to rein the promoter in.
The conversation quickly shifted to specific amounts of money that could be
moved through Mr. Purdy's network.
"Can you take two million a month and ... what it ... what is ...," asked the
RCMP officer.
"And use, use it properly, yeah," replied Mr. Purdy.
"We'll send two million through to you a month, we don't give a fuck whether
you find a cure or not, we don't give a shit, as long as we know the money out
at the other end or else, you can make money, that's even better. But that two
million can be used for you, it can flow through, we can get it back out some
other way, that we can reinvest it and use it ...," stated the undercover RCMP
agent.
"And cover it, yeah," added Ricardo.
"Two million a month is kind of our goal. 25 million a year, is what we want
to do," stated the RCMP officer.
"25 million dollars a year is an achievable goal. There is, there is, there is
an appetite for that kind of money in four or five reasonable ...," replied
Mr. Purdy.
"Without the (UI)," stated Ricardo.
"(UI) One out of five. You got four fives, there's 20. Right, we ... we don't
want to be more than five into a deal," replied Mr. Purdy.
"We don't want to run more than four of them. So that's kind of the number.
You know, 20 - 25 million bucks, we can handle it, we can handle it
efficiently, we can make fucking sure we make money with it, and we can make
sure money comes out of the other end of the pipe. Whether it's by selling the
company ... whether it's by distributing the stock, you know, you could figure
out that your cost one doing that, your risk, your risk costs is gonna be you
know 10 to 15 per cent. So that's ...," stated Mr. Purdy.
"That's nothing," replied Ricardo.
"(UI)) ... And your upside is gonna be a double or triple or quadruple. But
your, your risk we're not gonna go, we're, we're gonna have a stock loss, that
stock loss (UI) ... 15 per cent. If we're, if we're in a fucking hole we're
gonna get hit for a million and call it. But we're not gonna take more than,
we're not gonna take more than a 15-per-cent hit. In of course a year. Well,
so ... 50-per-cent hit could give you a three million dollar hit, whatever.
But it wouldn't, but we, we're not gonna take all hits, fuck, we're not that
stupid. We're gonna go a lot of things right," explained Mr. Purdy.
After a washroom break, the conversation continued.
"I feel like you're not giving me a total line of bullshit. Don't get me
wrong, there's always that pessimistic view of you're a salesman," stated
Ricardo.
"I am a salesman," replied Mr. Purdy.
"Okay," stated Ricardo.
"You asked me what I can manage, and manage comfortably. I can manage, I can
manage 25 million bucks a year, I'm there. I've managed that kind of money, go
look at, and, and, and, and, and the kind of money that I take out, there's
audited, so how much money do I manage? How much money has seven public
companies listed in my building, then I'll give you the (UI) ... auditors
other things, how much do we manage? Do we have an appetite for money? Yes.
Do, are we getting jealously guarded about what we put our money in? Yes. Why?
Because I'm not a shooter anymore. I don't want to spray the water," Mr. Purdy
told the undercover officers, who were posing as Colombian cocaine figures.
Of course, none of this proves that Mr. Purdy is guilty of anything. Promoters
often talk big, babble in fact, as defence lawyer Neal Sonnett is sure to
remind the jury.
bmudry@stockwatch.com |
