Re: 2/21/03 - [WTAI] Reuters: Founder of low-cost vehicle company arrested; Signonsandiego.com: WTA founder arrested by FBI in fraud
Reuters
Founder of low-cost vehicle company arrested
Friday February 21, 4:57 pm ET
By Gail Appleson
NEW YORK, Feb 21 (Reuters) - The founder of World Transport Authority Inc. (OTC BB:WTAI.OB - News), a company that sells licenses to build a low-cost utility vehicle, was arrested on Friday for allegedly causing the company to lie about its expected sales.
Douglas Norman, 61, a Canadian citizen who lives in El Cajon, California, was indicted for allegedly scheming to boost the company's share price in 2000 and 2001 and then selling his holdings for more than $1.6 million. The indictment was unsealed on Friday in Manhattan federal court.
Norman, who was arrested at his home, is charged with one count of securities fraud. If convicted, he could face a maximum prison sentence of 10 years and a $1 million fine.
Also on Friday, the U.S. Securities and Exchange Commission (News - Websites) filed a related civil suit against Norman accusing him of a carrying out a "campaign of deception." The suit seeks a court order forcing him to repay the illegal profits and barring him from acting as an officer or director of any publicly traded company. It also seeks unspecified penalties.
Neither Norman nor a spokesman for the company could immediately be reached for comment.
World Transport Authority, located in El Cajon, California, sells licenses for the manufacture of the low-cost WorldStar utility vehicle.
Federal authorities said Norman is the self-described founder of the company and the controlling stockholder. Both the civil and criminal cases said he is the vice president of international sales, and a company employee confirmed that he still holds that title.
WTA's Web site states that the WorldStar vehicle costs less than $7,000, has fewer than 500 moving parts and runs on three types of fuels. It says the company "provides the capability for emerging nations throughout the world to be automobile and truck producing countries."
Authorities said WTA's core business is promoting the sale of the vehicle and a system to make it. They said the company's literature claims that a "micro-factory" to make the cars can be built in about 90 days.
To carry out its business, the company sells "master licenses" that gives the licensee an exclusive marketing territory, typically covering one or two countries or a geographic region.
The indictment alleged that Norman schemed to inflate WTA's stock price by authorizing the company to issue a series of false press releases and by paying a consultant to post misleading statements on Internet message boards about the company's activities and expected WorldStar and license sales.
Norman knew that WTA faced substantial obstacles in making money from WorldStar sales as the vehicle was not ready for production at the time of the releases and postings, the indictment charged.
The WorldStar vehicle also had not received government approval for production or sale in the countries where production was to occur, according to the charges.
The indictment charged that the false statements convinced numerous investors to buy WTA common stock and that some of them bought their shares directly from Norman. He then sold large amounts of the stock, reaping more than $1 million in illegal profits, it said.
biz.yahoo.com
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WTA founder arrested by FBI in fraud
February 22, 2003
Douglas Norman of El Cajon's troubled World Transport Authority has been indicted by a New York grand jury for securities fraud.
Norman, who founded WTA, was arrested by agents of the Federal Bureau of Investigation on Thursday and incarcerated, according to his attorney, Jeremy Warren. At a hearing yesterday in U.S. District Court, bail was set at $120,000. He will attempt to post it Tuesday, Warren says.
Norman will plead not guilty at a later hearing, Warren says.
According to the grand jury, from January 2000 to January 2001, Norman artificially inflated WTA's stock by authorizing the company to issue a series of "false and misleading press releases and by paying an Internet consultant to post false and misleading statements on Internet message boards."
Those allegedly false statements regarded the company's developmental WorldStar auto, which purportedly will be sold in emerging nations. However, Norman knew WorldStar was neither saleable nor ready for production, the grand jury says.
Norman accumulated more than $1 million in profits as a result of the scheme, the New York grand jury says.
Meanwhile, Norman's San Diego problems continue. As previously related, he is wearing an electronic bracelet so the District Attorney's Office knows his whereabouts. He is a material witness in the March 3 criminal trial of two local penny stock touts who allegedly stashed shares of an initial public offering in a Cayman Islands tax haven bank owned by Norman.
Merle Travis Hall
Superior Court Judge William Mudd on Thursday sentenced Merle Travis Hall to eight years in state prison. Hall was charged with fleecing 21 investors of $3.7 million.
Working out of his Del Cerro home, he had told people (many of them family friends) that he was putting their money in stocks, bonds and a scheme called a probate attorney fund. Lawyers hired by the state to find heirs for a decedent without a will make a nontaxable 8 percent, and Hall was telling his victims they could get a piece of it, says Anthony Samson, deputy district attorney in the Economic Fraud Division.
However, "there is no such animal" as a probate attorney fund that investors can put money in, Samson says.
Hall, who was not registered to sell securities, sent phony statements to his investors, who believed they were making money.
Hall had alcohol and gambling problems, Samson says. Early last year, when it appeared his scam would be uncovered, Hall attempted suicide by shooting himself in the head. However, he survived. "He has some impairment of brain function," Samson says.
Meanwhile, investors have filed civil suits to try to recover funds through Hall's banks.
Kert Lynn St. John
The NASD has fined Kert Lynn St. John, a San Diego stockbroker, $75,000 and suspended him from any association with NASD members for two years. St. John didn't admit or deny the allegations. The NASD said St. John, while working for a Los Angeles firm, put customers in inappropriate investments and exercised discretionary authority over accounts without prior consent. He could not be reached for comment.
Centex Securities
Long-shuttered La Jolla brokerage Centex Securities, whose chief executive was arrested in Florida last year, has been expelled by the NASD. The penny stock brokerage closed down in 2001.
Last year, its chief executive, Bruce Biddick, was arrested in Florida for attempting to arrange a kickback with an undercover agent posing as an institutional investor.
Biddick and Marshall Klein, a longtime penny stock tout here, had solicited the agent to buy stock of two issues at above-market prices as a way to inflate the stock artificially.
Throughout its existence, the firm, which also had been known as La Jolla Securities, had been disciplined multiple times by regulatory authorities.
This final time, the firm was expelled for employing brokers without proper registrations, failing to follow penny stock procedures and not informing customers how the firm was getting compensated for penny stock it received.
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Union-Tribune library researcher Denise Davidson assisted with this column.
Don Bauder: (619) 293-1523; don.bauder@uniontrib.com
© Copyright 2003 Union-Tribune Publishing Co. .
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