FORMER V.P OF XYBERNAUT MAKES THE NEWS->SEC settles with Odner in OTC-BB pump-and-dump
Securities and Exchange Commission
Thu 28 Aug 2003 Street Wire
by Stockwatch Business Reporter
The United States Securities and Exchange Commission has settled with
Environmental Solutions Worldwide Inc., an OTC-BB company, and its former
president Bengt Odner, in a massive OTC-BB "pump-and-dump" scheme. The SEC
plans to maintain its case against the many remaining defendants, which
includes five Canadians, for the operation of a massive boiler room of
Environmental Solutions shares. The allegations in the case have not yet
been proven in court, and the remaining defendants are considered innocent
until proven guilty.
As originally reported in Stockwatch on Aug. 9, 2002, the SEC claims that
the case involved a $15-million pump-and-dump scheme between February,
1999, and December, 2000. (All figures are in U.S. dollars unless otherwise
indicated.) The SEC complaint alleges that the company and several of the
defendants arranged an aggressive proportional campaign to prime the
market, then issued 15 million "'unrestricted shares' in a sham Rule 504
'private offering.'" Several fraudulent press releases were issued
concerning the company's catalytic converter product. The shares were also
touted in spam E-mails and by a "false and misleading" analyst report. The
share price of the company responded to the promotion, rising from $2 to
$7. At the time when the stock was trading so high, two defendants,
Teodisio (Ted) V. Pangia and Satbal Sing, are alleged to have dumped
millions of shares they bought in the Rule 504 offering, profiting to the
tune of $15-million.
The cast of characters (defendants) in the case include Mr. Pangia of
Kleinburg, Ont.; Mr. Singh of Toronto, who was convicted in Canada of
narcotics trafficking in 1996 and sentenced to two years in jail; Michael
W. Smith, a lawyer from London, Ont.; Adam Michael Oliver, a lawyer from
Otterville, Ont.; Eugene Foo of Toronto; Mark Bergman of Jersey City, N.J.,
a close associate of disbarred Los Angeles lawyer Regis Possino, who was a
significant player in the General Commerce Bank affair, an Austrian scandal
that included fugitive Thai financier Rakesh Saxena, Saudi arms merchant
Adnan Khashoggi and a star-studded cast of other colourful financiers; and
Mr. Odner of the United Kingdom. Corporate defendants include Environmental
Solutions, three offshore companies Mr. Pangia is alleged to have created
for the scheme, Zoya Financial Ltd., a company owned and used by Mr. Singh
to issue false news releases during the scam, and Access 1 Financial Ltd.,
Mr. Bergman's tout company.
Environmental Solutions and Mr. Odner settled with the SEC on June 2, 2003.
Under the terms of the settlement, Environmental Solutions was permanently
enjoined from future violations of certain sections of the Securities
Exchange Act, which in essence has Environmental Solutions promising not to
break the law again. Mr. Odner also agreed not to break the law again, and
was fined $25,000 as a civil penalty.
Now that the partial settlement is out of its way, the SEC is charging full
speed ahead with its plans to prosecute the remaining defendants in the
case. Harold F. Degenhardt, district administrator of the SEC's Fort Worth,
Tx., office, told Stockwatch, "The commission intends to vigorously pursue
the remaining defendants in this case."
Last Friday, an application Mr. Pangia had made to dismiss the case against
him was tossed out by the court. The application was made on Jan. 9, 2003,
under which Mr. Pangia declared that the venue in which the case was being
heard, the District Court of the District of Columbia, had no jurisdiction.
He also states that "the Complaint is so devoid of factual allegations
accusant Pangia that it fails to meet even the minimal pleading
requirements."
The SEC, of course, took issue with Mr. Pangia's assertions, and it would
seem so did the court. On Aug. 21, 2003, Mr. Pangia's application was
dismissed by United States District Judge John Bates.
PANGIA AND THE ONTARIO SECURITIES COMMISSION
The SEC is not the only securities regulator to have a go recently at Mr.
Pangia. The Ontario Securities Commission launched a case against Mr.
Pangia and Ontario associate Agostino Capista in October, 2001. The OSC
claims that in 1995, Mr. Pangia and Mr. Capista broke securities
regulations, an illegal distribution and unregistered trading, relating to
EPA Enterprises Inc., a company listed on TSX Venture Exchange. The OSC
claims that in one of the dubious distributions, 26,000 shares were
purchased for $84,500 (Canadian), for which a prospectus should have been
issued. Over all, the OSC noted Mr. Pangia, Mr. Capista and Dallas North,
(the company that received some of the proceeds from share sales), sold at
least 452,000 EPA shares to the public in 113 transactions for a total of
$1.39-million (Canadian.)
Mr. Pangia and Mr. Capista went through three brokers at TD Evergreen to
complete their trades, including branch manager Simon Kin-Ho Tam. Between
March, 1995, and February, 1996, Mr. Tam, assisted by brokers Woody
Woo-Keung Woo and April Shuk-Fan Che, helped Mr. Pangia and Mr. Capista
sell 452,000 EPA shares in "off book" transactions that were not recorded
in the books and the records of TD Evergreen.
"The trading in EPA shares was primarily orchestrated and directed by
Pangia," the OSC allegations claims. Mr. Pangia is alleged to have told Mr.
Tam on the number of EPA shares available for sale, the price at which the
shares were to be sold, to which company payment cheques should be payable,
and provided Mr. Tam with share certificates that Mr. Pangia, Mr. Capista
or Dallas North owned or controlled.
While the above transactions were in essence unregistered trading, at least
15 of the transactions constituted allegedly illegal distributions. In this
portion, TD Evergreen clients purchased EPA shares from a company called
Envirovision. Mr. Pangia then exercised EPA options, and the shares issued
under these exercises were delivered by Mr. Pangia to Mr. Tam for deposit
into the client accounts.
Mr. Pangia has been involved with a number of other companies, most
recently Enviro Industrial Technologies Inc., of which he has been chief
executive officer since July, 2000, and Grand Enterprises Inc. Since April,
2000, he has been chairman and CEO of Diamond Discoveries International
Corp., a junior diamond exploration company. The same month, he founded TVP
Capital Corp., described as a venture capital company, which provides
consulting services to Enviro Industrial.
SMITH'S GO AT QUASHING SERVICE
In yet another twist, Mr. Smith, the London, Ont. lawyer, is trying to have
the service of documents against him squashed. He states in documents filed
with the District of Columbia court that process server tried to leave the
documents with Sarah McGeen, who was at the time renting the basement suite
in Mr. Smith's house while he was not home. She and Mr. Smith have since
"developed a relationship" and are living together. In an affidavit, Ms.
McGeen states that she refused to accept documents from a process server
because she did not know if she would be able to deliver the document to
Mr. Smith, who was spending his summer at his cabin in Northern Ontario.
The process server appears to have tossed the papers on the front doorstep
after the door was shut, and Mr. Smith claims never to have seen the
original complaint. If the court will not dismiss the service against him,
Mr. Smith has asked for a time extension for him to address the complaint.
(With files from Stockwatch's Brent Mudry.)
(c) Copyright 2003 Canjex Publishing Ltd.
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