RRUFF, this also was interesting.
In 2000, the SEC issued a cease-and-desist order barring Langley from participating in penny-stock offerings after his role in an alleged stock scam involving a Phoenix firm called Pollution Control International. Langley did not
admit or deny the SEC's findings. usatoday.com
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Here is where i found out about the name change from Polution Controls to Scottsdale Cigar Subject 14867
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BCSC target Pacific International in new Mafia indictment
Canada StockWatch
by Brent Mudry
February 6, 2003
In the latest case of U.S. authorities chasing Mafia-linked clients of
Canadian brokerages, an associate of New York's Colombo organized crime family
and nine others have been charged with securities fraud and money laundering in
four penny stock pump-and-dump promotions through greased brokers. Eight targets
were arrested in predawn raids Thursday by the agents of the FBI and the U.S.
Postal Inspection Service in New York and Miami, while one was already in
custody and another is at large.
The United States Department of Justice claims the ring rigged four Nasdaq
promotions: Healthwatch Inc., Scottsdale Cigar Co. Inc., Clinical Aesthetics
Centre Inc. and Metro Global Media Inc.
In a superseding indictment unsealed Thursday in United States District
Court for the Eastern District of New York, authorities claim the alleged
fraudsters, several of whom are well known to Canadian regulators, used offshore
accounts at Mark Valentine's now defunct Bay Street brokerage Thomson Kernaghan
and Pacific International Securities, a controversial Howe Street brokerage now
in the midst of a landmark Canadian regulatory prosecution. Pacific
International spokesman and compliance director, Richard Thomas, who was unaware
of the Rizzo indictment until provided it by Stockwatch, declined immediate
comment, citing the current BCSC proceeding.
This latest indictment traces out the alleged co-conspirators of Francesco
(Frank) Rizzo, detained without bail since his Dec. 16 arrest on a criminal
complaint identifying him as an associate of the Colombo La Cosa Nostra, or LCN,
family. Mr. Rizzo, 43, of Glen Cove, N.Y., was arraigned on Jan. 31 on an
earlier securities fraud indictment in this case.
The nine new defendants include repeat securities violators Angel Luis
Lorie, 60, of Miami, and Gerard Burns, 54, of Scottsdale, Ariz., previously
identified by the British Columbia Securities Commission as star bad-boy clients
of Pacific International, Russian national Eugene Slusker, Glen Vincent Benussi,
and five brokers at Centex Securities, a now-defunct U.S. brokerage fond of
Vancouver deals: Douglas Alfieri, Louis Caesar Ceparano, David Brian Miller,
Frank Matthew Savasta and Peter Jason Worrell.
In the arrest operation, Messrs. Burns, Alfieri, 38, of East Rockaway, N.Y.,
Ceparano, 38, of Melville, N.Y., Miller, 30, of New York, and Worrell, 30, of
Syosset, N.Y., were arrested in New York and set for arraignment Thursday
afternoon by U.S. District Court Judge Joanna Seybert at the federal courthouse
in Central Islip, N.Y. Mr. Lorie, Mr. Benussi, 39, of Wellington, Fla., and Mr.
Savasta, 33, of Lantana, Fla., were arrested at their homes in Florida, and set
for initial arraignment in U.S. District Court for the Southern District of
Florida before being shipped off to New York. FBI agents are seeking Mr.
Slusker, alias Gene Shuskar, 36, a Russian national last known to be in
Brooklyn, N.Y.
The arrests are the latest career achievements for Pacific International clients
Ms. Lorie and Mr. Burns, alias Gerald Burns, prosecuted together by the United
States Securities and Exchange Commission in 1997 for flogging $2.7-million
worth of worthless stock to Spanish investors. (Mr. Burns has also used other
aliases, including Leonard Thoubburon and Gerard Thoubburon.)
The Rizzo ring was gearing up around the time the SEC targeted Mr. Burns and Ms.
Lorie in for flogging worthless stocks to Spanish victims. On Sept. 30, 1997,
Ms. Lorie Burns and Diversified Capital Resources Inc., a Miami-based investment
banking company she headed and controlled, were barred by a federal judge in
Florida from "recklessly offering or selling securities" and from acting as
unregistered broker-dealers.
The same day, the SEC barred Ms. Lorie from participating not just in any penny
stock offering, but also from the securities industry in general. The lifetime
ban included acting as a promoter, finder, consultant, or other person who
engages in actions with a broker, dealer or issuer for purposes of the issuance
or trading in any penny stock, or inducing or attempting to induce the purchase
or sale of any penny stock.
The SEC complaint, filed Sept. 29, 1997, claimed Mr. Burns and Ms. Lorie sold
$2.7-million worth of share of VDS Enterprises Inc., based on false financials
filed with the regulator. (All figures are in U.S. dollars.) The victims were
told that VDS had acquired a garbage business in Venezuela, its anticipated
annual revenues of $45-million to $50-million, it had assets of $16.43-million,
shareholders' equity of $14.75-million and service contracts for $100-million,
none of which was true. In October, 1998, Mr. Burns was barred from acting as an
officer of director of a public company, fined $100,000 and ordered to pay
disgorgement of $2.7-million.
Ms. Lorie did not keep her nose clean for long. The SEC targeted her again in
August, 2001, when it filed an action charging her, American Healthcare
Providers Inc., her son and three others in an Internet market manipulation
scheme. The SEC claims the group made at least $1.47-million in illicit profits
by pumping American Healthcare stock through bogus press releases and Internet
chat site postings. The stock endured a 10-day SEC suspension in June, 2000,
after the company falsely announced a major contract with a New York health
program.
Mr. Burns is no stranger to handcuffs. He went to prison in May, 1988, on fraud
charges stemming from the sale of unregistered securities, and was released in
December, 1991. More recently, he and partner David Rowe were the key figures in
the Cambridge International Bank and Trust debacle, an offshoot of Van Brink's
First International Bank of Grenada prime bank scheme.
Mr. Burns and Mr. Rowe, investigated by the BCSC, the FBI, the SEC and numerous
state securities regulators, were arrested in March, 2001, in the Cambridge
case, a prosecution led by the U.S. Attorney's Office for the Northern District
of California. The Cambridge indictment claims Mr. Burns and Mr. Rowe raised at
least $30-million from more than 300 investors in the U.S. and Canada., and the
scheme involved accounts at Vancouver brokerage Union Securities, First Heritage
Savings Credit Union, in the Vancouver suburb of Langley, and Lines Overseas
Management Ltd. in Bermuda.
In the latest unflattering revelations about Mr. Burns, the current indictment
claims he and Mr. Slusker, the Russian on the loose, secretly owned portions of
Centex Securities, a brokerage, based in the San Diego suburb of La Jolla,
Calif., recently shut down by the National Association of Securities Dealers.
(Mr. Slusker also controlled a Centex account in the name of A.K. Arthur
International Co.) The Rizzo ring operated out of Long Island, N.Y., branches of
two dubious national brokerages, both since shut down, Centex and Jaron
Equities.
The new indictment is especially embarrassing for Canadian brokerages Pacific
International of Vancouver and Thomson Kernaghan of Toronto.
Pacific International is in the late stages of a lengthy precedent-setting
hearing by the BCSC, which claims the brokerage had the misfortune of attracting
and servicing far more than its Howe Street share of penny stock crooks,
securities violators, criminals and other riff raff. The Canadian regulator
launched its prosecution in July, 2001, in the wake of Stockwatch reporting
numerous U.S. indictments and SEC prosecutions featuring Pacific International
as an alleged stock and money laundering conduit for Mafia associates and other
securities violators.
Shalom Weiss, recently extradited from Austria to Orlando, Fla., to start an
845-year prison term leads a list of 14 dubious clients noted by the BCSC in its
notice of hearing, followed by Mr. Burns and Ms. Lorie. While Pacific
International has not yet opened its defence at the BCSC hearing, it is expected
to argue that despite allegations in FBI, SEC, U.S. Justice Department and other
regulatory documents, Mr. Weiss and Mr. Burns were never clients of the
brokerage.
Thomson Kernaghan was shut down last summer by the Ontario Securities Commission
and the Investment Dealers Association of Canada, largely stemming from numerous
dubious transactions involving its head, Mr. Valentine. In the week following
the OSC action, Stockwatch unveiled many dubious penny stock deals which caught
the interest of Mr. Valentine and his brokerage.
Mr. Valentine is currently under house arrest with electronic monitoring in
Florida, after waiving extradition in the wake of his Aug. 14 arrest at
Frankfurt's airport as a key target of Operation Bermuda Short, a two-year joint
RCMP-FBI undercover sting targeting 60 North American penny stock players for
agreeing to bribe a mutual fund manager or to launder funds for a Colombian
cocaine cartel. While legendary shorter Mr. Valentine and his Bermuda-based
offshore front Paul Lemmon inspired the name Bermuda Short, Mr. Lemmon has since
pled guilty and agreed to rat on Mr. Valentine.
The current indictment claims the Rizzo ring conspired to commit securities
fraud through dealings at Jaron and Centex in New York, and from additional
locations in the Miami area, and conspired to launder more than $2.6-million of
their illicit profits, between March, 1997, and May, 1998. Messrs. Rizzo,
Benussi, Burns, Slusker and Lorie alleged gained control of large blocks of
free-trading shares of Healthwatch, Scottsdale, Clinical Aesthetics and Metro
Global, with the assistance of the indicted Centex brokers and unindicted
unidentified Jaron brokers.
"The defendants used bank and brokerage accounts in the United States, Canada
and the Channel Islands of Guernsey in the United Kingdom to launder
approximately $2.6-million in proceeds from the fraudulent sales of these
stocks," states the U.S. Justice Department.
The targeted penny stocks performed quite well under the magic spell of the
Rizzo ring, under the plug was pulled. Scottsdale Cigar shares peaked at $5.37
in December, 1997, then plummeted to 44 cents by March, 1998. Shares of Clinical
Aesthetics peaked at $10 in November, 1997, before falling to 50 cents by the
following March. Metro Global shares doubled to $4 in January, 1998, then
abruptly fell to $2.50.
Alas, these stocks were hardly blue chip material and required hefty 30-per-cent
kickbacks to interest the Centex brokers.
The indictment notes that Ms. Lorie, operating out of an office in Miami, used
nominees to open foreign brokerage accounts. These included accounts in the
names of VISP SA and Southcross Ltd. at both Thomson Kernaghan in Toronto and
Pacific International in Vancouver. (A Howe Street source suggests the
indictment may be partially incorrect, as Pacific International never handled an
account in the name of VISP SA.)
Mr. Burns allegedly controlled trading of the targeted penny stocks at Centex.
"He also controlled trading of the companies' stock deposited into the 'VISP SA'
and 'Southcross Ltd.' brokerage accounts established by the defendant Angel Luis
Lorie at Thomson Kernaghan and Pacific International," states the indictment.
Mr. Berussi, who acquired the office space used to house a Centex branch at
Valley Stream, N.Y., controlled accounts at Centex and Barclays Bank PLC in the
name of Barson's Holdings. He allegedly used the Barclays account and an
offshore account in the name of Rum Ltd. at Bank of Butterfield in Guernsey as
conduits to secretly transfer the proceeds of penny stock sales at Jaron and
Centex to a bank account controlled by Mr. Rizzo, the Colombo Mafia associate,
in the name of Emerald Security Consultants Inc. at Chase Manhattan Bank.
"Defendants GERARD BURNS, ANGEL LUIS LORIE, GLEN VINCENT BENUSSI and EUGENE
SLUSKER established domestic and foreign brokerage accounts, including the VISP
SA and Southcross Ltd. accounts at Thomson Kernaghan and Pacific International,
the Barsons brokerage account and the A.K. Arthur account to execute prearranged
trades of stock in, among other companies, Scottsdale Cigar, MGMA (Metro Global)
and CLES (Clinical Aesthetics) between these accounts, all for the purpose of
artificially inflating trading volume in these stocks, generating market
interest in these stocks, and fraudulently converting securities into cash by
selling these stocks to members of the investing public that were led to believe
that the companies had services and assets in excess of their true value,"
states the indictment.
The indictment also claims Mr. Rizzo, Mr. Benussi and Mr. Slusker, "together
with others whose identities are known to the Grand Jury," hired brokers at
Jaron and Centex, including defendants Messrs. Alfieri, Ceparano, Miller,
Savasta and Worrell, to use "manipulative and deceptive practices" to
artificially boost the stocks through a series of rigged trades.
"It was a further part of the conspiracy that the defendants FRANK RIZZO, GLEN
VINCENT BENUSSI, GERARD BURNS, ANGEL LUIS LORIE AND EUGENE SLUSKER paid,
promised to pay and caused others to secretly pay DOUGLAS ALFIERI, LOUIS CAESAR
CEPARANO, DAVID BRIAN MILLER, FRANK MATTHEW SAVASTA and PETER JASON WORRELL,
among other brokers, cash kickbacks and other forms of compensation
substantially in excess of ordinary brokerage commissions, amounting to
approximately 30 per cent of the sales they made of the Companies' stocks, to
induce them to sell the Companies' stocks."
Among other things, the dirty brokers forgot to tell their sucker clients about
their kickbacks, which included an $1,150 watch Mr. Savasta received. In
January, 1998, Mr. Rizzo, Mr. Burns and all the other defendants except for Ms.
Lorie, traveled to Las Vegas for some sort of a shindig. The indictment notes
the brokers were greased with a number of the bribes on Feb. 6, 1998, and Mr.
Alfieri, apparently a stickler for detail, prepared a list a week later of the
outstanding kickbacks owed to him and his five fellow Centex brokers for
flogging the stocks.
All defendants, of course, including Mr. Rizzo, Mr. Burns and Ms. Lorie remain
presumed innocent until proven guilty. If convicted however, they face maximum
sentences of five years in prison for conspiracy to commit securities fraud, 20
years for money laundering, fines of up to twice the illicit profits gained, and
civil forfeiture of up to $2.6-million in real and personal property involved in
the money laundering or traceable to the money laundering conspiracy. |
