SEC target Bauer denies pump-and-dump allegations
2005-05-19 15:40 ET - Street Wire
by Stockwatch Business Reporter
Ronald J. Bauer, a 30-year-old Vancouverite facing pump-and-dump allegations levelled by the U.S. Securities and Exchange Commission, has finally responded to the SEC's complaint. Mr. Bauer substantially denies everything.
The denial comes after numerous attempts by the SEC to serve Mr. Bauer, a foreigner to the U.S. regulator, with its complaint. A Vancouver process server said he tried the intercom at Mr. Bauer's Vancouver condo no fewer than seven times, trying to serve the U.S. complaint, but never received a reply.
The doorman apparently told the server Mr. Bauer was out of town. The process server eventually left the SEC's complaint with "an adult member" of Mr. Bauer's household.
The SEC's complaint
In that 30-page civil complaint, dated March 2, 2005, the SEC said Mr. Bauer pumped his company, OTC Bulletin Board listing Bauer Partnership Inc., with several business deals that fell through. While Bauer Partnership was pumping these deals in November and December of 2002, Mr. Bauer apparently unloaded $1.5-million of the company's shares through nominee shareholders. (All figures are in U.S. dollars.)
One of these questionable deals, according to the SEC, was an age-reversing product dubbed "Fat-to-Fit." Fat-to-Fit, apparently developed by Mr. Bauer's upstairs neighbour, was supposed to rejuvenate skin and muscles. Bauer Partnership also expected it to rejuvenate its poor revenues, predicting $90-million annually by 2005, according to the SEC.
The SEC says another of these overly ambitious deals was a Panamanian reforestation project. This project, disclosed on Nov. 12, 2002, when the company traded around a nickel, boosted the company to 18 cents.
The company, in announcing the deal, said it would develop and market thousands of hectares of Panamanian forest. Unfortunately for investors, the SEC alleged Bauer Partnership did not intend to complete the deal and, in any case, it had no money for a massive reforestation project.
During the course of this, and a few other never-completed deals, the SEC claims Mr. Bauer paid Panamanian paralegal Juan Javier Lopez $10,000 to sell shares for him. The SEC said Mr. Lopez, along with other nominees, eventually sent $1.5-million to Mr. Bauer.
Mr. Bauer, as the SEC tells it, used this money to support a lavish lifestyle that included several high-priced sports cars, a yacht and a Miami condo.
The regulator did not accuse the nominees of any wrongdoing in its complaint.
The SEC is seeking a permanent penny stock ban for Mr. Bauer plus appropriate monetary penalties.
Mr. Bauer's response
Mr. Bauer, in a sparse nine-page reply to the SEC's complaint, broadly denies the allegations.
Without providing particulars, he says the SEC has failed to show that any of the so-called nominee shareholders sent him any money. He also says, again without particulars, that the SEC has failed to make a case for fraud against him.
His other arguments aside, Mr. Bauer argues the U.S. SEC does not have jurisdiction over him. (The law on this point is either very complicated, or very interesting, depending which lawyer you ask. In some circumstances the SEC would have to retry its case on B.C. soil.)
Mr. Bauer also says the jurisdiction the SEC has chosen, the U.S. District Court for the Northern District of Texas, is neither proper or convenient. He does not suggest an alternative jurisdiction.
A trial date has not yet been set.
Bauer Partnership, which changed its name to Harbour Front Holdings Inc. on Jan. 27, 2003, does not appear to be active any longer. |
