Factfinder and Joe - good points all; now that Jacob Bogatin has joined SI and this thread we can learn a lot more, hopefully.
Factfinder - your response confirms why I've been focusing on the due diligence efforts of brokers, analysts, fund managers and advisors. The average investor doesn't have the time or opportunity to call up company management, to kick the tires of a deal, to do detailed research or investigation. That's what these industry professionals are paid to do. It would seem that concerns about the positions of the auditors, the FBI, IRS, U.S. Customs and Immigration and State Departments are reasonable - these activities do not happen every day. It wasn't clear if you were suggesting that investors should have recourse for such things occurring from parties other than those who caused the matters under review.
Joe, you're right. I didn't mean to leave anyone out - or improperly credit anyone - it would appear that the TSE, the IRS, U.S. Customs and Immigration and the State Department have all participated in recent events. It would be interesting to now what role the TSE may have played. An article in Canada Stockwatch (see below) notes that it takes a lot of work to obtain a search warrant - so the FBI et al investigation must have been underway for quite a long time.
And, yes, the Bay Street boys are doing their best to upstage Howe Street these days.
FBI search warrant casts broad net
YBM Magnex International Inc YBM
Shares issued 44222901 1998-05-13 close $14.35
Thursday May 14 1998
by Brent Mudry
A quartet of U.S. federal agencies, led by the FBI, are particularly interested not just in YBM Magnex International but seven of its subsidiaries and predecessor companies, including Arigon Co. Ltd., Arbat International and Magnex RT, according to a search warrant unsealed Thursday in Philadelphia.
The FBI raided YBM's headquarters in Newtown, Pennsylvania, on Wednesday, reinforced by agents from the U.S. Immigration Office, the U.S. Customs Service and the Internal Revenue Service. Court-filed documents indicate the 60 federal agents, supported by local police who secured the perimeter, were well prepared for the raid, and had detailed descriptions of the internal layouts of YBM's headquarter facilities.
The search warrant also notes the FBI has a special interest in documentation provided for the audits of not just Deloitte & Touche, but also Parente Randolph Orlando and Carey Associates, a Pennsylvania accounting firm that handled YBM's audits prior to the 1996 fiscal year.
The search warrant, officially unsealed late Thursday in United States District Court, Eastern District of Pennsylvania, authorized federal officials to seize extensive records and other tangible items from YBM Magnex, subsidiaries Magnex RT, United Trade Ltd, YBM Magnetics, YBM Technologies Inc. and Crumax Magnetics Inc., and its successor and predecessor entities, including Arigon and Arbat, from January 1993 to present.
U.S. District Judge Franklin S. Van Antwerpen signed the sealed search warrant on May 6 at 10:30 am local time, but the search was not executed until Wednesday, two days before the document's
expiry date.
The lead agencies were the FBI and the the Customs Service, represented by lead special agents Charles Murray and Jeffry
Cochran, respectively. The search warrant does not name any
individuals, and the extent of the FBI's probe into U.S. citizens,
resident aliens and foreign figures is not yet known.
Before signing the warrant, Judge Van Antwerpen reviewed a detailed and extensive 70-page federal affidavit, which is expected to remain sealed for some time. Under U.S. law, this affidavit would have to present compelling information to authorize officials to raid a company's premises. While the content of the affidavit is not known, it would have to outline the FBI's case to date, based on reasonable and probable concerns of potential criminal dealings, and specify enough information on individuals, both named and with identities protected, and on certain transactions and dealings, to warrant a thorough search.
U.S. federal officials have little comment on the YBM affair to date. Bob Courtenay, of the U.S. Attorney's Strike Force in Philadelphia, confirms that a search was executed, but he could not provide details. Mr Courtenay could not say when the affidavit might
be unsealed, but he noted generally that in such cases, this document could remain sealed for up to a year or more. "I cannot comment," was his response, when asked of the existence or status of a U.S. grand jury proceeding. FBI special agent Murray and superior agent Bob Harrington were unable to return numerous calls. FBI media agent Linda Vizi repeatedly and emphatically denied the search warrant was unsealed. "It will remain sealed," she repeatedly told an inquiring reporter. Officials with the Ontario Securities Commission were also unable to comment on the case.
The FBI was authorized to seize all documents, records, data, correspondence and working papers relating to audits performed on YBM, including but not limited to, audits conducted by Parente Randolph and Deloitte and Touche. One former Parente auditor has a special relationship with YBM. Daniel Gatti served as audit manager from 1990 to 1995 for Parente, which has 11 offices in Pennsylvania, and is based in Wilkes-Barre. Mr Gatti left Parent in 1995 to join YBM as its vice-president of finance and chief financial officer.
Parente confirms that John Malahoski, a partner at its head office, played a lead role in the firm's audits of YBM before Deloitte took over the assignment. Mr Malahoski was reluctant to chat about YBM. When informed of the FBI raid, he responded, "I heard something about that." The audit partner referred inquiries to his firm's outside counsel, Bob Schaub of law firm Rosenn Jenkins & Greenwald. Mr Schaub could not be reached for comment. "We don't answer questions from the public on current or former clients," states Mr Malahoski. Parente has no offices outside Pennsylvania, although YBM's main business in in Eastern Europe.
A Parente staffer notes the firm is part of The Summit Group, an international affiliation of accounting firms. When asked where Summit is based, the Parente employee responded: "I don't have a clue."
(c) Copyright 1998 Canjex Publishing Ltd. canada-stockwatch.com
|
