HOW MANY FRAUDS CAN WE HANDLE......LOL
Mr Taylor, who had
20 years experience in gold exploration before
he joined the VSE, confirmed that he began
probing only Redell's investor relations
activities, and later shifted the focus to the
company's overstated reserves.
How come JT didn't do the same with IPMCF?
Redell Mining Corp -
VSE assigned rookie investigator to
fraud case
Redell Mining Corp
RDC
Shares issued
30727103
1998-04-15 close $0.03
Friday Jun 19 1998
DEFENCE LAWYER FOCUSES ON NOTES
AND METHODS
by Brent Mudry
Vancouver stock promoter David Thomas told
a Vancouver Stock Exchange investigator four
days after the VSE began probing Redell
Mining's Richmond boiler room that he had no
clue what was driving the stock price up,
according to testimony at the Redell Mining
reserve fraud trial of Glen Elmo White and Mr
Thomas. "Did Thomas tell you he didn't have
any idea what caused the increase in share
price. . . that he didn't like the increase. . . that
it was likely a number of market conditions
including the strength of the New York Stock
Exchange and the fact that U.S. investors liked
the stock?," asked defence lawyer Rod
Anderson, cross-examining VSE surveillance
officer Robert Taylor Holland. "That's my
notes," agreed Mr Holland on Thursday in
B.C. Provincial Court, on the third day of the
trial.
Justice D.I. Whyte was told the phone call
between Mr Taylor and Mr White took place
on March 15, 1996. Mr Holland earlier
testified the VSE investigation officially started
on March 11, when he received an internal
referral from the exchange's corporate finance
department. After an 11-day delay, corporate
finance red-flagged a February 29 news
release in which Redell disclosed it had opened
a sales office in Richmond targeting Asian
investors, with Chinese staff fluent in six or
seven Asian languages. Redell shares had risen
from the dollar range in January, 1996, to $2
by late February and $4.50 by March 11.
Under cross-examination, Mr Taylor, who had
20 years experience in gold exploration before
he joined the VSE, confirmed that he began
probing only Redell's investor relations
activities, and later shifted the focus to the
company's overstated reserves. Mr White,
Redell's former president, and Mr Thomas, the
company's former vice-president, jointly face
one count of fraud and 20 counts of
misrepresentation under the Securities Act,
involving allegations of fraudulently inflated
reserves over a two and a half year period. The
pair claimed gold reserves of 700,000 ounces
on Redell's La Forma property in the Yukon,
ten times the 70,000 ounce figure shown in a
VSE-ordered report and 25 times the 27,500
ounce figure calculated by engineering firm
H.A. Simons in an earlier report. The case is
dubbed "Mini Bre-X" by B.C.'s Securities
Fraud Office.
Mr Anderson opened his cross-examination by
establishing Mr Holland's expertise as a
surveillance investigator. The VSE official
earlier testified he moved to surveillance after a
three-year stint in corporate finance. "How
long had you been a compliance office -- about
a week?" asked the defence lawyer. "Or two,"
responded Mr Holland.
The VSE investigator was equally candid when
discussing the surveillance department's stock
trading monitoring programs. In direct
examination by Crown prosecutor Ron
Schmidt, Mr Holland earlier told the court the
computer programs "raise red flags of unusual
trading patterns." In cross examination, the
investigator admitted he had no idea how the
programs worked, or what they specifically
looked for. "That is really way beyond my area
of expertise," stated Mr Holland, now a
two-year veteran of the surveillance
department. "My understanding is it looks for
differences in trading activity," he added. "No
one explained to you the program looks for
things like a stock up 20 per-cent from the
opening price?," asked Mr Anderson. "No, I
usually just see the results," replied the
investigator.
The court was told that according to Mr
Holland's notes, the VSE first raised questions
on Redell's reserves on March 19, eight days
after it launched its probe based on the
company's investor relations affairs. Mr
Holland confirmed that the VSE sent Redell a
letter dated March 27, requesting clarification
of its reserve calculations. The investigator
testified that a few days later, before the end of
March, Mr White came by for an impromptu
meeting to show him a video and drop off a
report he had prepared. The White report did
little to appease the VSE's concerns on the
reserve figures.
Mr Anderson probed Mr Holland's standards
of note-taking on several occasions in
cross-examination. "Do you have any notes of
that meeting of what he told you about the
reserves?," asked the defence lawyer. "No,"
replied the surveillance investigator. When
asked if he usually took notes when something
important occurred, Mr Holland replied
"generally, yes." The investigator offered an
explanation of why he failed to record this
meeting with Mr White, who now stands trial.
"It was unscheduled. . . there were no
minutes," Mr Holland suggested. Mr Anderson
also pointed out that virtually all of Mr
Holland's notes were dated "1995," when it
was 1996. "I was still operating in 1995 but it
was 1996," the investigator replied, chuckling
in court.
Mr Holland also told the court that Mr White
showed him a short video at this impromptu
meeting in late March. "It was one of those
handheld records and you had to flip up the
screen. . . it was showing the state of the
mine," the investigator testified. "Did you ask
for a copy?," asked Mr Anderson. "No,"
replied Mr Holland.
The investigator also told the court about his
due diligence in checking out Ash and
Associates, a geological engineering consulting
firm selected by Redell after the VSE ordered
the company to commission an independent
report on the La Forma property and its
reserves. Mr Holland testified he looked up
Wayne Ash and assistant George Krueckl to
see if they were registered in B.C. Mr Krueckl
was not registered, but Mr Holland said this
was okay, since Mr Ash was the one writing
the report, with Mr Krueckl doing the field
work. Mr Anderson later asked about Mr
Krueckl. "He has also been disciplined by the
Association of Professional Engineers in 1986,"
stated the defence lawyer. "I was not aware of
that," replied the VSE investigator in court.
The trial, after a one-day break on Friday,
continues on Monday.
(c) Copyright 1998 Canjex Publishing Ltd.
MM |
