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Imagis founder draws private investigation
2002-06-13 07:01 PT - Street Wire
by Lee M. Webb
Imagis Technologies Inc.'s founder and current director, Altaf Nazerali, is the subject of a private investigation, according to the head of an international investigative firm reportedly specializing in due diligence and corporate background investigations. The private probe of Mr. Nazerali, a Howe Street veteran, comes as Imagis's stock price has hit some turbulence.
Vancouver-based Imagis, a heavily promoted biometric player, markets its facial recognition technology to law enforcement agencies and airports, among other potential customers. Since Sept. 11, 2001, the company's promotional emphasis has centred on potential applications of its biometric technology in airport security. Like other public biometric companies, Imagis's stock price, which had been languishing at approximately 60 cents in desultory trading, soared in the wake of the terrorist attacks on the World Trade Center and the Pentagon. By the end of last year, Imagis was changing hands for more than $2 per share and was headed higher.
Already buoyed by increased market interest in biometric companies, Imagis's stock price got another boost in early March, just as the trading restrictions on millions of Imagis shares expired. A weasel worded March 6 announcement issued by an obscure Boston-based investment firm, the Pembridge Group, hired by Imagis as a financial adviser just two months earlier, was widely misinterpreted and misreported as a $4.10 (U.S.) per share buyout offer for the company. In heavy trading, the stock rocketed to a 52-week high of $5.66 in the wake of the crafty Pembridge announcement.
While Iain Drummond, Imagis's president and chief executive officer, touted the Pembridge announcement as a buyout offer, a claim also made in reports by the National Post, The Boston Herald and CBC Newsworld, Canada Stockwatch has consistently and correctly reported that the Boston banker did not make an offer of $4.10 (U.S.) per share for the company. Sandra Buschau, Imagis's vice-president of investor relations, and Rory Godinho, a securities lawyer and company director, have both acknowledged that Pembridge did not make a buyout offer.
Since the Pembridge brouhaha erupted, Imagis's volatile stock price has tumbled to less than half of its Boston-baked 52-week high of $5.66. While it is not known whether the reported investigation of Mr. Nazerali is related to Imagis's wobbly share price, the U.S.-based private gumshoe, Terrence Burke, recently contacted the Stockwatch reporter covering the company.
"My name is Terrence Burke and I have an investigative firm that I operate out of Colorado and London, specializing in due diligence and corporate background investigations throughout the world," Mr. Burke wrote in a June 5 E-mail. "I am currently conducting an inquiry on behalf of a European client who is interested in the character, reputation, etc., of a Vancouver based businessman, Altaf Nazerali."
According to the biographical information on his Web site, Mr. Burke founded his own investigation firm, TM Burke International, after serving from 1991 to 2001 as the director of international operations for The Investigative Group International. His previous impressive law enforcement background includes a 20-year stint with the U.S. Drug Enforcement Administration (DEA), where he served as deputy administrator and acting administrator, and 10 years as an intelligence officer with the Central Intelligence Agency.
"During the last ten years, he has assisted corporate, legal and personal clients in risk prevention and problem solving by developing reliable information from proven sources," TM Burke's Web site claims. Whatever the specific nature of the inquiry involving Mr. Nazerali being conducted on behalf of Mr. Burke's unidentified European client, the former CIA agent suggested that a Stockwatch reporter might be of some assistance.
"In conducting general press research, my researcher alerted me to the fact that several articles written by you have mentioned Mr. Nazerali," Mr. Burke wrote. "I signed on to Stockwatch and reviewed the articles. While most of the information there regarding Mr. Nazerali is dated (BCCI, etc.) and already known to my client, I thought it might be worthwhile to speak to you to see if you could assist me in some other, more current, but related areas that have come to my attention."
Among other things, Stockwatch articles have sketched Mr. Nazerali's reported association with legendary boiler room operator Irving Kott and his ties to the Bank of Credit and Commerce International (BCCI), a bank fraud that saw $30-billion evaporate when it collapsed. After repeatedly running afoul of Canadian regulators, Mr. Kott set up shop in Amsterdam, flogging stock through First Commerce Securities and funnelling much of the money through BCCI, dubbed the Bank of Crooks and Criminals International. Dutch authorities raided First Commerce in May of 1986 and the following year the boiler room was forced into bankruptcy. Estimates of how much investors lost in the First Commerce debacle range as high as $400-million (U.S.). According to award-winning U.S. journalists Peter Truell and Larry Gurwin, who co-authored the 1992 book False Profits: The Inside Story of BCCI, the World's Most Corrupt Financial Empire, Mr. Nazerali served as the principal front man for Mr. Kott.
Canadian journalist Diane Francis also linked Mr. Nazerali to Mr. Kott's Amsterdam boiler room in her 1988 book Contraprenuers: Stock-Market Fraud and Money Laundering in Canada. Mr. Nazerali reportedly did not think much of Ms. Francis's depiction of him. According to an article in the Jan. 2 to Jan. 8, 1996, edition of Business in Vancouver, Mr. Nazerali dismissed Ms. Francis's account as irresponsible, untrue and poorly researched. Mr. Nazerali went on to explain that he was unwittingly deceived when he bought First Commerce before realizing that Mr. Kott controlled the company. Mr. Nazerali also claimed that he was just an innocent customer of BCCI and "lost money just like everyone else."
In dismissing Ms. Francis's account of his association with Mr. Kott, Mr. Nazerali pointed out that her physical description of him was totally wrong. "While in Luxembourg, van Apeldoorn met a mysterious black man named Altaf Nazerali, a six-foot four-inch former bodyguard whose brother is linked to Irving Kott," Ms. Francis wrote in Contrapreneurs. Evidently that physical description was off the mark; moreover, the reported association of Mr. Nazerali's brother with Mr. Kott is also a matter of some dispute.
Mr. Nazerali's brother, Shafiq Nazerali, also known as Shafiq Nazerali-Walji, is currently a consultant to Imagis. In 1997, Atlas Capital Group Ltd., headed by Hanif Mawji, filed a lawsuit in the Supreme Court of British Columbia against Shafiq Nazerali, ZMAX Corp., and a number of offshore entities including Anker Bank, Bank Sarasin & Co., Interallianz Bank, Credit Lyonnais (Suisse SA) Rahn & Bodmer, Credit Suisse, Banca del Gottardo, BIL Banque International a Luxembourg (Suisse) SA, Darier, Hentsch & Cie., Darier Hentsch Zurich AG, Ueberseebank AG, Raifinanz AG and ValorInvest Ltd. Howard Shapray, a Vancouver lawyer with the reputation of being a fierce litigator, represented Atlas Capital in the action.
In a sworn affidavit, Mr. Mawji linked Shafiq Nazerali to Mr. Kott. "In the early and mid 1980's (sic), Nazerali was closely associated with a notorious confidence artist named Irving Kott ("Kott")," Mr. Mawji claimed. "Kott is widely known to have operated 'boiler rooms' in Amsterdam in the early and mid 1980's (sic) which were used to sell securities investments fraudulently to members of the European and North American public." As an exhibit to his affidavit, Mr. Mawji attached an excerpt from Ms. Francis's book mentioning Shafiq Nazerali's connection to Mr. Kott.
"During the course of my association with Nazerali, Nazerali has reminisced to me about the period of his association with Kott," Mr. Mawji continued. "On the basis of what Nazerali himself has told me, I believe that the extract from Contrapreneurs provides an accurate description of the nature of the activity that Nazerali engaged in with Kott, in Europe and South America.
"Nazerali's involvement in shady 'boiler room' operations was not confined to his association with Kott in Amsterdam. Nazerali himself told me of having been deported from Uruguay in the 1980s because of his operation of a boiler room in Montivideo. On this occasion Nazerali was jailed briefly by Uruguayan authorities before being deported from that country."
Mr. Mawji went on to suggest that Shafiq Nazerali would even turn on his close associates. "Based upon his prior conduct, I believe that Nazerali will be prepared to engage in dishonesty or improper conduct, even at the expense of those who have friendly relations with Nazerali," Mr. Mawji stated, going on to outline a tiff between Shafiq Nazerali and Global Securities founder and chairman Arthur Smolensky.
(Mr. Smolensky and his brokerage firm have recently been in the news for servicing Amr Ibrahim (Anthony) Elgindy, arrested on May 21 in a six-count U.S. grand jury indictment alleging stock manipulation, extortion, obstruction of justice, and bribery of a former FBI special agent. While Mr. Elgindy traded through Global Securities, there have been no suggestions of any improprieties by the brokerage firm or Mr. Smolensky.)
In an affidavit filed in response to Mr. Mawji's allegations, Shafiq Nazerali denied any close association with Mr. Kott. "I have not been closely associated with Mr. Irving Kott or been involved or connected with any alleged fraudulent activities by Mr. Kott," he claimed. Like his brother, Shafiq Nazerali dismissed Ms. Francis's book, claiming it contained "defamatory statements and factual inaccuracies." In support of his claim, he also took issue with Ms. Francis's physical description of his brother, Altaf. "In fact, my brother Altaf is not black, he is under six feet tall, and he has never been a bodyguard," Shafiq Nazerali claimed.
Shafiq Nazerali also balked at the suggestion that he had been deported from Uruguay. "In specific reply to paragraph 69 of Mr. Mawji's Affidavit, I was never deported at any time from Uruguay or any other country, and I have never been jailed anywhere," he stated. "I never told Mr. Mawji anything of the kind."
Shafiq Nazerali went on to claim that "the issue" he had with Mr. Smolensky had been resolved. "Mr. Smolensky wanted shares issued in certain names," he stated. "I could not do that, as the stock was restricted from transfer at that time. The shares were eventually issued in the names requested by Mr. Smolensky, and the matter was thus resolved."
As it turned out, the dispute between Atlas Capital and Shafiq Nazerali was also resolved; and rather quietly, at that. The action was dismissed by consent on July 10, 1997, without costs to any party. The court file was subsequently sealed.
While the Atlas Capital file was tucked away from public view, it was not long before more allegations of Shafiq Nazerali's association with Mr. Kott made their way into a sworn affidavit. In March of 1998, Corsaire Inc. and Vancouver stock promoter Rene Hamouth, represented by the popular Mr. Shapray, filed a lawsuit against Shafiq Nazerali, an OTC Bulletin Board promotion, Ikon Ventures Inc., First Capital Invest Corp. (more recently a large Imagis shareholder), convicted fraudster Nelson Skalbania and, among others, Pacific International Securities broker Jean Claude Hauchecorne.
(In an unrelated matter, the Vancouver Stock Exchange, one of the predecessors to the Canadian Venture Exchange and then the TSX Venture Exchange, stripped Mr. Hauchecorne of his broker's licence for life in June of 1999 for his dealings with mob-related offshore accounts linked to Phil Gurian and Phil Abramo. The British Columbia Securities Commission (BCSC) weighed in with a 20-year ban from the market against Mr. Hauchecorne in August of 2000.)
Mr. Hamouth, acquitted of stock manipulation charges in connection with Alberta Stock Exchange-listed Penway Explorers Ltd. in 1993, evidently had a falling-out with Shafiq Nazerali and a cast of Howe Street veterans over the aborted vend-in of Zeolite Mira S.R.L. to Corsaire. Zeolite, an Italian company owned by a Serbian scientist, Dusan Vucelic, produced an "environmentally-friendly" phosphate substitute for detergents. After the proposed deal with Corsaire collapsed, Zeolite was vended in to Shafiq Nazerali's Ikon Ventures.
Miffed at the collapse of the Zeolite deal, Mr. Hamouth accused the key players, most notably Shafiq Nazerali, of being involved in a scheme of misappropriation of opportunity and further alleged that they engaged in a short-selling attack on Corsaire. "This is consistent with what I verily believe is Nazerali's background in manipulating the public markets," Mr. Hamouth claimed. "Nazerali told me and I verily believe that he had been 'trained' by Irving Kott and that he had 'worked the phones in Montevideo,'" Mr. Hamouth stated.
The disgruntled promoter also offered an account of Shafiq Nazerali's alleged trading activities. "Throughout the history of my dealings with Nazerali, I have learned from him that much of his investing and stock trading is executed through numerous nominee accounts," Mr. Hamouth claimed. "Nazerali uses agents and nominees at various European, Canadian and American brokerage institutions, to effect trades on his behalf."
Mr. Hamouth also linked Shafiq Nazerali to securities violator Eugene Sirianni, booted out of the market for 15 years by the BCSC in 1991. By Mr. Hamouth's account, Mr. Sirianni, now operating out of Switzerland, was a key player in the alleged scheme to foil Corsaire's Zeolite deal. Mr. Hamouth claimed that during the course of a telephone conversation with Ralph Olson, a broker with Colorado-based Cohig & Associates, he heard "recognizable voices in the background" in the New York hotel room where he reached Mr. Olson. "I asked him whether Nazerali and Sirianni were with him," Mr. Hamouth stated in his affidavit. "Olson replied that he was with them." According to Mr. Hamouth, Mr. Olson claimed that he was working on another deal with Shafiq Nazerali and Mr. Sirianni.
As with the Allied Capital lawsuit and the allegations levelled by Mr. Mawji, Shafiq Nazerali denied the allegations made by Mr. Hamouth in connection with the Corsaire lawsuit. Like the Allied Capital lawsuit, Mr. Hamouth's action against Shafiq Nazerali ended in a consent dismissal on April 16, 1999, without costs to either party.
Whether Mr. Burke will be poking around into Shafiq Nazerali's background as part of the investigation of Altaf Nazerali on behalf of his unidentified European client is an open question, one of many with respect to the private gumshoe's probe. In any case, the ex-spook's request for assistance from a Stockwatch reporter was declined. "Perhaps Oliver "Buck" Revell, chairman of Imagis Technologies Inc. and former Associate Deputy Director of the FBI, could help with your inquiry," Stockwatch suggested to Mr. Burke on June 6.
While Mr. Burke appreciated the suggestion, he claimed that he could not contact Mr. Revell. "Unfortunately the nature of my inquiry has to do with the personal activities of Mr. Nazerali and I would not be able to approach any of his business associates such as Buck Revell as it is imperative that Mr. Nazerali not become aware of the inquiry," Mr. Burke explained in a June 7 E-mail.
"My plan is to travel to Vancouver (which will be my first time) and identify and speak to individuals who may know Mr. Nazerali, but who would keep the interview confidential," he went on. "Because I have no contacts there, I was hoping that a (sic) someone, such as yourself, might be able to point me to the right people."
After a Stockwatch reporter again demurred, Mr. Burke followed up with another E-mail on June 10. "In any event, I'll probably head to Vancouver next week," Mr. Burke advised. "In addition to some folks who could talk to me about my subject's reputation, I have also been tasked to identify a Vancouver 'National Enquirer' type publication that might be willing to run a well documented article on him (the client is seeking revenge). Any suggestions would be welcomed."
Mr. Burke's peculiar June 10 E-mail on behalf of an unidentified vengeful European client was followed the same day by a peculiar E-mail from Kim Marsh, the head of a Vancouver-based private investigation firm, West Coast Investigations & Consulting Inc. According to his biographical information, Mr. Marsh retired from the RCMP in 1998 after more than 25 years of service, during which he was responsible for the national undercover program. Prior to his retirement from the RCMP, Mr. Marsh headed an organized crime team in Vancouver.
Apparently Mr. Burke, the former CIA agent and DEA administrator, has enlisted Mr. Marsh, a former RCMP officer, to help with his project. Mr. Burke evidently kept Mr. Marsh up to speed with copies of his E-mail exchanges with a Stockwatch reporter. Whether by accident or design, a copy of an E-mail message from Mr. Marsh to Mr. Burke found its way to Stockwatch.
"Further to our conversation, the following details are known about Altaf Nazerali," Mr. Marsh wrote to Mr. Burke on June 10. "He goes by Ali Nazerali and is approximately 60 years of age. He is an Ismaili East Indian and his family immigrated to Canada from Kenya in the early 1970's (sic). Ali lives in West Vancouver in the British Properties which is an exclusive area. I do not think Ali is a womanizer. He has a brother named Shafiq who is in the business with Ali. Shafiq spends a lot of time in Switzerland. I will discuss this further tomorrow."
It is not known whether Mr. Marsh did discuss the matter further with Mr. Burke, nor is it clear whether the efforts of these fine private investigators will yield anything of interest. Indeed, much about Mr. Burke's project remains murky. In fact, some veteran observers of Howe Street shenanigans have even suggested that the target of Mr. Burke's investigation may not be Mr. Nazerali. Perhaps, they suggest, Mr. Burke is far more interested in the Stockwatch reporter who has been covering Imagis than he is in the company's founder and current director, Mr. Nazerali. Just how this spook story plays out remains to be seen.
Meanwhile, the Imagis story is not playing nearly as well to investors as it did when the stock ran to a 52-week high of $5.66 in frenzied trading in the wake of the weasel worded March 6 announcement from Pembridge. With only 32,500 shares changing hands in TSX trading, Imagis closed at $2.55 on June 12.
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(More information regarding Imagis Technologies is available in Canada Stockwatch articles published on March 7, 11, 15, 25, 27 and 28; April 2, 9 and 16; May 17, 23 and 30; and June 4, 2002.)