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From: StockDung6/16/2015 4:23:11 PM
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Multivision's Nazerali sees John Thompson on the stand

2015-06-15 20:33 ET - Street Wire

by Mike Caswell

The defamation trial of Aly Nazerali versus the Deep Capture website heard testimony on Monday afternoon from one of Mr. Nazerali's long-standing associates, former Union Securities Ltd. chief executive officer John Thompson. He told the court of his astonishment after reading statements on Deep Capture that linked Mr. Nazerali with Mafia figures, arms dealers and others. Some of the items he read were "controversial, to say the least," he testified.
The testimony comes as part of a lawsuit that Mr. Nazerali is pursuing against the Deep Capture website, which purports to expose fraud. The suit complained that Deep Capture published several chapters in 2011 that associated Mr. Nazerali with market manipulators and other nefarious figures. The defendants include Patrick Byrne, the short-selling conspiracy theorist who runs Overstock.com Inc. and Deep Capture. Also a defendant is journalist Mark Mitchell. The men contest the allegations and are fighting the case.

Monday afternoon featured Mr. Thompson, who headed controversial Vancouver brokerage Union Securities until its acquisition by PI Financial Inc. in 2012, taking the witness stand to testify for Mr. Nazerali. Answering questions from Mr. Nazerali's lawyer, Dan Burnett, he explained to the court that he had been doing business with Mr. Nazerali since 1992, and found the statements on Deep Capture to be confusing and bizarre.
He said he first learned of the Deep Capture statements some time around September, 2011, when a client phoned him from the United Kingdom and commented about Mr. Nazerali's problems. After asking the client what he meant, Mr. Thompson found the Deep Capture site through an Internet search. He then spent some time going over it, he testified.
What he found left him amazed, he told the court. The website associated Mr. Nazerali with a wide number of people who Mr. Thompson described as nefarious characters. These included Osama bin Laden and Adnan Khashoggi, a "notorious fellow." It also had Mr. Nazerali helping to smooth over problems between the Russian Mafia and Irving Kott (a Canadian stock promoter with a history of civil and criminal violations).
Mr. Thompson did not dwell on any of the details in his testimony (and spoke quickly throughout), but explained many times that he could not believe what he was reading. "I was amazed someone could say these things," he said. He testified that he told his brother, his assistant, his wife and maybe a few others about the site.
Part way through the afternoon defence lawyer Roger McConchie began a somewhat lively cross-examination of Mr. Thompson. It began mundanely enough, with Mr. McConchie asking Mr. Thompson about when he held different positions at Union and how long he held them. Mr. McConchie also had a few questions about the length of time Mr. Thompson had known Mr. Nazerali, which was about 20 years.
Mr. McConchie then tried to ask about Union's controversial past. In particular, he questioned Mr. Thompson about a fine the firm received in April, 2006, for compliance violations. The question drew a quick objection from Mr. Burnett, who contended it was irrelevant. Mr. McConchie said it went to how credible Mr. Thompson was, but after some lawerly haggling he was unable to ask the question.
(The sanction that Mr. McConchie was asking about came as part of a settlement agreement that Union entered into with the B.C. Securities Commission, the Investment Dealers Association and Market Regulation Services on April 18, 2006, over dealings on the OTC Bulletin Board. The firm admitted to 13 examples of misconduct, much of which surrounded clients who traded heavily on the OTC-BB. The brokers involved included Trevor Koenig, who pleaded guilty in 2001 to fraud in the United States. To settle the case Union paid $1-million, while Mr. Thompson and the firm's other top officers paid a combined $625,000.)
Having failed to ask about the settlement, Mr. McConchie then started questioning Mr. Thompson about the risk of clients who traded OTC-BB stocks. Specifically, he queried whether they could become involved in abusive trading if left unsupervised. Again, this drew an objection from Mr. Burnett, and again Mr. McConchie was unable to ask the question.
Mr. McConchie then moved on to other topics, such as Mr. Nazerali's office arrangements. Mr. Thompson confirmed that he frequently went to Mr. Nazerali's office, and that Mr. Nazerali shared an office with Nelson Skalbania. (Mr. McConchie did not explain Mr. Skalbania's relevance, but earlier in the case he filed an affidavit indicating that he had read the Deep Capture posts and was amazed and dismayed at the references to Mr. Nazerali that he saw. In a later injunction application, the defence pointed out that Mr. Skalbania had received a year in jail in 1997 after being convicted of theft.)
The trial continues Tuesday.
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