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Non-Tech : GENI: Inc
GENI 2.4600.0%Sep 24 4:00 PM EDT

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To: Kevin Podsiadlik who wrote (264)9/22/2001 2:46:16 PM
From: StockDung  Read Replies (1) of 574
" and also receives "dirty" money from criminal groups and from arms deals. The victim says Pastrana then launders the money through his sharemarket scam, doubly profits"

Herald Sun: Boiler room racket hits investors [ 05aug01 ]

Boiler room racket hits investors

HUNDREDS of Australians have lost millions of dollars in the world's largest sharemarket scam.

The racket was masterminded by a shady Filipino, Amador Pastrana, 31, who has made $6 billion in eight years. Pastrana is on the run. The FBI will move soon to close the global operation, but it will be too late for the Australians – two of whom are known to have been cheated of $400,000 each. Last week's raid on a boiler room – a sophisticated, "cold calling" operations centre – in the Thai capital of Bangkok was the tip of a fraudulent iceberg. Pastrana, according to one of his victims, has built an empire of 50 boiler rooms in nine countries, and also receives "dirty" money from criminal groups and from arms deals. The victim says Pastrana then launders the money through his sharemarket scam, doubly profits. Pastrana regularly works 20-hour days, seven days a week and has become one of the world's richest people. He is close to the Thai royal family, various archbishops and also is a friend of disgraced former Philippines president Joseph Estrada. Australia has been one of the countries most heavily targeted by Pastrana and his army of high-pressure telephone salesmen. But last week's arrest of 80 people in Bangkok was just the "tip of the iceberg", according to the Australian Securities and Investments Commission. ASIC officials warned that unlicensed brokerage firms are still operating in Asia. Thailand's securities watchdog, the Securities and Exchange Commission, has asked police to file criminal charges against seven men who allegedly ran Bangkok-based stock trading firms that tried to scam investors, mostly in Australia and New Zealand. The SEC alleges the seven men headed stock brokerage firms without a licence from the Thai Government. It says they sought to sell shares of non-existent or dubious companies to investors. The seven are John Martin Kealy, Ronan Joseph Murray, Paul Mary Hickey, Scott Campbell Fisher, Jason Garrick Rich, Adrian Robert Wallis and Steven Hooper. The SEC provided no details about them. Hickey, an Irishman, and Fisher, an Australian, are in custody. The unlicensed firms employ English-speaking backpackers in Asia to "cold call" people, encouraging them to buy shares on the stock market. People are pressured into investing thousands of dollars – which usually disappears. ASIC's executive director of consumer protection, Peter Kell, said the latest arrests were only a deterrent. "Quite a few cold callers will continue to exist and consumers need to be vigilant to make sure they are not tricked," Mr Kell said. ASIC has been flooded with thousands of phone calls since the Thai arrests. Overall losses are believed to be billions of dollars and by fraudulently using the stock of just one company, Berten USA, Pastrana has fleeced Australian investors of $25 million. The company's president, James Martin, claims if US authorities and the FBI had listened when he warned them a year ago of fraudulent transactions in his stock, up to 90 per cent of the Australian losses could have been avoided. Instead, US authorities told Mr Martin there was nothing they could do about the scam because it had not taken place on American soil and they had received no complaints from US victims. It was not until Pastrana made his first major mistake in nine years – he forged Mr Martin's signature on a document – that the FBI began an inquiry. Berten USA started as a legitimate manufacturer of men's cologne. After being dormant for a decade, Berten was purchased by an American known as "Dan", who is implicated in Pastrana's operation, and is a suspect in a $1.8 million US security fraud. "Dan" sold Berten as a shell company to Pastrana shortly before he introduced the Filipino to Mr Martin. At the time, Mr Martin was operating a legitimate Silicon Valley company called Stratasys and needed investment capital. "Dan" suggested Pastrana to Mr Martin as a potential source of the investment capital. Pastrana agreed to invest $US7.5 million on condition Mr Martin used Berten as the vehicle and became company president. Pastrana's background appeared impeccable and among his references was then-president Estrada. "He was going to put in $US7.5 million to add to the $US2.5 million my colleagues and I had invested," Mr Martin said. "When I first met him in December 1999, he was charming and deeply concerned I was happy with everything he was doing. It was a class act, very accomplished and polished." Mr Martin and Pastrana met regularly over the next year and all went well until Mr Martin caught two employees planning to embezzle $600,000 from Stratasys. "I fired them immediately, and then I received a quite forcible call from Pastrana saying I should reinstate them," he said. "That's when I first smelled a rat." His suspicions were soon confirmed when he started receiving phone calls from Pastrana's friends asking when he was going to float Berten USA. Information of that nature is illegal insider trading. In August last year, following his float, Mr Martin went to the authorities and asked them to take his stock off the market. But it already was too late. Mr Martin and his friends lost their $US2.5 million original investment and Mr Martin lost a further $US27.5 million. He was declared bankrupt but later discharged. He then set off to trace investors who had lost money. So far he has been to Australia, New Zealand, Germany, Austria, Switzerland and South Africa. The FBI had Pastrana under surveillance for weeks and was due to arrest him and close his operation any day. But last week's Thai-led raid on the Bangkok boiler room, which snared 10 Australians and 70 other foreigners, was premature. Mr Martin said Thai officials had needed a boost for a local election and the raid provided the opportunity. The original plan was for simultaneous raids on 25 boiler rooms in 15 countries but the other boiler rooms have now been warned. And, Mr Martin said, one of the two companies named by Thai police after the raid, Benson Dupont Capital Management, was one of the least effective cogs in Pastrana's operation. "Everybody they picked up in the raid was very small fry," he said. Mr Martin left Australia on Wednesday after meeting defrauded investors. "For the past two months I have been touring the world tracing investors who have been burned," he said. "There is no legal obligation to do this, but I see it as a moral obligation. These people placed their faith in my company and have lost large amounts. "Their reaction to me has been understandably suspicious to begin with, but I have addressed a lot of meetings now, and generally my version of events has been accepted." Mr Martin has compiled detailed lists of many of the 4000 victims worldwide who bought worthless shares in Berten USA and has put together an international "hit parade" of the worst-hit countries. He believed it was almost impossible to work out global losses on companies manipulated by Pastrana. "He picks up five new companies every month, aiming for 60 a year. He plugs and dumps them at the same rate," Mr Martin said. "Berten is the only one I know about in detail and investors lost $25 million in Australia alone in under a year. "If you start multiplying that figure by 60 times a year for nine years, you are probably starting to get close."
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