|MARK VALENTINE: GO DIRECTLY TO JAIL|
The long-arm of the FBI has reached out and grabbed Mark Valentine. Valentine was arrested at the Frankfurt, Germany airport on August 14th; the result of a two-year investigation by U.S. and Canadian law enforcement agencies.
The arrest marks the latest dark chapter for Valentine, whose securities license recently was suspended by the Ontario Securities Commission (OSC). The OSC is examining Valentine’s conduct while serving as Chairman of Canadian brokerage house, See Thomson Kernaghan & Co. Ltd.– Not Exactly Valentine’s Day; and Thomson Kernaghan & Co. Ltd. – Time To Giddy Up and Go.
Stock Patrol started asking questions about those activities in January 2001, when we first noticed that Valentine’s firm, Thomson Kernaghan, had been receiving millions upon millions of shares of Infotopia, Inc. at a deep discount. Those shares were quickly registered, putting Thomson Kernaghan in a position to dump them while Infotopia was projecting profits that were largely illusory, and acquisitions that never came to pass. See Infotopia – Bye Bye Shares.
Now Valentine is facing the possibility of a lengthy jail term as was one of 58 defendants charged in the FBI’s sting operation - dubbed “Bermuda Short.” Other named defendants included stockbrokers, promoters and public companies.
Prosecutors say that the “corporate terrorists” participated in fraudulent schemes – set up by the FBI - involving the sale of $200 million in securities of twenty three publicly traded companies. According to the United States Attorneys Office, no members of the public lost money because the schemes were carefully controlled by the government.
The charges stemmed from two separate, but related, operations. In the first, an FBI agent posed as a trader for a fictitious foreign mutual fund. Using that guise he enticed corporate executives and stockbrokers to sell him large blocks of stock at above-market prices, resulting in huge profits for the sellers. In return, the sellers agreed to pay secret kickbacks to the agent.
In a second scheme, an FBI agent and a member of the Royal Canadian Mounted Police posed as members of a Columbian drug cartel who wanted to launder drug money. They convinced several of the defendants to launder a total of $1.4 million.
The charges against Valentine, and others (including Paul Lemon and Andrew Proctor, directors of Voyager Group, Inc, a Bermuda-based financial services firm) involved a scheme to dump shares of three OTC Bulletin Board companies that Valentine allegedly controlled: C-Me-Run Inc., SoftQuad Software Ltd. and JagNotes.
Authorities say that Valentine and Lemon conspired to sell $29.4 million worth of stock in those three companies through the FBI’s phony mutual fund trader, agreeing to pay kickbacks of $7.8 million to the trader, and his colleagues.
Infotopia investors already are familiar with JagNotes. Valentine and Thomson Kernaghan managed to steer funds toward JagNotes by arranging for Infotopia to purchase “airtime” for its infomercials on that Company’s marginally existent financial news network.
According to the criminal complaint, Valentine and other defendants also persuaded stockbrokers to manipulate stock prices by convincing their customers to buy securities. Those stockbrokers were promised kickbacks in return for their efforts.
U.S. officials intend to move forward with efforts to extradite Valentine. This time his trip is not likely to end at the Frankfurt airport. (8/19/2002)