SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

   Non-TechAuric Goldfinger's Short List


Previous 10 Next 10 
To: Francois Goelo who wrote (10156)5/13/2006 11:20:35 AM
From: StockDung
   of 19428
 
Financier faces new charges
May 13, 2006
By JOE CREWS
Business Writer

Daniel Rubin, the millionaire financial whiz kid who owns Lake Helen-based lawyer-referral firm 1-800-ATTORNEY, was arraigned in New York federal court this week on new securities fraud charges.

As a result of the new charges, Rubin and co-defendant Scott Halperin of New Jersey were granted a delay in their trial from June 12 to Nov. 13.

Rubin and Halperin, acting through Rubin Investment Group Inc., are accused of manipulating the stock prices of several companies in a classic "pump-and-dump" scheme, officials said at the time of his original arrest in October 2003.

"Mr. Rubin has entered a plea of not guilty to all the charges," said Rubin's attorney, Marc Mukasey. "He intends to take the case to trial and to be fully exonerated at trial."

Rubin Investment Group is a private investment banking firm Rubin started in 1998 when he was 26 years old. The indictment alleges he acquired 1-800-ATTORNEY by purchasing 83 percent of its stock at below-market prices without providing investment cash he promised.

Rubin originally was charged with Halperin in manipulating the stock prices of The Classica Group Inc. and Marx Toys and Entertainment Corp., both based in New Jersey. Halperin was the chief executive of Classica and chairman of the board at Marx Toys.

The new indictment, however, says Rubin forced a number of additional companies to issue stock at artificially low prices to his investment group, then made a series of duplicate trades that caused the stock prices to rise before he sold them.

Rubin and Halperin are both charged with conspiracy to commit securities fraud. Rubin also faces seven counts of securities fraud, three counts of mail fraud and one of money laundering conspiracy. Halperin also is charged with two counts of securities fraud.

Two other co-defendants -- Glen Santha, who worked at Rubin's Lake Helen office, and Daniel Nourani, who worked at Rubin's Los Angeles office -- pleaded guilty earlier to similar charges.

joe.crews@news-jrnl.com

Share RecommendKeepReplyMark as Last Read


To: RockyBalboa who wrote (17717)5/13/2006 6:55:00 PM
From: StockDung
   of 19428
 
Ziasun/Cragun->Stock promoter's divorce reveals life of luxury
canada.com
David Baines
Vancouver Sun
Saturday, May 13, 2006

CREDIT: Vancouver Sun/Handout
From 1986 to 1997, Vancouver businessman Mark Harris worked in phone rooms that used high-pressure methods to sell stocks, most of dubious value, to people all over the world.

For more than a decade, Vancouver businessman Mark Harris made a fortune running boiler rooms -- high-pressure telephone stock sales operations -- in Europe and Asia. Unfortunately for his net worth, his wife Lori made a career out of spending it.

From 1986 to 1997, Harris worked in phone rooms that used high-pressure methods to sell stocks, most of dubious value, to people all over the world. Initially, he manned the phones himself, but eventually became involved in setting up and overseeing the sales operations.

For various reasons, some of them regulatory, he moved often -- from Spain to Hong Kong, Macau, back to Hong Kong, then to the Philippines, California and finally Vancouver. Throughout most of this period, he worked closely with Bryant Cragun, owner of a boiler room operation that was rather grandly called Oxford International Management.

Wherever he went, Lori followed. It was a nomadic existence, but it had its rewards. In his peak earning years, he made more than $500,000 US a year.

Neither of them was shy about spending it. They employed a maid, a gardener, a chauffeur, even a dog-walker. Every year, for Lori's birthday, they went to Italy. During the beach season, they spent weekends on Boracay Island, about 90 minutes from Manila.

Aside from the occasional modelling job, Lori Harris did not work. She took Spanish lessons, she played tennis, she flew to Hong Kong to have her hair done. But mostly she shopped.

She bought Versace, Dolce & Gabbana and other expensive designer clothes. When her credit card at Saks Fifth Avenue exceeded her limit, she simply opened another account and purchased an $8,000 full-length mink coat. She shopped so much that she hired a personal shopper to help her.

In 1995, the couple began construction of a mansion on an acre of land in Osoyoos. The project, originally budgeted at 3,000 square feet and $500,000, ballooned to 6,000 square feet and $3 million, including an outdoor dining area modelled after the Four Seasons Resort in Bali and five Versace carpets costing more than $100,000.

In 1997, Harris returned to Vancouver to provide investor relations services for many of the same companies he had been selling by phone. Business was initially good, but by 2000, the market had collapsed. His income was decimated and his marriage in a shambles. In 2002 they separated.

Unable to agree on a division of assets, the couple went to court. In a 10-day trial earlier this year, and in a 14-page decision released just days ago, their private lives were laid bare, providing unique insight into the controversial and lucrative business of boiler room operators.

Not mentioned are the people who bought stock from Harris's telemarketers. According to newspaper accounts, court records and securities filings, many of them lost substantial amounts of money.

One was Guy Fletchere-Davies, a 62-year-old carpet manufacturer in Melbourne, Australia. He told the Wall Street Journal in August 2000 that he bought shares of ZiaSun Technologies Inc., which traded on the dreadful OTC Bulletin Board in the U.S., and several other junior stocks, from the Manila office of Oxford International Management, where Harris ran the telemarketing operation.

Fletchere-Davies said his brokerage account was passed around among several Oxford salespeople, then to a successor firm. In late 1999, "the phone calls stopped and the paperwork dried up." ZiaSun collapsed and he lost $150,000.

By this time, Harris had left Oxford and at Cragun's behest he had set up an investor relations business, Veritas Marketing & Communications Group Ltd., with offices in Vancouver and Solana Beach, Calif., to help promote ZiaSun and other stocks that Oxford was selling.

Oxford and Veritas have since shut down and Cragun has reportedly retired, but Harris continues to provide investor relations services through a private firm, Skylla Capital Corp., which operates out of a corner office in Park Place in downtown Vancouver.

Skylla is the grotesque six-headed monster in Greek mythology that swooped down on passing ships and sea creatures, but Harris denies that any of his business activities have been predatory: "Every company I have been associated with was fully registered and all the companies we recommended were legitimate," he said in an interview this week.

n

Harris is now 49, but his boyish good looks make him appear much younger. He dresses and speaks in a casual but calculated way. His cell phone rings incessantly. For the most part, he ignores the calls to focus on a Vancouver Sun reporter who, uninvited and unannounced, has dropped into his office.

According to the divorce action, Harris was born and raised in Calgary. He dropped out of school in Grade 11 and worked at a steel mill, as a truck driver, at McDonald's, and as a car salesman.

In 1986, he met and married Lori, seven years his junior. He began training as a stock broker, then a friend offered him a job with a firm called Indigo Investments in Torremolinos, Spain.

"He immediately began work as a telemarketer persuading prospective clients to purchase stock in companies," Judge Linda Loo noted in her judgment.

It was clear that he had an aptitude for the job. He made $5,000 in his first month. The following year, he got a better job as "telemarketing sales manager" for a firm called Equity Management Services in Marbella, Spain. It paid $10,000 per month plus a percentage of the business that the phone room generated.

However, the judge noted, "the job ended abruptly after about a year when the payroll failed to materialize." Harris told The Sun he's "not 100 per cent sure why it shut down." But in the fluid world of boiler rooms, such businesses disappear and reappear with alarming frequency and speed. In this instance, the phone team was offered similar work in Hong Kong starting the following week.

Within five months, Harris was back making $10,000 per month, but once again, the job suddenly ended, this time when the Hong Kong Securities and Exchange Commission intervened. Why the commission intervened is not explained.

Harris found work in a similar operation in Macau, but the couple found the living and working conditions unagreeable, so they decided to use their savings to travel throughout Europe and Asia.

In 1990, Harris returned to Hong Kong and teamed with Bryant Cragun, a former senior vice-president with Goldman Sachs, in another telemarketing operation. Within months, however, Hong Kong regulators once again stepped in and the phone room was shut down. Once again, no reason is given. Harris told The Sun that, to meet capital requirements, the firm had posted shares of an OTC Bulletin Board company rather than a Nasdaq company, and the authorities refused to accept them.

The following year, in April 1991, Cragun established another telemarketing business in the Philippines, Oxford International Management, which styled itself as a "U.S. equity fund manager." He hired Harris to manage the phone room, with huge success.

Within four months, Harris was making $10,000 US per month, plus a percentage of sales. By 1993, the firm had grown to 50 employees and he was making more than $250,000 US per year. By 1995, the firm had offices in Spain, Brussels, Taipei, Indonesia and Bangkok, and he was making $500,000 US annually.

Life was good. The couple travelled extensively. Each Christmas they stayed at the Four Seasons Hotel in Bali. During the summer, they spent weekends on Boracay Beach, where Harris invested $200,000 in an aquasports business which provided them with boats and jet skis, but generated nothing in the way of profits. They also invested $85,000 in an Indian cuisine restaurant in nearby Subic Bay.

Lori was, by all accounts, an excellent hostess. She entertained Harris's business colleagues at Boracay Beach and helped arrange Oxford's annual Christmas party, which was attended by up to 400 guests. She also attended dinner meetings with Mark's clients and prospective clients.

"He considered his wife an asset because together, they were an attractive, well-dressed couple," Loo noted. But other than spending money, the judge said, "she took almost no interest in her husband's work or their finances."

In an interview this week, Lori Harris said she understood her husband was involved in "venture capital," but didn't know any details. "I knew it was telemarketing, but I didn't know the stocks or the names of the companies he was promoting," she said.

n

Oxford had a stable of junior companies that it organized, financed and promoted to retail investors. Among them were ZiaSun Technologies Inc. and Chequemate International Inc.

Both were listed on the OTC Bulletin Board, a trading forum that is virtually unregulated. In fact, prior to 1999, bulletin board companies didn't even have to issue financial statements.

ZiaSun and Chequemate financed their businesses by selling large blocks of stocks to foreign purchasers under a U.S. securities rule known as Regulation S.

Under this rule, issuers can avoid going through the onerous process of a registered stock offering by placing the shares with "accredited investors" outside the country. The condition is that these shares cannot be sold back to U.S. investors for at least a year.

Cragun, as an officer and director of ZiaSun and Chequemate, arranged for these companies to sell large blocks of unregistered stock to Oxford and related boiler rooms, which marked up the share price and hyped them to investors in foreign jurisdictions.

Problem was, neither Oxford nor its employees were registered to sell stock in Ireland, Switzerland, Australia or any of the others countries where the purchasers were located. Also, the companies were long on puffery and short on substance, which made them exceedingly risky investments.

According to a June 2002 article in the St. Louis Post-Dispatch, one of Oxford's clients was Australian rancher Wally Peart. Starting in 1994, he bought seven stocks from Oxford, including Chequemate, for a total investment of $130,000 US. Little did he know, but all of the companies had close ties to Cragun and associates.

Peart told the newspaper that, on Oxford's advice, he never sold any of the shares, ostensibly to maximize long-term gains. "Everything seemed to work OK, and they often invited me to visit them in Manila," Peart is quoted as saying. "However, in 1999, it all folded and my retirement fund disappeared."

Harris rejects the characterization of Oxford as a "boiler room." He said the firm made sure it was licensed in every jurisdiction in which it sold stock. However, when asked if the firm was licensed to sell stock to Australian investors such as Peart, he replied: "I can't answer that question. I don't know exactly."

He also said the companies that Oxford recommended were all legitimate companies and a lot of Oxford clients made money. "I bought IBM and lost a lot of money on it. It's all based on timing," he said.

He also said neither he nor Cragun have ever been accused of wrong-doing. Cragun told the Wall Street Journal that the U.S. Securities and Exchange Commission spent five years investigating his role in selling Regulation S shares overseas and it "never filed anything against me."

n

A large chunk of money supplied by investors like Peart found its way back to B.C.

The Harris's bought the acre of land in Osoyoos and began constructing their mansion. It had seven bathrooms and marble tiling throughout, even in the mechanical and laundry rooms.

They paid $35,000 for chandeliers, $40,000 for a wrought iron staircase and $25,000 for a desk for Mark's home office. In all, they spent $225,000 on furnishings. The total cost was more than $3 million. "It is the most expensive house in Osoyoos," the judge observed.

But the gravy train was coming to a halt. By 1996, Oxford had over 10,000 clients, but according to Loo, the stock market had turned and Harris "was forced to deal with unhappy investors."

Cragun opened an investment banking business in San Diego and invited Harris to join him. In October 1997, Mark and Lori moved to Del Mar, just outside San Diego, and rented a 3,200-square-foot ocean-view home for $4,750 a month. They also bought a Porsche 911 for $96,000 US and a 540 BMW for $65,000 US.

Within a few months, Cragun decided he wanted Harris to help him support the public companies that he was promoting. So Harris incorporated Veritas Marketing & Communications with offices in Vancouver and Solana Beach, Calif. He commuted back and forth, spending Tuesdays to Friday in Vancouver, and Saturday to Monday in Del Mar.

Veritas provided investor relations services for several companies, including ZiaSun. At its peak, it had 20 employees, but it was not a lucrative enterprise. Harris was paid in shares, which initially soared in value, but by the time they became free-trading, the share price had collapsed. ZiaSun, for example, rose to $30, but plunged to 30 cents by the time they were cleared for trading.

In 2001, Harris's total income slumped to $10,000, but Lori could not adjust to this new financial reality. As Judge Loo remarked: "Her passion for high-end designer fashions continued undeterred." Among the items she bought, over her husband's objections, was an $8,000 full-length mink coat from Saks. The following month, in September 2002, they separated.

"There is no doubt that Ms. Harris has a clothes-buying habit," the judge observed.

n

Since their separation, Lori has been living in the Osoyoos mansion, but Judge Loo has ordered that it be sold and net proceeds divided between them. She also ordered Mark to pay $150,000 spousal support in two equal instalments in January 2007 and January 2008.

It is not clear what Lori will do. "Mr. Harris has suggested avenues Ms. Harris might explore, such as being a veterinary assistant, because she loves animals, or being a personal shopper, because she has exquisite taste and enjoys interacting with people," Loo noted.

However, she added, Lori "has taken no real steps towards finding work or training because she claims she is too emotionally distraught...."

In 2003, Mark returned to Marbella, Spain, to set up offices for another telemarketing firm called Global Capital Asset Advisors. At about the same time, he began a common-law relationship with Jonni-Colleen Sissons, then a broker with IPO Capital Corp.

In January 2004, Sissons gave birth to their son in Malaga, Spain, and they have since returned to Vancouver. Sissons is now registered with Northern Securities and Mark is pursing his investors relations business through Skylla Capital.

He refuses to say who his clients are: "I have been advised by my lawyer not to say anything further to you."

dbaines@png.canwest.com

© The Vancouver Sun 2006





Copyright © 2006 CanWest Interactive, a division of CanWest MediaWorks Publications, Inc.. All rights reserved.

Share RecommendKeepReplyMark as Last Read


To: Francois Goelo who wrote (10156)5/15/2006 9:02:46 AM
From: StockDung
   of 19428
 
CIA INC. STINKS BY CHRIS BYRON
nypost.com

THE SPY AGENCY SHOULD CLOSE ITS VENTURE CAPITAL FIRM

May 15, 2006 -- IF former National Security Agency chief Michael Hayden hangs in there as President Bush's nominee to head the CIA and makes it to a Senate confirmation hearing, one of the panel's members should ask him this:
"Sir, please tell the committee how much further you anticipate allowing the CIA to expand its presence on Wall Street via the private venture capital firm known as In-Q-Tel, Inc."

Hayden came under withering fire in Washington last week as word spread that the ex-NSA chief had presided over the White House's post-9/11 surveillance program of monitoring domestic U.S. telephone calls. The White House, politically weakened from a year of setbacks both at home and abroad, may decide to withdraw Hayden from consideration and submit an alternative nominee burdened with less civil liberties baggage.

Yet whoever winds up in the CIA's top job will inherit a developing mess involving In-Q-Tel that was largely ignored by the agency's departing director, Porter Goss. Hints that all is not well with In-Q-Tel have begun seeping into view as this little-known domestic CIA front operation continues to funnel agency money into penny stock and micro-cap companies in Wall Street's murkiest back alleys.



Two In-Q-Tel CEOs have resigned from the six-year-old venture capital fund in just the last four months; the fund is being run on a day-to-day basis by a man from Washington's politically greased Carlyle Group who has been with In-Q-Tel for only a few weeks. Headhunters are said to be having trouble coming up with candidates for a permanent replacement.

And there are even reports, largely unconfirmed, that the Securities and Exchange Commision is looking into several penny stock promoters with ties to In-Q-Tel.

Launched in 1999 by CIA director George Tenet as a Wall Street venture fund to finance new technologies for the spy world, In-Q-Tel quickly found friends on Capitol Hill, where policymakers seized on the fund as a way to remind constituents that the ghost of Vietnam no longer walked the land. The attacks of 9/11 gave In-Q-Tel even more stature in Congress, where the fund came to be seen as an essential element in the war effort.

Yet the public's visceral reaction to last week's NSA revelations suggests that war or no war, a backlash against government snooping may be starting. And that in turn promises to crank up the heat under In-Q-Tel, where at least some of the fund's investments raise questions of judgment regarding how taxpayer money is being spent by the organization, as well as who it is choosing for business partners.

A year ago, this column drew back the curtain on a fishy In-Q-Tel in vestment, financed out of the black box budget of the CIA, in a defense-sector start-up called Ionatron Inc.

Run by a longtime Wall Street regulatory violator named Robert Howard, Ionatron used a cash infusion from In-Q-Tel to promote itself around Washington as the developer of a laser-equipped, remotely controlled device the size of a golf cart that could patrol the highways of Iraq, ferreting out and detonating insurgent land mines ahead of troop movements.

We warned in this space that the technology being trumpeted by Ionatron was not only unproven, but had been obtained by Howard and some midlevel researchers at Raytheon Corp. under highly irregular circumstances designed to persuade a West Coast laser researcher into turning over his research to Howard's group.

Nonetheless, Sen. Hillary Clinton and her Democratic colleague from California, Barbara Boxer, quickly embraced the Ionatron program, which eventually devoured more than $12 million in government funding before the Pentagon finally concluded last week that the devices are not reliable and cancelled plans to deploy them.

Ionatron's stock price has tumbled more than a third in the last three weeks, leaving the company's largest investor - prominent hedge fund SAC Capital Advisors, run by Steven A. Cohen of Connecticut - sitting with millions in paper losses.

SAC Capital has acknowledged that it is under investigation by the SEC in what appears to be a separate matter involving stock trading, and the SEC may soon start taking a look into the hedge fund's buying of Ionatron's shares.

In-Q-Tel's growing portfolio of investments includes a few successes. Yet the fund has more often poured money into companies that were barking dogs long before In-Q-Tel showed up, and have failed to improve since.

Consider a North Carolina outfit called ID Technologies Corp., which began life in 1994 as CardGuard International Inc. to promote a fingerprint identification system no one wanted to buy. In the four years that followed, the company racked up losses of $3 million on a mere $92,000 in revenues.

In 1998, the company changed its name to ID Technologies and added $2.5 million more to the loss column on barely $100,000 more in revenues.

Along the way, In-Q-Tel popped up with plans to invest $400,000 more in ID Tech, but the firm collapsed, leaving investors with $5.58 million in cumulative losses and a stock that now sells for a fraction of a penny per share.

Another In-Q-Tel investment, in a data software company called Convera Corp., may be headed in the same direction, bearing much greater losses. In 2004 the fund took a stake in Convera, which had yet to turn a profit while piling up more than $1 billion in cumulative losses since its founding in the mid-1980s.

By the end of 2005, a resulting bounce in Convera stock had topped out at $16, and the shares have since lost half their value. Last week they were trading below $8 on investor disenchantment with the perennial money loser's latest offering: an Internet search engine for extracting information from video files.

Because its funding comes from the CIA, In-Q-Tel has been an irresistible target for conspiracy theorists who charge that the CIA is somehow linked through it to every penny stock that goes south.

Last week, one left-leaning Web site reported that SEC investigators think the CIA-backed venture fund has been steering money into penny stock "pump and dump" firms in Israel, Dubai and Malaysia.

But a day's worth of phoning around traces these claims to a tireless complainant named Tony Ryals, who has been bombarding the SEC and Internet message boards for years with claims that he has uncovered a submerged world of In-Q-Tel-linked fraud stretching for Kuala Lumpur to the Middle East.

The alleged linkages are bewildering in their complexity and typically impossible to follow, but conspiracy buffs find them irresistible, since they seem to echo some of the CIA's worst excesses from 30 to 40 years ago, and by their nature, they can never be entirely disproved.

WHETHER the SEC has looked into Ryals' charges and found them baseless isn't known, but thanks to In-Q-Tel and the lengthening shadow of the CIA on Wall Street, the most improbable of such claims once again have a whiff of credibility.

Bottom line: There are many sensible ways the CIA could have gone about developing the technologies it needs, but funneling money into Wall Street via an outfit like In-Q-Tel was never one of them. So it will be a good thing for Wall Street - and for America, too - if the CIA's next spymaster simply shuts the operation down.

cbyron@nypost.com

Share RecommendKeepReplyMark as Last Read


To: Francois Goelo who wrote (10156)5/15/2006 9:38:46 PM
From: StockDung
   of 19428
 
Jim Strickland Investigates Bargain Vacations

POSTED: 12:20 pm EDT May 15, 2006
UPDATED: 6:12 pm EDT May 15, 2006

ATLANTA -- The fax machine in the Channel 2 Action News investigative unit has churned out dozens of travel offers over the last few years. We recently bought a package that promised us four nights in Orlando, three nights in the Bahamas (with a short cruise,) two nights in Fort Lauderdale and a trip to Vegas with airfare included!

Could $99 dollars per person be real? No.

The people answering the phone number listed on the fax transferred me four times before a computer voice told me: Besides the one time reservation fee of $58 dollars, no other fees are mandatory.

Several other additional charges, such as shipping and handling of $117 for a package of travel documents, pushed the total price from $99 per person to more than $350.

We learned dream vacations sometimes end in rude awakenings.

We were required to stop at a “welcome center” in Ft. Laudersale, where a woman at the desk said, “All these people that come through here on packages... It's all geared around time shares.”

We had to plunk down a $40 deposit to ensure we'd show up at a 90 minute timeshare presentation we didn't know anything about.

“I had no idea I was going to take a tour today,” said New York traveler Erika Tavares.

“I blame the marketeers who get us down here under false pretenses,” said her husband, Giovanni.

Our sales rep told us the Vacation Village time share resort paid our travel company and several others to recruit prospects. “We're basically chipping in money on your vacation,” said salesman Luke Reischel.

A group from South Wales complained they got stuck taking three timeshare tours. They had to pay that deposit at the same welcome center.

“Give me your forty dollars,” Nigel Williams recalled the demand of a man staffing the center.

“For what?

“Give me your forty dollars, you'll get it back after the tour.”

“Tour, what tour?,” Williams remembered.

A couple from Denmark said they’d been threatened with extra hotel charges if they skipped time share presentations they were not told of.

“It's close to criminal, but it's legal,” said Peter Saager.

Our Bahamas hotel room had doors that wouldn't close and a toilet that wouldn't stop leaking. A manager insisted on changing our room.

Our Orlando hotel, actually on a busy highway in Kissimmee, gave us a no smoking room with cigarette burned carpet. Furniture was falling apart, and the bed sagged four inches in the middle of the mattress.

We had paid our money to a Florida travel business called Wholesale Connection Company.

Debra Graham of Richmond Hill, GA, paid for a similar package, but never even received the documents necessary to book the trip. “I got a charge on my credit card, and I got nothing,” said Graham.

Graham's is one of more than 120 complaints with the Better Business Bureau of Central Florida.

“WCC does have an unsatisfactory record with the BBB, primary due to their selling practices and failure to give refunds when they should be giving refunds,” said BBB President Judy Pepper.

Wholesale Connection Company is connected to a telephone boiler room. On our visit, one manager didn't want us there. Another said she'd been authorized by the owners to speak.

As for our unannounced timeshare tour, Customer Service Manager Carmen Santiago said: “Our sales staff always strive to assist customers and I don't believe that no one would have explained that to you, sir.”

On our cruise, we paid port taxes of $159, when the true port tax is less than $10 bucks. “We don't just invent fees,” she said.

Santiago also explained that a statement over the phone: “We do not promote this on a refundable basis,” doesn’t mean WCC refuses to give refunds. She said it simply means they don’t promote the fact they give refunds.

“Don't you think it's a little misleading?,” I asked.

“No sir, it's not misleading,” she replied.

Copyright 2006 by WSBTV.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Share RecommendKeepReplyMark as Last Read


To: Francois Goelo who wrote (10156)5/16/2006 8:58:55 AM
From: StockDung
   of 19428
 
SEC Continues Crackdown on Prime Bank Scams By Jennifer McCandless
May 16, 2006
The SEC has filed a civil suit charging that James Pratt, an insurance agent, and Timothy Coffin, an attorney, defrauded 85 people of more than $1 million using a prime bank scheme. The case is just the latest in a string of Commission prosecutions of con artists using prime bank fraud.

The Commission filed the lawsuit to freeze the pair’s assets, as well as those of businesses they run, EFS, Freedom Fidelity, and SP&V. The United States District Court in Dallas, where the suit was filed, ordered an accounting of the firms and expedited discovery in the investigation. Judge Barefoot Sanders, who is presiding over the case, also appointed Chris Kirkpatrick, an attorney with Dallas-based law firm Haynes and Boone, as receiver for the defendants.

Between 2004 and April 25 of this year, Pratt and Coffin’s prime bank scheme raised just over $1 million from at least 85 investors. A prime bank scheme is one in which investors are told that phenomenal investment returns will be achieved by trading bank instruments purportedly issued by top global banks in an exclusive, often secret, market. In reality, the trading program does not exist, and the proprietors of the scheme keep the investors’ money.

In its suit, the SEC is seeking pay civil monetary penalties and the disgorgement of all ill-gotten gains, plus prejudgment interest from the duo. In addition, the court is currently undertaking an investigation into how Pratt and Coffin have already spent nearly one-third of the funds they raised.

Since 1995, the SEC has filed over 100 cases against individuals and firms running prime bank schemes. So far this year, the Commission has initiated eight cases alleging prime bank fraud. Most recently, it charged David Dadante, an unregistered investment adviser, with having raised approximately $50 million dollars from at least 110 investors in a prime bank scam.

In March, Sharon Vaughn, an Illinois hedge fund operator, was ordered to pay more than $800,000 to settle a federal securities fraud lawsuit alleging she recklessly ceded control over $25 million of investor funds to prime bank scam artists, according to the SEC.

Vaughn falsely promised a conservative, low-risk trading strategy to investors in her hedge fund, Directors Performance Fund. Instead, Vaughn invested nearly all of the fund's assets in a sham prime bank scheme. At its peak in June 2005, the fund had raised $28 million from 29 high-net-worth individuals. Most of the $25 million has been returned to investors from an Italian bank where the money was held.

Last June, James Harrold was sentenced to 78 months in prison after he pled guilty to 16 counts of mail fraud, two counts of wire fraud, seven counts of interstate transportation securities acquired by fraud, and four counts of money laundering. The court also ordered Harrold to pay restitution of approximately $3.6 million. In addition, he was sentenced to three years of supervised release after Harrold completes his prison term.

The guilty plea followed Harrold's indictment on charges stemming from a prime bank scheme, in which he solicited groups of people to invest in an investment program, in which their funds would ultimately end up in a so-called prime prime bank debenture instrument that would generate a monthly profit of 20%. Rather than make the promised investments, he used the investors' funds to pay personal and business expenses, and to repay principal and the purported 20% interest to investors who liquidated their investments.

Have a comment? Let us know what you think of this or another CCH Wall Street story by clicking here.

Share RecommendKeepReplyMark as Last Read


To: Francois Goelo who wrote (10156)5/16/2006 9:09:53 AM
From: StockDung
   of 19428
 
Producer Faces 10 Years in TV Scam
Joseph Medawar, 44, agrees to plead guilty to bilking investors in a bogus production.
By Greg Krikorian and Christine Hanley, Times Staff Writers
May 16, 2006

A Hollywood producer has agreed to plead guilty to conspiracy to commit mail fraud and income tax evasion in connection with a bogus television production about the U.S. Department of Homeland Security that he used to swindle millions of dollars from dozens of investors, according to federal court documents filed Monday.

Under the plea agreement, Joseph Medawar faces a maximum of 10 years in prison, up to $9 million in government fines and $3.4 million in restitution to those who were defrauded by his scam.

The plea, set to come before a federal judge today in Los Angeles, also requires Medawar to cooperate with the U.S. attorney's office, FBI and IRS in any ongoing investigation.

Last September, federal agents arrested Medawar, 44, on charges that he defrauded at least 70 investors — many of them from local churches — out of millions of dollars. A subsequent grand jury indictment alleged that Medawar told the investors that his production company, Steeple Entertainment Ltd., was developing a show about the Homeland Security Department with the cooperation of President Bush and other federal officials.

Authorities alleged that the millions of dollars collected from investors supported a lavish lifestyle for Medawar and the woman billed as the show's lead actress, Alison Heruth. Over a period of two years, the pair spent money on luxury cars, shopping sprees, expensive dinners and $40,000-a-month in rent for a Beverly Hills mansion, the indictment said.

Medawar not only defrauded investors but won over some of the state's most prominent Republicans with his pitch about a television series based on the Homeland Security Department. The politicians included Rep. Dana Rohrabacher (R-Huntington Beach), who used his influence to open doors in Washington, D.C. It was later learned that Medawar had paid the congressman $23,000 for an option on a 30-year-old screenplay. The $23,000 came from proceeds of the swindle, authorities said.

Rohrabacher has maintained that he thought the show would bring positive attention to the Department of Homeland Security. He has denied that Medawar gained special access by purchasing his script or by contributing to his political campaign.

Medawar began making the homeland security pitch in early 2003. At the time, he had a paper trail of business disputes and lawsuits going back 15 years, one of which had drawn FBI attention. Yet he persuaded prominent Southern California Republicans to lend their support, and pulled off his scam under the noses of local law enforcement and national security officials.

His film crew shot action scenes at the Orange County sheriff's headquarters building and high-security operations center. His political contributions won him entry into invitation-only GOP events, allowing him to mingle with the kind of power brokers who make a difference in politics and in Hollywood. He also had his picture taken with the president.

Heruth, met in Washington with Rohrabacher and former Rep. Christopher Cox (R-Newport Beach), who is now chairman of the Securities and Exchange Commission, as well as House Homeland Security Committee staffers, who advised her how to make the show more realistic.

Medawar used some of these connections to mislead investors into believing that the show had unprecedented access to Homeland Security officials. He urged investors to buy stock in Steeple before the company went public, assuring them that government involvement would make the show a hit, authorities said. The investors were told that 26 episodes were in production for distribution in 137 overseas markets.

In court documents filed Monday, Medawar acknowledged misrepresenting the project to investors.

His attorney, Jeffrey Rutherford, declined to comment about the plea agreement, as did federal prosecutors Christine Ewell and David Willingham.

Heruth, 41, pleaded guilty in April to lying to federal agents when she said she did not know that the show was part of an elaborate investment scam. In her guilty plea, Heruth acknowledged making false statements to FBI and IRS agents to conceal the scheme. She is scheduled to be sentenced July 17 and faces a maximum of three years in prison. The agreement also requires her to make full restitution to victims.

Medawar's former chief financial officer, Jeffrey Rosenberg, previously pleaded guilty to one count of failing to report mail fraud and acknowledged that he had helped conceal the scam from unwitting investors and lied to federal investigators. As part of the plea, he had agreed to testify against Medawar.

Share RecommendKeepReplyMark as Last Read


To: Francois Goelo who wrote (10156)5/16/2006 10:09:42 AM
From: StockDung
   of 19428
 
SFO outlines alleged $26 million scam
16 May 2006

A man accused of cheating hundreds of investors through multi-million dollar money-go-round schemes was said in Tauranga District court yesterday to have "robbed Peter to pay Paul".

Former Waikato schoolteacher, Donald Moris Rea, 57, is charged under the Crimes Act with theft by misappropriating proceeds held under direction.

The Serious Fraud Office alleges that he received more than $26 million from would-be investors between February 23, 2000 and July 10, 2003 – a sum which he fraudulently applied to his own use or use of others.

During the first day of a trial expected to last up to five weeks, the court heard how Rea himself had fallen victim to a common international Nigerian scam. It involved US dollar bank notes stained in black dye, which – the get rich quick promoters claimed – could be washed off with a special chemical to make the notes legal tender.

Inevitably, further payment was sought including the cost of the chemical.

"It seems the accused brought some (notes) and ended up losing the lot" Crown prosecutor Philip Morgan QC of Hamilton said in his opening address to the jury.

Earlier when asked to plead, the short bald headed Rea responded firmly: "I enter no plea because I do not understand the charge."

Judge Ian Thomas, who is presiding over a jury of nine women and three men, ordered that a not guilty plea be entered.

Rea is defending himself. His wife Catherine, armed with a King James Version of the bible, was allowed in the afternoon to sit beside Rea.

Flanking the couple at the lawyers' bench where they sat behind prosecutors Mr Morgan and Anita Killeen were two prison guards.

Judge Thomas allowed Rea bail over night and during adjournments.

The judge advised the jury to ignore any publicity about the case. "It might be safer not to watch the TV, listen to the radio or read the paper during the course of this trial," he said.

Mr Morgan described how Rea and his agents promoted a scheme encouraging people to give him money.

He claimed to have had access to programmes run by the top 25 European banks, which could bring "handsome" returns.

"People did give him large sums," the prosecutor said. But what Rea actually did with the money was "light years away" from what investors believed he had agreed to do."

"He did invest some, but not very much. What he did invest was a disaster," said Mr Morgan.

"He didn't get a return or his money back either."

Rea in fact was drawing in fresh investors and using their money to pay earlier investors whose returns were due.

"This scheme can be likened to robbing Peter to pay Paul but on a much bigger scale," said the prosecutor.

"He was obtaining money from more and more people to pay the Paul's."

Of a total of $29 million dollars he acquired Rea only invested about 10 per cent in bonds and overseas currency. A significant sum was paid out in interest to investors in monthly returns "so it looked as though he was undertaking a worthwhile profit generating scheme."

About $9 million, the crown alleges, was used by Rea personally or through a series of trust and bank accounts for the benefit of his family.

He largely "just helped himself," the prosecutor said.

Rea acquired property, brought vehicles and a boat – "all sorts of happy things like that."

Not all investors had documentation, gave written directions to Rea or even met him personally.

"In some cases the directions were unspoken because it was obvious from the behaviour of the accused that they were giving him their money (for investment)," said Mr Morgan.

It was in Rea's interests to pay investor's capital back when they asked for it "to show it was a successful business."

He added: "it was all sort of going round in a circle."

There was no prospectus. Investors came through word of mouth, having heard of the high yield schemes and the "wonderful returns" others were receiving.

Mr Morgan said Rea wanted it all to be `hush hush' and was careful not to overtly solicit sums of money, to avoid the attention of the Commerce Commission.

Participation was by invitation, minimum entry to a scheme was $10,000 and there was a three per cent joining fee. Investors were told their funds remained on call until they were placed as part of a larger investment. After that, a monthly return would be – and was – paid.

However Rea who told about how clever he was and described himself as a doctor and a university lecturer did not place investors' funds with the European banks, the prosecutor said.

He used "patter" to make it look like his scheme was legitimate and, "as a little sweetener," told people their money was going to be used for humanitarian purposes.

"That was all to show Mr Rea was doing good things."

Mr Morgan said the accused was "creating a visage of a successful business and an aura of a successful investor."

That was so more people would be encouraged to invest with him and the charade would carry on indefinitely, benefiting Rea in the process.

The "circular scheme" was very successful for two and a half years until the accused was put into statutory receivership in mid-2003.

At one point during the prosecutions lengthy opening address Rea stood and said: "objection."

Judge Thomas replied: "You will have your chance, Mr Rea. You cannot interrupt Mr Morgan."

The crown plans to call 42 witnesses. This afternoon David Hassall, former forensic accountant for the Serious Fraud Office, gave details of the complicated paper trail left by Rea's money manoeuvres. He will return to the witness stand tomorrow.

Share RecommendKeepReplyMark as Last Read


To: Francois Goelo who wrote (10156)5/16/2006 12:53:47 PM
From: StockDung
   of 19428
 
SEC CHARGES STOCK PROMOTERS IN PHONY FAX SCAM

U.S. Securities and Exchange Commission

LITIGATION RELEASE NO. 19701 / May 16, 2005
Securities and Exchange Commission v. Joshua Yafa, Michael O. Pickens, et al., United States District Court for the Southern District of New York, Civil Action No. 6:06-CV-664-ORL-19-DAB

SEC CHARGES STOCK PROMOTERS IN PHONY FAX SCAM

The Securities and Exchange Commission has announced charges against two stock promoters in a scam designed to mislead investors into believing they had inadvertently received a confidential stock tip faxed from a stockbroker to his client. The handwritten fax had the appearance of an urgent message from a financial planner intended only for his client, “Dr. Mitchel,” urging the purchase of a stock that was about to triple in price. In fact, neither the financial planner nor “Dr. Mitchel” exists. The fax was sent to more than one million recipients across the country by stock promoters who made over half a million dollars unloading their shares on duped investors.

The Commission’s complaint alleges that Joshua Yafa, 31, of Coral Gables, Florida, drafted a fax in which a fictitious financial planner urged “Dr. Mitchel” to buy shares of AVL Global, Inc. (ticker: AVLL), a company which had hired Yafa as a public relations consultant and paid him in stock. Yafa sent the supposedly misdirected “Dr. Mitchel” fax to more than 150,000 fax machines across the United States the evening of December 15, 2004. The complaint alleges that AVLL’s stock price soared as soon as the market opened, after which Yafa sold his shares of AVLL, reaping more than $300,000 in proceeds.

The Commission also charged Nocona, Texas resident Michael O’Brien Pickens, 51, with hatching a copycat scheme. According to the Commission’s complaint, Pickens obtained a copy of Yafa’s “Dr. Mitchel” fax and had the AVLL ticker symbol replaced with the symbols of three different microcap companies Pickens had been promoting – Data Evolution Holdings, Inc. (ticker: DTEV), Infinium Labs, Inc. (ticker: IFLB), and Soleil Film, Inc. (ticker: SFLM). The Commission alleges that Pickens sent out nearly a million of the modified “Dr. Mitchel” faxes in December 2004. The share price of the three stocks climbed by as much as 100% on massive volume, and Pickens made over $300,000 selling stock in the companies.

The Commission also brought fraud charges against Serafin Sierra, 45, a salesman at Miami-based Vision Lab Telecommunications, Inc., the “fax blasting” company that transmitted both sets of “Dr. Mitchel” faxes. According to the Commission’s complaint, Sierra learned of Yafa’s scam, and forwarded a copy of the original AVLL “Dr. Mitchel” fax to his customer Pickens, facilitating Pickens’ copycat scheme.

The Commission’s complaint charges Yafa, Pickens, and their affiliated companies, Global Media Marking, Inc., M3, Inc., and M3 Research LLC, with violating Section 17(a) and 17(b) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The complaint also charges Sierra with aiding and abetting Pickens’s violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

In addition to the Commission’s civil action, the United States Attorney’s Office for the Southern District of New York has announced the initiation of a related criminal action.

The Commission’s investigation is continuing.

SEC Complaint in this matter



sec.gov

--------------------------------------------------------------------------------
Home | Previous Page Modified: 01/10/2006

Share RecommendKeepReplyMark as Last Read


To: Francois Goelo who wrote (10156)5/16/2006 1:07:07 PM
From: StockDung
   of 19428
 
re: fax spammers Dr Mitchell: sec.gov

Share RecommendKeepReplyMark as Last Read


To: Francois Goelo who wrote (10156)5/16/2006 3:28:13 PM
From: StockDung
   of 19428
 
Scripps to close Shop At Home TV network
NASHVILLE, May 16 (UPI) -- The E.W. Scripps Co. announced Tuesday it is closing its Nashville-based Shop At Home network and Web site effective June 22.

The network was founded in Newport, Tenn., in 1986, moved to Knoxville, Tenn., in 1992 and Nashville in 1998, the Knoxville (Tenn.) News Sentinel reported. It has 660 full-time employees.

Scripps, of Cincinnati, bought the network for about $285 million as a sales outlet for products seen on its Home & Garden Television, HGTV; Food Network; Do It Yourself Network and Fine Living cable networks.

Shop At Home has lost about $84 million in the past four years and is expected to post an after-tax loss of up to $60 million in the second quarter, the newspaper said.

"This is not the outcome we had hoped for when we acquired Shop At Home nearly four years ago," Scripps President and Chief Executive Officer Kenneth W. Lowe said.

Employees were notified of the closing Tuesday and told they would receive 60 days' pay, severance packages and career transition services.

E-MAIL | PRINT | SAVE | LICENSE
© Copyright 2006 United Press International, Inc. All Rights Reserved

Share RecommendKeepReplyMark as Last Read
Previous 10 Next 10