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From: StockDung5/13/2010 10:08:50 AM
   of 122081
 
Law firm fined £400k for boiler room scam
Story by: Samantha Downes Magazine: FTAdviser Published Thursday , May 13, 2010
A lawyer who aided a multi-million pound boiler-room share scam has had a lifetime ban upheld and his firm fined £400,000.

The Financial Services and Markets Tribunal upheld a Financial Services Authority (FSA) decision permanently banning Andrew Greystoke from working in financial services.

It also fined him and Atlantic Law LLP (Atlantic Law), an FSA-regulated law firm of which he is senior partner, a total of £400,000.

The tribunal found that Greystoke recklessly signed off Atlantic Law’s approval of 50 UK investment advertisements between December 2005 and March 2007, issued by four unregulated Spanish stockbroking firms.

It found that he did so without taking reasonable steps to ensure that the advertisements were clear, fair and not misleading and despite having reason to doubt that the Spanish firms would deal with UK consumers in an honest and reliable way.

Mr Greystoke accepted that these Spanish companeis were boiler room share scam operators and approved their advertisements despite seeing consumer complaints and press articles clearly warning of their activities.

The tribunal said it would have been “blindingly obvious” to Greystoke, that the Spanish companies did not exist to offer the free reports, but to sell shares, whose value he knew to be at least doubtful.

One hundred and thirty UK consumers who invested a total of over £3m complained to the Financial Services Authority. The FSA believes the true loss caused by the advertisements approved by Greystoke was likely to be substantially more than £3m.

Margaret Cole, FSA director of enforcement and financial crime, said:

"Atlantic Law and Andrew Greystoke acted recklessly, without integrity and with a complete disregard of the risks to consumers. The tribunal’s decision supports our view that firms and individuals that assist boiler room operators should be brought to task. This has been a hard-fought case into which the FSA has put significant time and resources. It will send a strong message of deterrence to other firms and individuals that may be tempted to turn a blind eye to the legitimacy of their clients in exchange for fees or commission."

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From: scion5/13/2010 10:25:15 AM
   of 122081
 
Pacer update 11 May 10 USA v. Panetta CRIMINAL DOCKET FOR CASE #: 1:09-cr-00007-SLR

Date Filed # Docket Text

05/11/2010 32 ORDER SCHEDULING RULE 11 HEARING as to Angelo R. Panetta.( Change of Plea Hearing set for 6/9/2010 08:30 AM in Courtroom 6B before Judge Sue L. Robinson.), ORDER TO CONTINUE in the Interests of Justice as to Angelo R. Panetta. Time excluded from 5/11/2010 until 6/9/2010. Signed by Judge Sue L. Robinson on 5/11/2010. (lid) (Entered: 05/11/2010)

Defendant (1)Angelo R. Panetta

ecf.ded.uscourts.gov

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To: scion who wrote (110329)5/13/2010 10:27:27 AM
From: scion
   of 122081
 
05/11/2010 32 ORDER SCHEDULING RULE 11 HEARING as to Angelo R. Panetta.( Change of Plea Hearing set for 6/9/2010 08:30 AM in Courtroom 6B before Judge Sue L. Robinson.), ORDER TO CONTINUE in the Interests of Justice as to Angelo R. Panetta. Time excluded from 5/11/2010 until 6/9/2010. Signed by Judge Sue L. Robinson on 5/11/2010. (lid) (Entered: 05/11/2010)

Doc 32 PDF file
viewer.zoho.com

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From: scion5/13/2010 11:38:05 AM
   of 122081
 
Well, These New Zuckerberg IMs Won't Help Facebook's Privacy Problems

Nicholas Carlson | May. 13, 2010, 11:19 AM
businessinsider.com

Facebook CEO Mark Zuckerberg and his company are suddenly facing a big new round of scrutiny and criticism about their cavalier attitude toward user privacy.

An early instant messenger exchange Mark had with a college friend won't help put these concerns to rest.

According to SAI sources, the following exchange is between a 19-year-old Mark Zuckerberg and a friend shortly after Mark launched The Facebook in his dorm room:

Zuck: Yeah so if you ever need info about anyone at Harvard

Zuck: Just ask.

Zuck: I have over 4,000 emails, pictures, addresses, SNS

[Redacted Friend's Name]: What? How'd you manage that one?

Zuck: People just submitted it.

Zuck: I don't know why.

Zuck: They "trust me"

Zuck: Dumb fucks.

Brutal.

Could Mark have been completely joking? Sure. But the exchange does reveal that Facebook's aggressive attitude toward privacy may have begun early on.

Since Facebook launched, the company has faced one privacy flap after another, usually following changes to the privacy policy or new product releases. To its credit, the company has often modified its products based on such feedback. As the pioneer in a huge new market, Facebook will take heat for everything it does. It has also now grown into a $22 billion company run by adults who know that their future depends on Facebook users trusting the site's privacy policy.

But the company's attitude toward privacy, as reflected in Mark's early emails and IMs, features like Beacon and Instant Personalization, and the frequent changes to the privacy policy, has been consistently aggressive: Do something first, then see how people react.

And this does appear to reflect Mark's own views of privacy, which seem to be that people shouldn't care about it as much as they do -- an attitude that very much reflects the attitude of his generation.

After all, here's what early Facebook engineering boss, Harvard alum, and Zuckerberg confidant Charlie Cheever said in David Kirkpatrick's brilliantly-reported upcoming book The Facebook Effect.

"I feel Mark doesn't believe in privacy that much, or at least believes in privacy as a stepping stone. Maybe he's right, maybe he's wrong."

Again in Kirkpatrick's book, Facebook COO Sheryl Sandberg puts it this way:

"Mark really does believe very much in transparency and the vision of an open society and open world, and so he wants to push people that way. I think he also understands that the way to get there is to give people granular control and comfort. He hopes you'll get more open, and he's kind of happy to help you get there. So for him, it's more of a means to an end. For me, I'm not as sure."

Facebook declined to comment about Mark's attitude toward privacy.

businessinsider.com

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From: StockDung5/13/2010 1:00:52 PM
   of 122081
 
FINRA Fines Deutsche Bank Securities, National Financial Services a Total of $925,000 for Systemic Short Sale Violations
Both Firms Facilitated Customer Execution of Short Sales Through Direct Market Access Order Systems That Violated the 'Locate' Requirement of Regulation SHO

For Release:
Contacts: Thursday, May 13, 2010
Nancy Condon (202) 728-8379
Brendan Intindola (646) 315-7277


FINRA Fines Deutsche Bank Securities, National Financial Services a Total of $925,000 for Systemic Short Sale Violations
Both Firms Facilitated Customer Execution of Short Sales Through Direct Market Access Order Systems That Violated the 'Locate' Requirement of Regulation SHO


Washington, DC — The Financial Industry Regulatory Authority (FINRA) announced today that it has fined two broker-dealers a total of $925,000 for executing numerous short sale orders in violation of Regulation SHO and for related supervisory violations. FINRA fined New York's Deutsche Bank Securities $575,000 and Boston's National Financial Services (NFS) $350,000.



Regulation SHO requires that a broker or dealer may not accept or effect a short sale order in an equity security without reasonable grounds to believe that the security can be borrowed, so that it can be delivered on the date delivery is due. Identifying a source from which to borrow such security is generally referred to as obtaining a "locate." Locates must be obtained and documented prior to effecting a short sale.



Both Deutsche Bank and NFS implemented Direct Market Access trading systems for their customers that were designed to block the execution of short sale orders unless a "locate" had been obtained and documented. But FINRA found that Deutsche Bank disabled its system in certain instances and NFS created a separate system for certain customers – so that in both instances, the systems no longer blocked some short sale orders that did not have valid, associated locates.



"The locate requirement is an essential component of ensuring that short sales are executed properly," said James S. Shorris, FINRA Executive Vice President and Acting Chief of Enforcement. "The failure to design, implement and supervise systems that reasonably ensure that shares of a security are available to be borrowed before a short sale is executed significantly undermines the effectiveness of Regulation SHO."



FINRA's review of a sample of short sale orders at both firms revealed that some short sale orders entered through the Direct Market Access trading systems were released for execution without any evidence that a locate had actually been obtained.



In Deutsche Bank's case, the firm's systems sometimes experienced outages that prevented the importing of locate data and, as a result, short sale orders placed for execution were automatically rejected, even when a client had already obtained a valid and properly documented locate. FINRA found that during these system outages, Deutsche Bank disabled the system's automatic block, permitting client short sale orders to automatically proceed for execution without first confirming the presence of an associated locate.



FINRA found that in addition to its automated process, NFS created a separate manual locate request and approval process for approximately 12 of the firm's prime brokerage clients, which preferred to obtain locates in multiple securities prior to commencement of the trading day. Requests for, and approvals of, the multiple simultaneous locates were transmitted via email exchanges with account representatives on the firm's Prime Services Desk, and were not required to be entered into the firm's stock loan system at the time of approval. Further, prime clients were allowed to enter and execute their orders through automated platforms that did not have the functionality to automatically block execution of a short sale order that did not have a valid and documented locate.



FINRA also found that neither Deutsche Bank nor NFS performed a meaningful post-trade date review of short sale orders to identify short sale orders executed without a valid, associated locate having been obtained or documented.



Further, FINRA found that both firms implemented inadequate supervisory systems in connection with their Regulation SHO compliance. Deutsche Bank was aware that its system to block short sale orders in the absence of locates was periodically disabled over a period of more than four years (from January 2005 through September 2009), but failed to devise or implement a replacement procedure. Similarly, NFS created a flawed system for certain customers that failed to ensure that certain short sale orders had valid and timely locates associated with them. NFS's flawed system operated for nearly four years (from January 2005 through August 2008).



Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA's BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2009, members of the public used this service to conduct 18.5 million reviews of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999.



FINRA is the largest non-governmental regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating all industry participants to examining securities firms, writing and enforcing rules and the federal securities laws, informing and educating the investing public, providing trade reporting and other industry utilities, and administering the largest dispute resolution forum for investors and registered firms.



For more information, please visit our Web site at www.finra.org.



View Deutsche Bank Securities Action (PDF 790 KB)

View National Financial Services Action (PDF 281 KB)

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From: scion5/13/2010 4:22:03 PM
   of 122081
 
Hedge Fund Assembles Dream Team Advisory Council

May 13, 2010
complianceweek.com

MIllennium Management, the hedge fund whose former portfolio manager, Renato Negrin, is still awaiting the jury’s verdict in the SEC’s case against him concering alleged insider trading in credit default swaps, recently decided to create a new independent Regulatory and Compliance Advisory Council to help advise the firm. In a letter to investors two weeks ago, Millennium founder Israel Englander said the council “will help us see the forest, and not just the trees.”

And if any group can successfully see the forest, it is likely to be the one assembled thus far by Millennium. Check out the current members of the council:

Louis Freeh, the director of the FBI from 1993 until 2001
Harvey Pitt, chairman of the SEC from 2001 until 2003
Former SEC commissioner Aulana Peters
Former SEC commissioner Joseph Grundfest
Former federal judge and SEC Enforcement Division chief Stanley Sporkin
Former TIAA-CREF chief investment counsel Peter Clapman

Top that!

Reuters reports that only a few hedge funds, including $5.5 billion Pershing Square Capital Management, have similar advisory boards, but they may become more popular as a way to provide comfort to large institutional investors.

complianceweek.com

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To: StockDung who wrote (110327)5/13/2010 6:30:21 PM
From: StockDung
   of 122081
 
Bud Burrell's Ramsden really is a Canadian Hall of Famer -- he liked Cdn deals too:
-----------------------------------------------------

CDNX member Union sues Gibraltar's Ramsden for $248,400

2002-02-01 21:00 ET - Street Wire

See Street Wire (C-*CDNX) Canadian Venture Exchange

by Brent Mudry
Vancouver brokerage Union Securities has filed a $248,400 debit suit against a client in the secretive offshore enclave of Gibraltar. In a statement of claim filed Thursday in the Supreme Court of British Columbia, Union claims Terry Ramsden opened a trading account on Sept. 19, 2000, and traded actively in this account "from in or about" March, 2001. No details are given of which stocks Mr. Ramsden actively traded through his offshore account at Union, or the extent of his trading.
Union's offshore client is presumably Howe Street player Terrance Philip Ramsden, also known as Terrence Ramsden, the controversial flamed-out expatriate British horse racing gambler and penny stock promoter. A decade ago, Mr. Ramsden achieved the rare distinction of joining the select list of penny stock players deemed unfit for even the former Vancouver Stock Exchange, which was dubbed at the time as the Scam Capital of the World by Forbes magazine.
While Union's star client in recent years, at least in the bad-boy category, has been notorious American career felon and New York Mafia associate Ed Durante, Mr. Ramsden deserves special recognition for his own career achievements. (In the unrelated Durante case, Vancouver broker Trevor Koenig, who ran Union's White Rock satellite branch specializing in garbage OTC Bulletin Board stocks, has been in custody since his Labour Day border arrest, and is now in plea negotiations in New York.)
Union's current suit claims Mr. Ramsden racked up an unpaid debit of $158,100 (U.S.), including interest to Jan. 28, or about $248,400 in Canadian funds, but he has either refused or neglected to honour payment demands. The allegations in the suit, filed by Vancouver lawyer Patrick Sullivan of Taylor Veinotte Sullivan, have not yet been proven in court and a statement of defence has not yet been filed.
Mr. Ramsden's return to the Vancouver brokerage scene is no doubt disconcerting to Howe Street boosters who claim all the riff-raff were chased out of town years ago.
Locally, Mr. Ramsden is best known for his rocky reign over Silversword Corp., a controversial Toronto company listed on the VSE. In mid-1990, two years after Mr. Ramsden took control of Silversword, shocked VSE officials abruptly halted trading after they suddenly twigged in to some sort of suspicious trading. That fall, the exchange demanded Mr. Ramsden be given the boot before it would lift the trading suspension, without making public any details of his troubles with authorities.
Although the most notable, Mr. Ramsden is not the only rogue among Silversword's alumni. A few years after leaving Silversword's board in 1990, Toronto lawyer Simon Rosenfeld popped up as the mastermind of a fraudulent Nasdaq pump and dump, for which he was fined $2.82-million (U.S.) by the United States Securities and Exchange Commission last March.
Mr. Ramsden's Silversword saga traces back to September, 1987, when the VSE halted trading of Canadian Estate Land Corp., a one-year-old VSE shell, amid a two-step reverse takeover in which the London financier's Panther Oil and Gas Ltd. was vended into Lynx Petroleum Ltd. and Lynx was vended into Canadian Estate.
The deal gave Mr. Ramsden 95-per-cent control of Lynx, resulting in him becoming the major shareholder of Canadian Estate. Mr. Ramsden opted not to join the board, which was led by Alan Shefsky, now a CDNX diamond promoter, and Mr. Rosenfeld, the Toronto lawyer.
When the deal closed in March, 1988, Canadian Estate changed names to Silversword, which began trading at $4.05. The thinly traded stock slipped to $1 by that August but bounced back to end the year at $1.75.
1989 was a banner year for Silversword. The stock more than doubled to $3.70 in early February amid increasing trading volume, then peaked at $7 that August.
Silversword trading was even more volatile in early 1990, with the stock collapsing from $2.50 that January to 68 cents five weeks later, then abruptly quadrupling to $3.05 a month after that, in early March.
Three months later, on June 1, 1990, the VSE abruptly halted trading at $2, "pending clarification of market activity." Later that month the exchange upgraded its action to a trading suspension, citing concerns over both the market activity and the composition of Silversword's board of directors. (Mr. Rosenfeld, who served a stint as chairman, had already left the board that February.)
Silversword's controversial collapse was no doubt embarrassing to its marquee director, former federal cabinet minister Eugene Whelan, whose claim to fame was serving 12 years as agriculture minister under the late prime minister Pierre Trudeau. (Mr. Whelan was subsequently named Senator Whelan by current Prime Minister Jean Chretien in 1996, but he resigned in July, 1999, as the senate, plagued by no-shows and sleepers, nudges out members at age 75.)
The only sliver of detail to emerge on the Silversword debacle came on Nov. 22, 1990. "The company has been advised by the VSE that trading of its shares will not resume on the exchange until such time as Mr. Terence Ramsden, the principal shareholder of the company, divests himself of his holdings in Silversword," stated Silversword head Raymond Barlett, an associate of Mr. Ramsden, in a terse press release.
Silversword shares never resumed trading on the VSE and the Vancouver penny stock exchange delisted the stock in May, 1993. (By this time, Mr. Rosenfeld's fraudulent promotion of an unrelated penny stock on Nasdaq was at its peak.)
Nowhere in the VSE's public notices or Silversword press releases was there any mention of Mr. Ramsden's serious troubles with British authorities, as exchange authorities usually liked to sweep any emerging scandals under the carpet as the targets were swept out the door.
While officials mysteriously halted trading of Toronto-based Silversword on the Vancouver exchange, Mr. Ramsden's world was falling apart in London. "Terry Ramsden, who was once Britain's fifty-seventh richest man but ended up becoming one of the country's most famous bankrupts after running up gambling losses of more than 100 million pounds ," stated the Guardian newspaper in a recent article. Mr. Ramsden was also well on his way to jail.
British racing and gambling journalist Mark Siggers of Alfa, an industry news service, notes that Mr. Ramsden, a familiar face at horse tracks around the world, reputedly lost 58 million pounds to bookies in three years after betting heavily and disastrously on his own stable of racehorses. The bookies and authorities found out too late that Glen International, which also happened to be a major shareholder of Silversword, was about to collapse.
"Pursued by the Serious Fraud Office, Ramsden fled to the U.S. in 1991 and fought extradition procedures from a Los Angeles jail cell. When he eventually volunteered to return, receiving a two-year suspended jail sentence for having fraudulently induced finance houses to invest in Glen International," reports Alfa. The judge reportedly found Mr. Ramsden's guilt was related to criminal recklessness instead of deliberate fraud.
Bad as this might sound, Mr. Ramsden's troubles were just starting. The tax chaps from Inland Revenue sent the Silversword financier a bill for 21.5 million pounds in overdue taxes and he was declared bankrupt soon after. Unfortunately, Mr. Ramsden then perpetrated a bankruptcy fraud by hiding assets from bankruptcy court officials, including 77,000 pounds of winnings from a British track and 300,000 pounds he received from a New York trust.
The fallen horseman of Howe Street was sentenced to 21 months in prison in 1998, and on his release he reportedly appeared in a number of Internet companies, including some with betting Web sites. Soon after walking free, with the prison doors clanging shut behing him, Mr. Ramsden headed to the open doors of Union Securities in Vancouver, which was happy to open a brokerage account for the fallen financier.
While Mr. Ramsden has relocated to Gibraltar, amid an exodus of British bookies and gambling figures to the tax-friendly secrecy haven, the troubles in his former racing empire are far from over.
On Jan. 4, high-profile British horse trainer Rod Simpson, who had been the top trainer in Mr. Ramsden's stable for years, was fined 2,500 pounds by the British Jockey Club for a series of racetrack misdemeanours. "What I didn't allow for was the fact that the Jockey Club has these ex-policemen aged 90 to 130 with nothing else to do," the unrepentant racing legend told the press.
According to Alfa, two years ago Mr. Simpson had the misfortune of being evicted by receivers from racing stables owned by another client, David Piper, who had been arrested and charged with drug trafficking offences. One of the horses trained by Mr. Simpson for Mr. Piper was Nipper Reed, named after the Great Train Robbery detective who put the infamous Kray brothers behind bars.
While Mr. Ramsden is back to playing the markets through Vancouver brokerage Union Securities, another Silversword alumni has been in regulators' crosshairs in recent years.
Barely a year after leaving Silversword's board in 1990, Toronto lawyer Mr. Rosenfeld was hard at work setting up the fraudulent promotion of Synpro Environmental Services on the Nasdaq Small Cap Market. The SEC caught up with Mr. Rosenfeld in March, 1997, when it charged the former Synpro president, former vice-president Terry D. Kochanowski, also of Toronto, and Colorado broker John F. Yakimczyk, with rigging Synpro's market from 1991 through 1994, making bogus public and regulatory filings and evading registration requirements of federal securities laws.
Mr. Yakimczyk, who allegedly received kickbacks, was given a disgorgement fine of $139,500 (U.S.), of which all but $15,000 (U.S.) was waived due to his demonstrated inability to pay. The dirty broker was also fined $25,000 (U.S.) by the National Association of Securities Dealers and banned for two years. Mr. Kochanowski was fined $50,000 (U.S.), although this was waived due to his plea of poverty.
The holdout kingpin Mr. Rosenfeld, who had served as Silversword's chairman and Synpro's president, was hit with $2.82-million (U.S.) in fines last year. In a final judgment entered March 12, 2001, in the U.S. District Court for the Southern District of New York, the Toronto lawyer was ordered to pay $1.09-million in disgorgement, $630,400 in prejudgment interest, and $1.09-million in civil fines.
In its complaint, the SEC claims that from 1991 to 1994, Mr. Rosenfeld and Mr. Kochanowski engaged in a fraudulent scheme to falsely inflate the value of shares of Synpro, formerly known as Sherwood Corp. The regulator claims the pair overstated the value of Synpro's assets, failed to disclose the related-party nature of transactions which involved Synpro as a party, and made various other material misrepresentations and omissions.
The fraudulent scheme also allegedly included the unregistered distribution of Synpro shares and the making of undisclosed stock and/or cash payments to Mr. Yakimcyzk and others. The SEC further claims Mr. Rosenfeld falsified Synpro's books and records, made materially false and misleading statements and failed to disclose material information to Synpro's auditors, and caused Elije Corp., also known as Elije Inc., an entity under his control, to fail to disclose its beneficial ownership of more than 5 per cent of Synpro's shares.
During this period, Synpro held itself as being involved in international real estate development and in the recycling of waste tires into marketable byproducts. Until March of 1993, the company was headquartered in both Portchester, N.Y., and Toronto, before relocating to Conyers, Ga.
In 1991, Synpro reported its acquisition of Ramia Holdings, a Cypriot company controlled by Giovanni Ilardo, an Italian resident, for 5.62 million restricted shares. The sole asset of Ramia was Italhellas SA, a company based in Rhodes, Greece, whose sole purported asset was 17 acres of property on the Isle of Rhodes. Synpro valued the property and the shares at $15-million. (All Synpro figures are in U.S. dollars.)
The SEC claims, however, that neither Synpro nor Italhellas own or have ever owned property on the Isle of Rhodes, and Synpro accordingly overstated its assets by $15-million. Synpro also claimed the Greek government made $13.5-million in grants and loans for development of the property, but this also was allegedly false.
In the second dubious property deal, Synpro claimed in July of 1992 that it acquired 100 per cent of Inmobiliaria Medialuna SA, an Equatoguinean corporation, from three companies: Croyden Investments, Nesden Management and Korsal Finance SA. Synpro claimed that IMSA owned the Hotel Medialuna, a purported resort hotel located in the west African country of Equatorial Guinea, valued at $20-million.
Three months later, in October of 1992, Synpro and Mr. Rosenfeld were informed by IMSA that the Presidency of Equatorial Guinea had transferred ownership of the hotel to the government. IMSA twice informed Synpro and Mr. Rosenfeld that it was proceeding to annul its agreement with Synpro. The SEC claims Synpro and Mr. Rosenberg knew of or recklessly disregarded the significant risks and uncertainties concerning the true ownership of the hotel.
The regulator further claims that Synpro issued 362,500 shares to a consultant, Euro-Pacific Investments & Trading, as compensation for "professional services rendered" in connection with the acquisition of the Rhodes property, but it forgot to disclose that in reality Euro-Pacific was a British Virgin Islands shell controlled by Mr. Rosenfeld. At the time the shares were issued, the Toronto lawyer was both president and secretary of Euro-Pacific, which had business addresses in London and Tortola.
Synpro also issued 7.2 million shares to Elije, another BVI shell with business addresses in Geneva and Tortola, but forgot to mention this offshore shell too was controlled by Mr. Rosenfeld. The SEC claims that from August of 1992 through February of 1995, 4.23 million of the 7.2 million shares issued to Elije were sold to public investors in the U.S. and Canada.
About 735,000 of the shares were sold through accounts in Elije's name at various registered broker-dealers, while 3.8 million of the shares issued to Elije were transferred to brokerage accounts in the name of Merchant House Internationale Populaire SA. Of these shares, 3.5 million were sold in the U.S. and Canada through accounts in the name of Merchant House at various brokerages. The U.S. regulator claims that Merchant House is another BVI shell controlled by Mr. Rosenfeld.
The 4.23 million shares sold generated proceeds of $1.05-million, and almost all of the proceeds were remitted to bank accounts controlled by Mr. Rosenfeld. The SEC claims that as part of the fraudulent scheme, at least 1.32 million of the 7.2 million Synpro shares issued to Elije were delivered to "various persons" for their efforts in boosting the stock price by inducing the public to buy the stock. In addition, at least 76,000 of the 362,500 shares issued to Euro-Pacific were delivered, and at least $200,000 was paid in cash, to "various persons" to arrange public buying, in a series of kickbacks to greased brokers

SEC target Rosenfeld nabbed in money laundering sting

2002-08-16 20:36 ET - Street Wire

Also Street Wire (C-*OSC) Ontario Securities Commission

by Brent Mudry
Bay Street penny stock lawyer Simon Rosenfeld, a past securities violator, has been charged with three counts of money laundering in a Canadian sting operation related to Bermuda Short. The Miami-based overall FBI-RCMP operation is the broadest U.S.-Canadian joint probe of stock-market-related money laundering in recent history. Of 58 individuals named in 23 separate grand jury indictments unsealed Thursday in Miami, 20 were Canadian, including Mark Valentine, the suspended head of Toronto brokerage Thomson Kernaghan, controversial former Vancouver lawyer Martin Chambers and numerous Vancouver and Toronto penny stock players.
The top-secret arrest of Mr. Rosenfeld, 55, was more than two months ago, the first known arrest related to the overall Bermuda Short operation. FBI Assistant Special Agent in Charge Frank Figliuzzi confirms the first of the 58 current parties was arrested 6:30 Tuesday morning, as more than 100 FBI agents fanned out across the U.S. in the co-ordinated arrest operation, which ended Wednesday. A total of 29 targets were arrested in the greater Miami area, Boca Raton and other cities in South Florida.
While Special Agent Figliuzzi was unable to make any comment on the Rosenfeld case, another high-ranking law enforcement official confirmed the Toronto lawyer is related to the overall Bermuda Short operation. "There is a connection," the official told Stockwatch. Although the RCMP-based "E" Division, which handled the Chambers sting, dubbed "E-POS," presumably for "point-of-sale," notes its investigation lasted three years, the Toronto Rosenfeld case is believed to be much more recent.
It is unclear whether Mr. Rosenfeld, like Mr. Chambers, was snared for offering to launder drug money. In fact, even though the whole outline of the Rosenfeld case was presented in Ontario Provincial Court at Old City Hall in Toronto Wednesday, almost every detail is covered by a broad publication ban requested by the lawyer's lawyer.
While publication bans at Canadian bail hearings are relatively routine, the Rosenfeld ban is so broad that a Toronto RCMP spokeswoman told an inquiring Stockwatch reporter Thursday that even the identities of the two parties cannot be revealed. This was particularly surprising, as the reporter had made no direct or indirect mention of Mr. Rosenfeld, had no knowledge of his predicament at the time, and was specifically inquiring about the Toronto individuals named Thursday, especially Mr. Valentine.
Left unexplained is exactly why there is such a fuss about Mr. Rosenfeld, and why is case is so sensitive that a respected Canadian judge would agree to a publication ban so broad that even the parties' names were protected. Stockwatch has since confirmed that the names are no longer subject to such a gag order.
Here is what Mr. Rosenfeld and his defence lawyer are so desperate to keep a secret. For the record, Mr. Rosenfeld has been charged with three counts relating to money laundering. The Toronto penny stock lawyer was charged June 4 with one count each of money laundering and possession of proceeds of an alleged crime. A month later, on July 5, a third count, also of money laundering, was added to the list.
Co-accused Sotirios Phronomadis, believed to be a secondary player, was also charged June 4 with two counts relating to money laundering. Both men face a next court date of Sept. 13 at 9 a.m. in Court 114, unless Mr. Rosenfeld and his lawyer manage to get the date switched or shroud the case in further secrecy.
It is not known whether Mr. Rosenfeld, like Mr. Chambers, was snared in a sting to launder Colombian cocaine funds, or some other operational premise. In the Chambers operation, an undercover RCMP corporal and an undercover FBI special agent posed as Colombian narco-cartel operatives anxious to launder drug money through banks in Canada, the U.S., especially Miami, and offshore.
While Mr. Rosenfeld, like his co-accused, remains presumed innocent until proven guilty, he is hardly the most respected lawyer on Bay Street.
Mr. Rosenfeld's biggest claim to fame, at least in penny-stock circles, is a $2.82-million penny stock fraud judgment the United States Securities and Exchange Commission won against him in March of last year. (All figures are in U.S. dollars.)
The combined judgment against Mr. Rosenfeld gave him full credit for his key role in the "pump and dump" promotion of Synpro Environmental Services, a Nasdaq Small Cap Market stock, between 1991 and 1994. The SEC claims Mr. Rosenfeld, the former president, treasurer and director of Synpro, violated a number of securities regulations in the fraudulent scheme.
Mr. Rosenfeld, 54, earlier served as a director of Al Shefsky's Silversword Corp. and SFP International, while fellow Synpro director and defendant Terry Kochanowski, 37, also of Toronto, earlier served as a director of United Gunn Resources. None of these three companies were involved in the regulatory proceedings. Mr. Kochanowski and bribed Colorado broker John F. Yakimczyk, 60, settled their Synpro prosecutions earlier.
In a consent settlement in January, 2000, Mr. Kochanowski agreed to disgorge $50,000 of illicit profits, but payment was waived and no fine was levied, based on a "demonstrated inability to pay." Both Mr. Rosenfeld and Mr. Kochanowski have been banned as directors or officers of a public company.
In a consent settlement with the SEC in April, 2000, Mr. Yakimczyk agreed to disgorgement of $139,500 in illicit profits, but payment of all but $15,000 was waived, and no fine was levied, based on the promoter's plea of poverty. In a July, 1996, settlement with the National Association of Securities Dealers, Mr. Yakimczyk agreed to a reprimand, a two-year prohibition on association in any capacity with a brokerage, and a $25,000 fine.
The SEC claims Mr. Rosenfeld, with the assistance of Mr. Kochanowski, masterminded and orchestrated a fraudulent scheme to falsely inflate the value of shares of Synpro, formerly known as Sherwood Corp., and made numerous registration violations including unregistered distributions of offshore shares. "For instance, Rosenfeld directed Synpro to overstate the value of the company's assets by falsely reporting, among other things, that Synpro owned a $15-million, 17-acre property on the Isle of Rhodes, Greece. Rosenfeld also failed to disclose the related party nature of numerous transactions to which Synpro was a party," states the SEC.
The regulator also notes the Toronto lawyer made numerous moves to "condition" the market for Synpro shares to sell his secret holdings, including making undisclosed stock and/or cash kickbacks to broker Mr. Yakimczyk, of Aurora, Colo., and other promoters, for inducing investors to buy the stock. The SEC claims that Mr. Kochanowski was also a central player, arranging and keeping track of the bribe payments.
In a final judgment entered March 12, 2001, by United States District Court Judge William Pauley III for the Southern District of New York, Mr. Rosenfeld was ordered to pay a total of $2,816,764. This amount includes $1.09-million in disgorgement, $630,000 in prejudgment interest and $1.09-million in civil penalties.
Under the direction of Mr. Rosenfeld from December, 1991, to December, 1994, Synpro claimed to be involved in international real estate development and in the recycling of waste tires into marketable byproducts. Until March, 1993, the company was headquartered in both Portchester, N.Y., and Toronto, before relocating to Conyers, Ga.
In 1991, Synpro reported its acquisition of Ramia Holdings, a Cypriot company controlled by Giovanni Ilardo, an Italian resident, for 5.62 million restricted shares. The sole asset of Ramia was Italhellas SA, a company based in Rhodes, Greece, whose sole purported asset was 17 acres of property on the Isle of Rhodes. Synpro valued the property and the shares at $15-million. Neither Synpro nor Italhellas own or have ever owned property on the Isle of Rhodes, however, and Synpro accordingly overstated its assets by $15-million.
Synpro also claimed the Greek government made $13.5-million in grants and loans for development of the property, but this also was allegedly false. In the second dubious property deal, Synpro claimed in July of 1992 that it acquired 100 per cent of Inmobiliaria Medialuna SA, an Equatoguinean corporation, from three companies: Croyden Investments, Nesden Management and Korsal Finance SA. Synpro claimed that IMSA owned the Hotel Medialuna, a purported resort hotel located in the west African country of Equatorial Guinea, valued at $20-million.
Three months later, in October of 1992, Synpro and Mr. Rosenfeld were informed by IMSA that the Presidency of Equatorial Guinea had transferred ownership of the hotel to the government. IMSA twice informed Synpro and Mr. Rosenfeld that it was proceeding to annul its agreement with Synpro. The SEC claims Synpro and Mr. Rosenberg knew of or recklessly disregarded the significant risks and uncertainties concerning the true ownership of the hotel.
The SEC also claims that Synpro issued 362,500 shares to a consultant, Euro-Pacific Investments & Trading, as compensation for "professional services rendered" in connection with the acquisition of the Rhodes property, but it forgot to disclose that in reality Euro-Pacific was a British Virgin Islands shell controlled by Mr. Rosenfeld. At the time the shares were issued, the Toronto lawyer was both president and secretary of Euro-Pacific, which had business addresses in London and Tortola.
Later in 1992, Synpro falsely claimed it had obtained a $5-million line of credit from Societe Financiere Privee SA, a private Swiss bank based in Geneva. Synpro also issued 7.2 million shares to Elije, another BVI shell with business addresses in Geneva and Tortola, but forgot to mention the offshore shell was controlled by Mr. Rosenfeld. The company paid four million shares to Elije as payment for a $1-million fee for arranging the purported $5-million line of credit, and 3.2 million shares in payment of a $1.6-million fee for "structuring and consulting services" in connection with Synpro's acquisition of IMSA.
The SEC claims that from August of 1992 through February of 1995, 4.23 million of the 7.2 million shares issued to Elije were sold to public investors in the U.S. and Canada. About 735,000 of the shares were sold through accounts in Elije's name at various registered broker-dealers, while 3.8 million of the shares issued to Elije were transferred to brokerage accounts in the name of Merchant House Internationale Populaire SA. Of these shares, 3.5 million were sold in the U.S. and Canada through accounts in the name of Merchant House at various brokerages. The SEC claims that Merchant House is another BVI shell controlled by Mr. Rosenfeld.
The 4.23 million shares sold generated proceeds of $1.05-million, and almost all of the proceeds were remitted to bank accounts controlled by Mr. Rosenfeld. The SEC claims that as part of the fraudulent scheme, at least 1.32 million of the 7.2 million Synpro shares issued to Elije were delivered to "various persons" for their efforts in boosting the stock price by inducing the public to buy the stock.
In addition, at least 76,000 of the 362,500 shares issued to Euro-Pacific were delivered, and at least $200,000 was paid in cash, to "various persons" to arrange public buying. While Mr. Rosenfeld was the alleged mastermind and controlling figure, the SEC notes that Mr. Kochanowski was a central player, and he arranged for and kept track of the kickback payments to brokers.
Three years before embarking on the fraudulent Synpro pump and dump, Mr. Rosenfeld was a key player in another troubled penny stock promotion, Silversword, which he departed in 1990. He was not the most distinguished Silversword player, however. That title goes to Howe Street player Terrance Philip Ramsden, also known as Terrence Ramsden, the controversial flamed-out expatriate British horse racing gambler and penny stock promoter. A decade ago, Mr. Ramsden achieved the rare distinction of joining the select list of penny stock players deemed unfit for even the former Vancouver Stock Exchange, which was dubbed at the time as the Scam Capital of the World by Forbes magazine.
On Howe Street, Mr. Ramsden is best known for his rocky reign over Silversword, a controversial Toronto company listed on the VSE. In mid-1990, two years after Mr. Ramsden took control of Silversword, shocked VSE officials abruptly halted trading after they suddenly twigged in to some sort of suspicious trading. That fall, the exchange demanded Mr. Ramsden be given the boot before it would lift the trading suspension, without making public any details of his troubles with authorities.
Mr. Ramsden's Silversword saga traces back to September, 1987, when the VSE halted trading of Canadian Estate Land Corp., a one-year-old VSE shell, amid a two-step reverse takeover in which the London financier's Panther Oil and Gas Ltd. was vended into Lynx Petroleum Ltd. and Lynx was vended into Canadian Estate. The deal gave Mr. Ramsden 95-per-cent control of Lynx, resulting in him becoming the major shareholder of Canadian Estate.
Mr. Ramsden opted not to join the board, which was led by Alan Shefsky, now a TSX Venture Exchange diamond stock promoter, and Mr. Rosenfeld, the Toronto lawyer. When the deal closed in March, 1988, Canadian Estate changed names to Silversword, which began trading at $4.05. (All Silversword figures are in Canadian dollars.) The thinly traded stock slipped to $1 by that August but bounced back to end the year at $1.75.
1989 was a banner year for Silversword. The stock more than doubled to $3.70 in early February amid increasing trading volume, then peaked at $7 that August.
Silversword trading was even more volatile in early 1990, with the stock collapsing from $2.50 that January to 68 cents five weeks later, then abruptly quadrupling to $3.05 a month after that, in early March.
Three months later, on June 1, 1990, the VSE abruptly halted trading at $2, "pending clarification of market activity." Later that month the exchange upgraded its action to a trading suspension, citing concerns over both the market activity and the composition of Silversword's board of directors. (Mr. Rosenfeld, who served a stint as chairman, had already left the board that February.)
Silversword's controversial collapse was no doubt embarrassing to its marquee director, former federal cabinet minister Eugene Whelan, whose claim to fame was serving 12 years as agriculture minister under the late prime minister Pierre Trudeau. (Mr. Whelan was subsequently named Senator Whelan by current Prime Minister Jean Chretien in 1996, but he resigned in July, 1999, as the senate, plagued by no-shows and sleepers, nudges out members at age 75.)
The only sliver of detail to emerge on the Silversword debacle came on Nov. 22, 1990. "The company has been advised by the VSE that trading of its shares will not resume on the exchange until such time as Mr. Terence Ramsden, the principal shareholder of the company, divests himself of his holdings in Silversword," stated Silversword head Raymond Barlett, an associate of Mr. Ramsden, in a terse press release.
Silversword shares never resumed trading on the VSE and the Vancouver penny stock exchange delisted the stock in May, 1993. (By this time, Mr. Rosenfeld's fraudulent promotion of an unrelated penny stock on Nasdaq was at its peak.)
Nowhere in the VSE's public notices or Silversword press releases was there any mention of Mr. Ramsden's serious troubles with British authorities, as exchange authorities usually liked to sweep any emerging scandals under the carpet as the targets were swept out the door.
While officials mysteriously halted trading of Toronto-based Silversword on the Vancouver exchange, Mr. Ramsden's world was falling apart in London. "Terry Ramsden, who was once Britain's fifty-seventh richest man but ended up becoming one of the country's most famous bankrupts after running up gambling losses of more than 100 million pounds," stated the Guardian newspaper in a recent article. Mr. Ramsden was also well on his way to jail.
British racing and gambling journalist Mark Siggers of Alfa, an industry news service, notes that Mr. Ramsden, a familiar face at horse tracks around the world, reputedly lost 58 million pounds to bookies in three years after betting heavily and disastrously on his own stable of racehorses. The bookies and authorities found out too late that Glen International, which also happened to be a major shareholder of Silversword, was about to collapse.
"Pursued by the Serious Fraud Office, Ramsden fled to the U.S. in 1991 and fought extradition procedures from a Los Angeles jail cell. When he eventually volunteered to return, receiving a two-year suspended jail sentence for having fraudulently induced finance houses to invest in Glen International," reports Alfa. The judge reportedly found Mr. Ramsden's guilt was related to criminal recklessness instead of deliberate fraud.
Bad as this might sound, Mr. Ramsden's troubles were just starting. The tax chaps from Inland Revenue sent the Silversword financier a bill for 21.5 million pounds in overdue taxes and he was declared bankrupt soon after. Unfortunately, Mr. Ramsden then perpetrated a bankruptcy fraud by hiding assets from bankruptcy court officials, including 77,000 pounds of winnings from a British track and 300,000 pounds he received from a New York trust.
The fallen horseman of Howe Street was sentenced to 21 months in prison in 1998, and on his release he reportedly appeared in a number of Internet companies, including some with betting Web sites. Soon after walking free, with the prison doors clanging shut behing him, Mr. Ramsden headed to the open doors of Union Securities in Vancouver, which was happy to open a brokerage account for the fallen financier.
While Mr. Ramsden has relocated to Gibraltar, amid an exodus of British bookies and gambling figures to the tax-friendly secrecy haven, the troubles in his former racing empire are far from over.
On Jan. 4, high-profile British horse trainer Rod Simpson, who had been the top trainer in Mr. Ramsden's stable for years, was fined 2,500 pounds by the British Jockey Club for a series of racetrack misdemeanours. "What I didn't allow for was the fact that the Jockey Club has these ex-policemen aged 90 to 130 with nothing else to do," the unrepentant racing legend told the press.
According to Alfa, two years ago Mr. Simpson had the misfortune of being evicted by receivers from racing stables owned by another client, David Piper, who had been arrested and charged with drug trafficking offences. One of the horses trained by Mr. Simpson for Mr. Piper was Nipper Reed, named after the Great Train Robbery detective who put the infamous Kray brothers behind bars.
Although Howe Street boosters love to say the riff-raff were chased out years ago, Mr. Ramsden is back to playing the markets through Vancouver brokerage Union Securities, which filed a $248,400 (Canadian) suit against its offshore Gibraltar-based client this January. another Silversword alumni has been in regulators' crosshairs in recent years.
While Union's star client in recent years, at least in the bad-boy category, has been notorious American career felon and New York Mafia associate Ed Durante, Mr. Ramsden deserves special recognition for his own career achievements.
(In the unrelated Durante case, Vancouver broker Trevor Koenig, who ran Union's White Rock satellite branch specializing in garbage OTC Bulletin Board stocks, has been in custody since his Labour Day, 2001, border arrest, and is now in jail in New York. In a parallel Durante sting to that of Mr. Koenig, controversial Vancouver offshore accountant Michael K. Graye, an associate of Mr. Chambers, was nabbed last October.)
With such a rich penny stock legacy on Howe Street and Bay Street, it is hardly a surprise that so many Canadians, including Mr. Rosenfeld, were targeted and nabbed in Bermuda Short.

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From: scion5/13/2010 7:46:04 PM
   of 122081
 
Pacer update 12 May 10 FOR CASE #: 6:09-cv-01638-GAP-KRS SEC v. K & L International Enterprises, Inc. et al

Date Filed # Docket Text

05/12/2010 52 MOTION for Final judgment as to Defendants Stephen W. Carnes, Signature Worldwide Advisors, LLC and Signature Leisure Inc. by United States Securities and Exchange Commission. (Polish, Jonathan) (Entered: 05/12/2010)

Defendant: K & L International Enterprises, Inc.

Defendant: Signature Leisure, Inc.

Defendant: Signature Worldwide Advisors, LLC

Defendant: Stephen W. Carnes

Defendant: Lawrence A. Powalisz

Defendant: Enzyme Enviromental Solutions, Inc.

Defendant: Jared E. Hochstedler

ecf.flmd.uscourts.gov

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To: scion who wrote (110335)5/13/2010 7:47:04 PM
From: scion
   of 122081
 
05/12/2010 52 MOTION for Final judgment as to Defendants Stephen W. Carnes, Signature Worldwide Advisors, LLC and Signature Leisure Inc. by United States Securities and Exchange Commission. (Polish, Jonathan) (Entered: 05/12/2010)

Doc 52 PDF file
viewer.zoho.com

MOTION FOR ENTRY OF FINAL JUDGMENTS AS TO DEFENDANTS STEPHEN W. CARNES, SIGNATURE WORLDWIDE ADVISORS, LLC AND SIGNATURE LEISURE INC.

Plaintiff Securities and Exchange Commission (the “Commission”) respectfully moves this Court to enter Final Judgments as to Defendants Stephen W. Carnes, Signature Worldwide Advisors, LLC and Signature Leisure, Inc. (the “Defendants”). In support of this motion, the Commission states as follows:

1. The Defendants have consented to entry of Final Judgments. The Consents are attached hereto as Exhibits A, B and C.

2. The proposed Final Judgments, which are attached to the Consents, would permanently enjoin the Defendants from violating Section 5 of the Securities Act of 1933 [15 U.S.C. § 77e], bar them for three years from participating in an offering of penny stock under Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)], order them to pay disgorgement, plus prejudgment interest, and order them to pay civil penalties under Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)].

WHEREFORE, the Commission respectfully requests that this Court enter Final Judgments against Defendants Stephen W. Carnes, Signature Worldwide Advisors, LLC and Signature Leisure, Inc., and for such other relief as the Court deems appropriate.

Dated: May 12, 2010

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To: scion who wrote (110336)5/13/2010 8:31:11 PM
From: Buckey
   of 122081
 
SEC's Sedona target Chapman facing default judgment
Ticker Symbol: C:*SEC U:*SEC U:SSSI

SEC's Sedona target Chapman facing default judgment

U.S. Securities and Exchange Commission (C:*SEC)
Thursday May 13 2010 - Street Wire

Also U.S. Securities and Exchange Commission (U:*SEC) Street Wire
Also Sedona Software Solutions Inc (U:SSSI) Street Wire

by Mike Caswell

Bob Chapman, the newsletter writer charged for the Sedona Software Solutions Inc. market manipulation, is facing the possibility of a default judgment against him. On May 4, 2010, the judge entered an order to show cause against Mr. Chapman, stating that the newsletter writer has failed to answer the case, despite being properly served.

The charges Mr. Chapman faces are for his role in touting Vancouver-based Sedona in January, 2003. The U.S. Securities and Exchange Commission claims that he predicted the stock would reach $62 in his newsletter, the International Forecaster. He failed to disclose that he owned 370,000 shares of the company, which he had purchased at prices between 25 cents and $1. (All figures are in U.S. dollars.)

The SEC served Mr. Chapman with the suit on Aug. 13, 2009, delivering it by courier and by certified mail to an address in Mexico and to a post office box in Florida. It also served him at the e-mail address for his newsletter, international_forecaster@yahoo.com. He had 20 days to respond.

SEC's complaint
The SEC filed a civil complaint against Mr. Chapman, 72, and others on Dec. 19, 2007, in the Southern District of New York. The regulator claimed that the men touted Sedona and another company, SHEP Technologies Inc., with misleading information and sold $5.8-million in shares. The other defendants are Vancouver residents Scott Peever and William Curtis; West Vancouver promoter Anthony Wile and his uncle, Wayne Wew (formerly known as Wayne Wile); and Bermuda residents Scott and Brian Lines.

The allegations against Mr. Chapman were for the Sedona manipulation. The SEC said that Mr. Wile and the Lines brothers began touting the company in January, 2003, as a gold producer in Latin America. They claimed in news releases that Sedona was about to merge with privately held Renaissance Mining Corp., and that the deal would leave Sedona in a position to produce 75,000 ounces of gold in 2003.

The information was misleading, because nobody had verified the potential of the mines. In addition, Renaissance required millions of dollars to actually acquire the projects. The men also failed to disclose that the Lines brothers secretly controlled over 99 per cent of Sedona through offshore nominees, according to the complaint.

As part of the promotion, Mr. Wile had four newsletter authors write "independent" research reports that conveyed the same false claims about Sedona, the SEC said. The only author named in the complaint was Mr. Chapman, who had purchased 370,000 shares of Sedona through a Bahamian entity named Marathon Industrial Fund Ltd. In November, 2002, one month after acquiring his stock, Mr. Chapman wrote that Renaissance was "an incredible opportunity that could be the largest public offering in the United States for a mining company this year."

He followed this with a Jan. 19, 2003, report which stated that Renaissance was "available to be purchased" under Sedona's symbol, which was SSSI. The report also said that Sedona's current price was $10, and that the company could eventually reach $62.

None of this was true, the SEC said. Renaissance and Sedona had not actually completed their merger, so the public could not actually buy shares of Renaissance. In addition, Sedona had last traded at three cents, not $10. Mr. Chapman also failed to disclose his ownership of Sedona shares, according to the complaint.

The stock began trading two days later, on Jan. 21, 2003, with a prearranged trade between the Lines brothers and Mr. Wew, according to the complaint. The SEC said Mr. Wew bought 5,000 shares at $8.25. Over the next week, the Lines brothers sold 159,300 shares of the company into an artificial market at prices between $9 and $10, the SEC claimed. They had bought the same shares earlier for seven cents.

The promotion ended on Jan. 29, 2003, when the SEC suspended the company, citing questions about the accuracy of information on the Renaissance merger. When the company resumed trading two weeks later, it fell under $1.

The SEC said the Lines brothers, in subsequent interviews, attempted to conceal their Sedona shareholdings. They told investigators that they did not control nominee companies that held Sedona shares. They also directed LOM employees to create and backdate trading records to obscure their control, the complaint stated.

The SHEP manipulation was very similar to that of Sedona, according to the SEC. In that promotion, Mr. Peever, Mr. Curtis and the Lines brothers acquired 80 per cent of the company in 2002. They then paid $600,000 for favourable coverage in two tout sheets, the Intrepid Investor and the OTC Journal. The stock went to $2.98 and, according to the SEC, Mr. Peever and Mr. Curtis sold $4.3-million worth of its shares.

The SEC sought orders permanently banning all of the defendants from participating in penny stock offerings, in addition to appropriate civil penalties and disgorgement.

While Mr. Chapman has not responded to the suit, the other defendants have either settled or are fighting the charges. Mr. Peever and Mr. Curtis settled the case early. On Aug. 29, 2008, they agreed to permanent penny stock bans and to pay civil penalties and disgorgement in amounts to be determined by the judge. They did not admit to any wrongdoing.

The Lines brothers have filed answers to the charges, in which they deny any wrongdoing. Mr. Wew and Mr. Wile also deny any wrongdoing, and have filed motions to dismiss the charges.

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