| To: StockDung who wrote (2529) | 2/14/2007 9:21:04 PM | | From: scion | | | | (In a July 14, 2006, pleading in an unrelated criminal trial where Mr. Edwards's wife Diana Lee Flaherty is awaiting sentencing after being convicted of securities fraud in connection with Phoenix Metals U.S.A. II Inc.'s "gold from volcanic cinders" scam, the prosecution claims that "the source of wealth offered as bond by defendant's current husband is uncertain in light of the SEC's continuing investigation of reports that he has engaged in significant securities fraud."
CMKM Diamonds Features in NASD Enforcement Action
by Lee M. Webb
Canada StockWatch
September 29, 2006
CMKM Diamonds Inc., Saskatchewan native Urban Casavant's revoked pink sheet woofer, features prominently in a National Association of Securities Dealers (NASD) disciplinary proceeding against Nevada-based NevWest Securities Corp. and two of its top officers.
The NASD complaint alleges that NevWest president Sergey Rumyantsev and vice-president Antony M. Santos violated anti-money laundering rules and failed to file suspicious activity reports (SARs) as a client with 32 accounts dumped 259 billion CMKM shares for proceeds of more than $53-million. (All amounts are in U.S. dollars.)
"Broker-dealers have an obligation to investigate 'red flags' indicating suspicious activity and, where appropriate file SARs," NASD enforcement head James Shorris said in a Sept. 26 news release. "Despite a multitude of very obvious red flags, NevWest chose to look the other way, earning millions for itself in the process."
The respondents have not yet filed a response to the NASD complaint and no findings have yet been made regarding the allegations.
The client
According to the NASD, the CMKM transactions executed on behalf of a NevWest client identified by the initials "JE" in the complaint were "highly suspicious" and should have caused the firm and its officers "to suspect that the customer was violating federal securities laws."
The client, who is known to many followers of the wild CMKM saga as John Edwards, is not a broker and is not a party to the NASD enforcement proceeding and there have been no findings that he violated securities laws.
(In a July 14, 2006, pleading in an unrelated criminal trial where Mr. Edwards's wife Diana Lee Flaherty is awaiting sentencing after being convicted of securities fraud in connection with Phoenix Metals U.S.A. II Inc.'s "gold from volcanic cinders" scam, the prosecution claims that "the source of wealth offered as bond by defendant's current husband is uncertain in light of the SEC's continuing investigation of reports that he has engaged in significant securities fraud."
Mr. Edwards was not implicated in the Phoenix Metals fraud and, as noted in a subsequent court order in Ms. Flaherty's criminal case, there has been no appropriate showing that the collateral offered by Mr. Edwards constitutes the illegal proceeds of criminal activity. Ms. Flaherty, who faces a sentence of 12 to 18 years in prison and forfeiture of $5.7-million, filed a motion for a new trial on Sept. 19.)
The NASD claims that Mr. Edwards opened five accounts at NevWest in 2002; 19 accounts in 2003; and another eight accounts in 2004. The regulator says that the same UPS postal box address was used for 30 of Mr. Edwards's 32 accounts in the names of various trusts and corporate entities.
"Shortly after JE began opening accounts at NevWest, he developed a trading pattern of physically carrying into the firm certificates of low-priced securities," the complaint alleges. "In February 2003, JE began to deposit shares of CMKM into the various accounts he opened at NevWest.
"JE instructed NevWest, through his registered representative, to expeditiously liquidate the certificates and to immediately wire all sales proceeds to various bank accounts.
"The bank account owner of record rarely matched the name of the NevWest account holders."
The NASD says that between January of 2003 and December of 2004, NevWest wired $43-million through 139 wire transfers from at least 28 of Mr. Edwards's accounts as he unloaded a staggering 259 billion CMKM shares.
The transactions
According to the allegations in the 27-page NASD complaint, the number of CMKM shares Mr. Edwards unloaded increased over time. During 2003, the regulator says that he sold 4.3 billion CMKM shares in 66 transactions for proceeds of $401,000.
Mr. Edwards allegedly ramped up his selling in 2004, "aggressively" implementing his CMKM trading strategy.
"In many instances, JE carried into NevWest billions of CMKM shares at a time," NASD claims. "Through NevWest he liquidated billions of shares per month."
The regulator says that as Mr. Edwards began dumping billions of shares per month in early 2004, NevWest's anti-money laundering compliance officer recommended to Mr. Santos that the firm file an SAR regarding his CMKM transactions. That recommendation was not followed, nor was a subsequent recommendation to file an SAR made by Mr. Edwards's registered representative in August of 2004.
During 2004, as sub-penny CMKM's promotion was ratcheting up, Mr. Edwards allegedly managed to unload 207 billion shares in 368 transactions for proceeds of more than $49-million. The complaint alleges that the busy CMKM seller wired $41.5-million from his NevWest accounts in 2004.
By 2005, the wheels were falling off Mr. Casavant's pink sheet promotion, particularly after the U.S. Securities and Exchange Commission (SEC) temporarily suspended trading in CMKM in March of 2005 and then followed up with an administrative proceeding against the company.
Notwithstanding the badly floundering promotion and the SEC investigation, Mr. Edwards allegedly managed to unload approximately 48.5 billion shares of CMKM in 133 transactions for proceeds of $3.7-million between January and May of 2005.
The red flags
According to the NASD complaint, Mr. Rumyantsev and Mr. Santos should reasonably have been aware of "red flags" with respect to Mr. Edwards's CMKM transactions and wire transfer activity, which should have triggered anti-money laundering procedures.
Among other things, the regulator says the fact that Mr. Edwards suspiciously refused to reasonably explain how he acquired his CMKM shares should have raised a red flag.
The regulator also says that Mr. Edwards "suspiciously opened and maintained 32 accounts at the firm for no business or apparent lawful purpose."
The NASD complaint suggests that Mr. Edwards hand-delivering CMKM certificates to the brokerage firm should have raised concerns.
"The CMKM certificates JE deposited for sale were not always registered in the name of a specific account holder with NevWest," the NASD continues. "Instead, beginning in or about August 2004 and continuing into 2005, JE began depositing certificates registered in the name of NevWest's clearing firm."
In addition to pointing to Mr. Edwards's wire transfer activity as another red flag, the regulator says that he "suspiciously exhibited a lack of concern regarding the commissions and other transaction costs relating to the liquidation of CMKM shares."
According to the NASD complaint, NevWest earned $2.5-million in commission revenue from Mr. Edwards's CMKM dumping, accounting for 36 per cent of the firm's total revenues during the relevant period.
Rounding out the list of red flags, the regulator goes on to say that the substantial number of shares unloaded by Mr. Edwards and the significant proceeds of those sales "should have prompted NevWest to conduct a searching inquiry to ensure that CMKM was complying with relevant laws and regulations."
Among other things, NASD claims that NevWest failed to conduct a reasonable inquiry to obtain specific details concerning how and when Mr. Edwards acquired his CMKM shares.
Moving on from the discussion of red flags, the NASD claims that Mr. Rumyantsev and Mr. Santos were, or should have been, aware of public information regarding CMKM.
Among other things, the regulator claims that the brokers should have known that the company had not filed any quarterly or annual reports for years, leaving investors in the dark as NevWest unloaded approximately 37 per cent of CMKM's outstanding shares for Mr. Edwards.
The regulator further claims that the respondents should have been aware of CMKM's NHRA funny car promotional campaign in which the company sponsored a car called the CMKXTREME vehicle. At the time, the company's trading symbol was CMKX.
"Promotional items such as T-shirts and hats with "Got CMKX?" written on the front were handed out at race events," the complaint notes. "All of this activity was used to encourage investors to purchase shares of CMKM through trading activity on the pink sheets."
NevWest should also have been aware of the SEC suspension and subsequent administrative proceeding against CMKM, which was initiated on March 16, 2005. The hearing was held on May 10, 2005.
"Despite the aforementioned events, NevWest from March 17, 2005, through May 11, 2005, continued to sell at least 22.5 billion shares of CMKM for JE's accounts in approximately 77 transactions," the complaint notes.
The SEC finally yanked CMKM's stock registration on Oct. 28, 2005.
According to the NASD, Mr. Rumyantsev and Mr. Santos should also have known that Mr. Edwards had liquidated a substantial number of shares of Pinnacle Business Management Inc., which later became Serac Holdings Inc., and Barrington Foods, which became U.S. Canadian Minerals Inc., a company with close ties to Mr. Casavant and his pink sheet dog of dogs.
The complaint alleges that Mr. Edwards deposited almost six billion Pinnacle shares with NevWest and approximately 6.2 million U.S. Canadian Minerals shares.
In May of 2002, the SEC temporarily suspended Pinnacle and subsequently filed fraud charges against the company. Pinnacle's stock registration was revoked in July of 2004.
The SEC temporarily suspended U.S. Canadian Minerals in October of 2004, just as the OTC Bulletin Board promotion that had traded as high as $18.75 per share was executing a 3-for-1 forward split. The company was booted down to the pink sheets where it now occasionally ekes out a trade for less than 10 cents.
It is not clear just what the NASD thinks NevWest and its senior officers should have drawn from Mr. Edwards's apparent penchant for dumping wads of shares of dubious penny and sub-penny companies with regulatory problems.
Indeed, in the absence of any evidence that Mr. Edwards did anything at all illegal while unleashing his flood of 259 billion CMKM shares that were apparently eagerly sponged up by naive investors, it is far from clear just how strong a case the NASD will be able to bring against Mr. Rumyantsev and Mr. Santos.
Among the proposed sanctions, the NASD wants the respondents to disgorge any ill-gotten gains and pay such costs of the proceedings "as are deemed fair and appropriate under the circumstances."
Stockwatch will follow developments in the NASD proceeding and the continuing CMKM saga |
| | Casavant Mining Kimberlite International (CMKM) | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
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| From: StockDung | 2/22/2007 12:25:39 PM | | | | | | ...................O-Smear................................
Must Reading For Train Wreck Fans garyweiss.blogspot.com
Thursday, February 22, 2007
A new blog is required reading for regulators or anyone following the self-destruction of Overstock.com.
It's called "O-Smear," and it was created by the Internet sleuth "ScipioAfricanus." Scipio was largely responsible for Overstock.com's "director of social media," Judd Bagley, being outed as operator of Overstock's corporate smear site antisocialmedia.net. He also has done excellent work chronicling Bagley's use of spyware to track Patrick Byrne's critics, and above all in tracking Byrne's dissembling and contradictory statements in public message boards.
Anyone probing Overstock will find this blog a comprehensive source of information on this third-rate retailer's disgraceful, unethical, and possibly illegal conduct. It is a rich source of information for anyone interested in antisocialmedia.net, its nauseating proprietor, and his "bellowing" (to quote Bloomberg) overlord.
The URL is o-smear.blogspot.com .
© 2007 Gary Weiss. All rights reserved. |
| | Casavant Mining Kimberlite International (CMKM) | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
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| From: StockDung | 2/23/2007 9:35:54 AM | | | | | | Update - CMKM Diamonds, Inc. - Lights, Camera, No Action
Investigative Reports
February 22 2007
stockpatrol.com
CMKM Diamonds, Inc. has faded from the news, and its shares no longer trade in the public market, but the Company’s fans and foes still are seeking satisfaction – or at least resolution of the Company’s long-unfulfilled promises.
On the fan front, the clamor has become familiar; CMKM’s legion of believers cling to dreams of the Company’s resurrection. And they continue to wait – seemingly in vain - for the Company to distribute shares of Entourage Mining Ltd. (OTCBB: ETGMF).
On the flip side, one CMKM investor, evidently frustrated by the Company’s failed promises and limited disclosure, filed a federal lawsuit charging the Company and Casavant with a long litany of offenses, including fraud, mismanagement and racketeering.
Meanwhile, a tiny over-the-counter movie company has temporarily shelved plans to film a biography of CMKM’s controversial leader, Urban Casavant. Fuego Entertainment, Inc. (OTCBB: FUGO) has been promising to film Casavant’s story since at least mid-2005. Back then, Fuego said that its projects included “One Million Millionaires,” a documentary on the life of “a controversial individual, Mr. Urban Casavant and his dream of making 1 million millionaires.” Fuego claimed that the movie would “cover his life from being a low-income earning prison guard to multimillion-dollar businessman.”
CMKM shareholders seem unlikely to join that vaunted millionaires’ club. The Company has hardly been the path to millions – at least not for public investors. If the movie ever is released, the filmmaker may have to change the title. “Urban Cowboy” has been used, but maybe “Silent Urban” would do in its stead. After all, Casavant repeatedly invoked the 5th Amendment and refused to answer questions under oath during the SEC proceedings against CMKM. Will he be more talkative for the Fuego cameras?
The Casavant biography appeared to be an odd choice for Fuego, which was formed to develop crossover entertainment from Latin to mainstream U.S. markets. On the other hand, the Casavant biopic is in line with Fuego’s other planned projects - documentaries on stock fraud and Ecuadorian gold mines and a reality-based television program focusing on the activities of professional stock traders. So far, however, none of these films seem to have made their way to the screen – small or large.
In any event, Fuego’s Casavant project has been placed on the backburner – so it will not be vying for an Oscar anytime soon. In its Form 10-K for the year ended May 31, 2006, Fuego reported that “One Million Millionaires” has not been finished “because the company is waiting for the outcome of an ongoing investigation of the individual whose life this documentary life is based on.” Since “[t]here have also been several legal complaints filed against this person,” – presumably Casavant – Fuego would “wait and see the outcome of this pending legal matter in order to include it in the film project.”
Fuego may also be waiting until it has sufficient funds to proceed. As of November 30, 2006, Fuego had no cash.
The litigation involving Casavant and CMKM is not likely to end soon. One of the lawsuits that Fuego may be following was filed earlier this month by a CMKM shareholder in federal court in Nevada – CMKM’s corporate home. The Complaint cites the Company’s prolonged failure to file required public documents, a series of allegedly dubious financial transactions, and the unexplained disappearance of millions of dollars that purportedly were in the CMKM coffers.
Was that money making millionaires – as Urban Casavant dreamed? Who might they be?
For that answer, observers may have to wait for the movie.
IF YOU HAVE QUESTIONS OR COMMENTS FOR STOCKPATROL.COM, CONTACT US AT editor@stockpatrol.com
stockpatrol.com |
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| To: StockDung who wrote (2537) | 2/26/2007 1:14:54 PM | | From: scion | | | | Shareholder Sues CMKM Diamonds, Directors for $57M
diamonds.net
By Jeff Miller Posted: 02/23/07 16:29
RAPAPORT... The statute of limitations was set to expire for filing civil action against CMKM Diamonds on February 19, 2007, said Gene Hurd, but as that date was a federal holiday in the United States, the date was extended to February 20.
Hurd, a shareholder in CMKM Diamonds, told Rapaport News he just made the deadline --by six hours in fact-- according to papers filed in United States District Court southern division for Nevada, where CMKM is registered.
Hurd is suing CMKM Diamonds for at least $57,151,950 in damages and cites 11 causes of action against CMKM Diamonds. "I believe I'm the only shareholder who filed action," he told Rapaport.
In court documents obtained by Rapaport, Hurd (plaintiff) names CMKM Diamonds Inc., Urban Casavant, Robert Maheu, David DeSormeau, Rupert Perrin, Caroly Casavant, Wesley Casavant, Cindy Casavant, and John Does 1-50 plus [Mary] Roes 51-200 "each a legal person."
The plaintiff is unaware of the "true names" and capacities of all defendants sued. The plaintiff purchased 200 million shares of CMKM (CMKX.PK) stock between June 4, 2004, and October 29, 2004.
Allegations in the complaint begin at the time Cyber Mark International Corporation acquired certain mineral claims owned by Urban Casavant and his family in November 2002. Upon the transaction the plaintiff claims Cyber Mark appointed the senior Casavant president and CEO, (wife) Carolyn Casavant was appointed vice president, (son) Wesley Casavant corporate treasurer, and (daughter) Cindy Casavant corporate secretary. In December the company changed its name to Casavant Mining Kimberlite International, which was then changed to CMKM Diamonds in February 2004. (See related links for the history of CMKM as followed by Rapaport News.)
The suit lists DeSormeau and Perrin as directors of CMKM beginning January 15, 2003, and Maheu for joining January 31, 2005.
"After Casavant was appointed president of CMKM, no periodic reports were filed with the Securities and Exchange Commission" as required, but on July 22, 2003, CMKM filed form 15-12G stating it was no longer required to file reports because it had fewer than 300 shareholders.
On February 17, 2005, CMKM amended the form stating it had 698 shareholders, at which time the company had issued 800 billion shares.
The plaintiff wrote that CMKM relocated offices to 5375 Procyon Street, Su. 101, Las Vegas, Nevada, on March 4, 2005, but "the subject property was in fact occupied by a 'hot rod' shop..." Corporate auditors at the time issued a statement in July 2005 that claimed CMKM "may have advanced $4 million for the benefit of CMKXtreme Inc., a drag racing enterprise owned and controlled by Casavant," which had not been approved by the board of directors. The plaintiff alleges too that the audit firm noticed "CMKM may have made loans to its officers and directors in violation of the Sarbanes-Oxley Act...that the books and records of CMKM were un-auditable, because they were incomplete, and that the books and records that did exist were not properly maintained."
In March 2003 the Securities and Exchange Commission suspended trading of CMKM securities, which was followed by a hearing on May 10, 2005, at which time Judge Brenda Murray ruled that "CMKM had neither and independent auditor nor financial statements to be audited," and that "the draft ledger for 2003 and 2004 reflected no business operations, that management 'deprived shareholders and investors of material information in official filings, but promoted the company to investors through informal news releases and public statements that contained false information.'"
To these charges, Urban Casavant took the Fifth Amendment and declined to answer questions except for the proper spelling of this legal name.
The ruling ultimately revoked CMKM's registration in October 2005.
Maheu testified to Murray that he was being paid $40,000 per month as a director of the company, but stated he did not know CMKM had any other directors other than Casavant, according to the court documents.
Opus Pointe, which was hired by CMKM to reconstruct financial records testified that 2.7 billion shares ($24.7 million) were issued to an unknown contract. Other transactions included $1.4 million in deposits and $116,000 in withdrawals were made in 2003, and that $35 million was deposited and $6 million was withdrawn in 2004. During these two years, CMKM had admitted to having no business operations.
In September 2006, the National Association of Securities Dealers (NASD) sought disciplinary action against Las Vegas-based NevWest Securities Corporation for having authorized 500 transactions between March 2003 and May 2005 for one customer referred to as "JE" in which 259 billion shares traded for $53 million.
For his cause of actions against CMKM, the plaintiff charges first that defendants failed to file financial reports, concealed the absence of business, understood the true number of shares outstanding and failed to report on board of directors meetings, thus leaving the plaintiff with false information for which to gauge investments.
In the second cause of action, "Maheu, DeSormeau, and Perrin failed to supervise the officers and to monitor the personal transactions between officers and CMKM, thereby breaching their fundamental duty to act in the best interest of shareholders."
The plaintiff states in a third cause of action that Maheu, in his capacity as board member, demonstrated "reckless disregard by allowing materially false and misleading information to be disseminated." Maheu admitted knowing of "problems" during the Murray hearing, "he made no independent effort to verify that management was cooperating with the accountants and professionals engaged to correct the filing deficiencies..."
Urban Casavant "together with one or more John Does, agreed and performed overt acts in furtherance of a conspiracy to convert CMKM funds to personal use through illegal loans or advances." In the fourth case of action, plaintiff charged that Casavant knew the NevWest customer identified as JE "was in fact the beneficial owner of significantly more than 5 percent of CMKM's securities and that Casavant conspired" with JE to conceal an 80-fold increase in authorized shares.
As officer of the company, Casavant is charged in the court filing with racketeering (in the fifth cause) for unlawfully, knowingly, and intentionally conducting and participating in CMKM's activities, which affected interstate and foreign commerce through a pattern of mail fraud, wire fraud, and securities fraud.
While the sixth and seventh causes of action involved securities documents, the eighth cause targets the $4 million loan to CMKXtreme, "an entity unrelated to the diamond exploration business, at a time the company had no exploration or other business activities whatsoever." The general ledger showed a $30 million deposit, on December 31, 2004, "yet CMKM announced less than 10 months later that it had defaulted on its obligations to United Carina for $500,000."
Corporate bylaws state that CMKM shareholders were entitled to annual meetings, which did not take place according to the ninth cause of action, and that "the term of each director shall expire on the day of the succeeding annual shareholder meeting." Casavant served continuously since 2002, without calling a shareholder meeting.
In a tenth cause of action, plaintiff alleged that Casavant "through his actions, including the loans, advances, and transfers to himself and CMKXtreme, maintenance of all records in his home, his appointment as sole director, officer, and employee at most times relevant to this action, and appointment of only immediate family members to corporate officer positions, is for all intents and purposes the alter ego of CMKM and is thus personally responsible for all debts of the corporation..."
The plaintiff determined that Casavant "enriched" himself at the expense of CMKM shareholders of at least $4 million, in the eleventh and final cause. As shown in stock ledgers, the plaintiff determined at least $53 million in transactions took place under Casavant's leadership and knowledge.
The plaintiff demanded a trial by jury, and seeks compensatory damages of at least $50,650, punitive damages of at least $101,300, and disgorgement of all gains by defendants of at least $57 million. He also seeks the appointment of receiver or trustee to manage CMKM, until such time an annual meeting of shareholders would convene to elect new directors.
diamonds.net |
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| From: StockDung | 2/28/2007 12:08:55 PM | | | | | | THE GREEN BARON PUMPS STOCK CONNECTED TO ORGANIZED CRIME
=======================================================
PENDER INTERNATIONAL From "..The Green Baron's.." email advisories..:
===============================
From: jmhollen 2/16/2005 11:58:00 AM
of 8
From "..The Green Baron's.." email advisories..:
PENDER INTERNATIONAL (BB: PNDR)
PENDER Acquires Montebello Development to Develop $30 Million Ocean Front Mexican Resort
It now appears PENDER INTERNATIONAL is beginning to makes strides in its development projects. With its new team of experienced management in the real estate industry, PENDER just announced this morning that it completed the purchase of a new project. Keep in mind that this is separate from the $220 million real estate asset and development acquisition that PENDER hopes to complete late next week.
Business Wire - February 16, 2005 10:00
TORONTO, Feb 16, 2005 (BUSINESS WIRE) -- PENDER INTERNATIONAL Inc. (OTCBB:PNDR) has entered into an agreement to purchase 100% of the issued and outstanding shares of Montebello Development in exchange for restricted common stock. Montebello Development is developing Salchi Bay Development -- a 25-acre ocean front resort in Huatulco, Mexico. PENDER intends to begin construction next week and anticipates completion of 12 private villas by the end of this year. Thereafter, we anticipate an additional 48 units to be completed in 18 months. The property is located on a 1.5-mile private beach on a secluded bay less than 20 minutes drive from Huatulco INTERNATIONAL Airport. Huatulco is one of the newest and fastest growing resort areas in Mexico.
Vic Dominelli, Director of PENDER, stated that "the long-term benefits of our Huatulco project will add significantly to our portfolio of assets." He explained that PENDER will retain an on-site supervisor to conduct daily inspections, supervise construction quality and provide regular reports on construction progress. "At the completion of the project," he continued, "PENDER will evaluate adjacent properties for development that are included in the right-of-first refusal accompanying this project development."
Orlando Silvestri, President and CEO of PENDER, noted that PENDER has taken a greater interest in the development of properties, "with the expertise with which we have surrounded ourselves, we believe that PENDER will have more opportunity to invest in a diversified portfolio of companies and projects -- Salchi Bay Development and Armistice Resources being primary examples. We continue to evaluate some very interesting properties in Europe, as well as a 400-acre resort and casino in the Caribbean. We would expect the PENDER property portfolio to exceed $350 million in value by the end of the 2nd quarter."
More details of the Salchi project will be available for viewing on the company's website: PENDERINTERNATIONALinc.com'>http://www.PENDERINTERNATIONALinc.com.
SOURCE: PENDER INTERNATIONAL Inc.
PENDER INTERNATIONAL Inc.
Vic Dominelli, 905-882-0221
PENDERINTERNATIONALinc.com'>http://www.PENDERINTERNATIONALinc.com
===============================================
Stock scam linked to organized crime Court documents allege Markham man is key in the Cosimo Commisso family and is tied to a pump-and-dump fraud
February 28, 2007
Tony Van Alphen
Nick Pron
Staff Reporters
Friends know him as the soft-spoken owner of a popular garden centre north of Toronto, a family man who financially supports minor hockey teams.
But in court documents obtained by the Toronto Star, the RCMP alleges Aneillo (Neil) Peluso is a key member of the Cosimo Commisso organized crime family and a major player in a multi-million-dollar Bay Street "pump-and-dump" stock fraud.
Last September, Canada's national police force charged Peluso – a tall, 47-year-old businessman with no criminal record – and two other men, with conspiring to manipulate the share price of a junior company and turn it from a penny stock into a must-have investment.
Its only real asset was a stake in a flooded mine in Northern Ontario.
The Mounties allege the scheme at Pender International could have netted players more than $360 million, but regulators stopped all trading among a group of related companies responsible for most of the action in late 2004.
Peluso's lawyer, Alan Gold, said last night that the allegations in RCMP affidavits about his client's ties to an organized crime family are worthless.
"They're not worth the search warrant paper they're written on," he said in an interview.
Gold added allegations in such affidavits and publication of them are unfortunately the price of freedom of the press.
He also said the fraud charges against Peluso in the Pender case are before the courts and his client will vigorously defend against them.
While detectives originally focused on members of "Italian-based traditional organized crime," according to the documents used to obtain search warrants, the investigation later mushroomed into a number of other areas that made headlines across the country.
In one case, a senior Toronto prosecutor resigned when he got caught up in a sting operation that ended with a prominent lawyer going to jail for money-laundering. Then there was a series of corruption charges laid against officers with the Toronto police over allegations they were extorting from bar owners in the entertainment district. Other officers faced disciplinary charges for their involvement with a used-car dealer, but when one was exonerated, he sued the force for allegedly smearing his name through leaks to the media.
Detectives also uncovered what they described as another Bay Street fraud, and are awaiting, according to the heavily edited documents, "the laying of charges."
It was expected that most of the cases, the main investigation and the offshoot probes, will be before the courts for years, all covered by traditional publication bans. But the unsealed documents used by investigators with the Combined Forces Special Enforcement Unit are open to public scrutiny, offering a rare glimpse into this city's organized crime underworld.
A potential witness in the Pender fraud case is terrified for his life, a court heard yesterday, and is asking that he be identified only as X, Y and Z. A hearing date has yet to be set on his request.
After getting a judge's approval for search warrants and wiretaps, detectives quietly began their investigation in April 2001, based out of a secret office in the north end of the city.
At the time of the charges, the RCMP did not disclose any details publicly about Peluso's background.
His alleged involvement in Pender became apparent during an investigation called Project Ora, which targeted Commisso and "his group" for their involvement in "criminal offences" and other alleged crimes, which were blacked out on the documents.
In the documents, Commisso was described as one of the heads of the "Italian-based organized crime group."
One affidavit described Peluso as "a high ranking member of Cosimo Commisso's organized crime group."
A footnote in the same police affidavit also disclosed that the special enforcement unit had been targeting "Commisso and his associates such as Neil Peluso for their alleged involvement" in criminal offences. Details of that activity are blacked out.
The affidavits are only allegations of wrongdoing by the police and have not been proven in court.
The RCMP says the charges in the separate Pender probe against Peluso represent one of the rare occasions where police have arrested an alleged top mobster for stock fraud in the half-century since organized crime groups began infiltrating stock markets.
Ontario government corporate records show Peluso owns Tree Valley Garden Centre, with operations in Stouffville and Richmond Hill. The government information and RCMP do not make any allegations against the company.
Peluso lives in a large home inside a gated enclave next to a golf course in nearby King City. Acquaintances describe him as unassuming and friendly. His garden centre has supported community activities, including the sponsorship of minor hockey teams.
Although Peluso has no criminal record, the RCMP affidavit said he experienced at least one brush with the law several years ago.
York regional police charged him with four counts of assault, including two with a weapon. But the Crown dropped the charges in 2002.
Among the criminal counts in the Pender case, the RCMP charged Peluso with assault causing bodily harm and robbing a businessman.
Furthermore, the RCMP said Peluso and his alleged partners, Michael Lee Mitton and Michael Ciavarella, used accusations, threats or violence in efforts to induce a Pender public relations officer to do "one or more things" relating to the company for their own financial gain.
The force did not provide any further details about the alleged extortion, robbery and assault.
In the allegations, the RCMP charged the trio with fraud over $5,000 and conspiracy to commit fraud in connection with manipulating the public market price of Pender in Canada, the U.S. and elsewhere between May 2004 and July 2005.
Police say individuals in the case artificially boosted Pender's stock through phoney promotion and trading among related companies and then sold shares at a profit before investors discovered they had been duped.
Ciavarella, 44, and Mitton, 48, also face money-laundering charges. Police allege they possessed $243,991.39 (U.S.) with knowledge that some or all of it was obtained directly or indirectly from crime.
Police declined to elaborate on how they calculated the amount of the alleged $360 million fraud but some brokerages lost money.
For example, HSBC Securities claimed in a lawsuit it advanced funds to the trading account of one company with ties to Pender and found itself short $2.6 million (U.S.) when cheques for stock didn't clear. HSBC said it also issued loans of about $900,000 to parties with possible links to the alleged fraud.
Peluso and Ciavarella, a former Pender president, are free on bail with restrictions. In Peluso's case, three relatives, including his wife and father, pledged $1.2 million (Canadian) in sureties to ensure he was freed on bail.
As conditions of his release, the court ordered Peluso to surrender any guns, resign from senior corporate positions and refrain from contact with more than 84 specific individuals who could be witnesses in the case.
One unsealed affidavit describes a phone call between Peluso and Ciavarella in which they discuss issuing press releases to explain Pender's meteroic rise on the stock markets, worrying that the public might not believe that a penny stock worth 10 cents one day went up "all of a sudden" to $5 a share.
Mitton eluded police for nearly four months after they charged him. They finally took him into custody last month in downtown Toronto.
He remains in custody, but is no stranger to jail after racking up more than 100 criminal convictions during his career, primarily relating to stock market frauds in British Columbia.
The short, portly built man has been described by a judge as a "professional swindler." The B.C. Securities Commission called him a "classic financial predator." Securities regulators in B.C. and Alberta have imposed permanent trading bans on him in recent years.
He owes more than $425,000 in fines and penalties to the B.C. commission and several million dollars in restitution orders to brokerages and investors.
Before heading to B.C. in the mid-1980s, Mitton had spent time in prison on several fraud convictions in Montreal.
He was out on parole again when the Ontario Securities Commission found suspicious trading at Pender in late 2004.
Pender, which traded on the electronic NASD over-the- counter board, originally started as a furniture importer in 1998 but later turned itself into a "merchant bank."
Pender's share price shot up from 30 cents (U.S.) on Oct.14, 2004, to $11.35 within 35 trading days despite no significant corporate developments. The company's only tangible asset was an indirect stake in a flooded mine in Northern Ontario.
The commission halted trading in Pender stock by Mitton, Ciavarella and related companies in December 2004 and the RCMP's Integrated Market Enforcement Team stepped in. The RCMP team began a probe and executed more than a dozen search warrants on banks, brokerages, phone companies and Mitton's penthouse in Markham over the past two years.
Another police affidavit said the penthouse had the same address as one of the companies that traded heavily in Pender stock.
After the Ontario Securities Commission halted trading by companies in the alleged fraud, phone records showed numerous phone calls between Mitton and Peluso, the documents said.
Another RCMP affidavit said HSBC Securities indicated it appeared Ciavarella, the head of Pender, purchased and sold its shares between related accounts at different brokerages.
Meanwhile, investigations that arose from the original project remain before the courts.
One case involves allegations of corruption against two Toronto police officers accused of shaking down bar owners in the entertainment district. A second case involving a used-car dealer ended up with several Toronto officers charged internally under the Police Services Act.
One of them, Robert Correa, eventually exonerated at a police tribunal, later sued the force, alleging that officers with internal affairs, along with then-chief Julian Fantino, deliberately fed misinformation to the media to discredit him. Those allegations, hotly denied, have not been tested in court.
Another probe, called project "OJUST," ended with prominent lawyer Peter Shoniker pleading guilty to money-laundering. A judge sentenced him to 15 months in jail.
A senior Toronto prosecutor quietly resigned from the Crown attorney's office after police disclosed his role in the case – directing an undercover officer with stolen union funds to speak to Shoniker.
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| From: StockDung | 3/2/2007 11:10:28 AM | | | | | | TogiEntertainment, Inc., announces purchase of Christian Financial Radio Network (CFRN)
by Mark Faulk
TogiEntertainment, Inc., is extremely pleased to announced that we have acquired CFRN.net. Our long-term plan is to use the network, and its well established audience, as a foundation to build a broad-based radio internet network, tentatively called TogiNetwork.
Rated the number one network on StreetIQ.com after beating out 25,000 other financial shows, CFRN will remain a cornerstone of TOGI Internet Radio, expand its programming and become a subsidiary of TogiEntertainment. CFRN founder and owner DeWayne Reeves will join the TogiEntertainment family.
?After much prayer and soul searching, I am completely confident in passing the baton to TogiEntertainment. I look forward to working with the Togi team and I'm excited about what the future holds for all of us, ?said Mr. Reeves.
Togi Internet Radio plans to fill in the gap between programming offered by mainstream media and what people really want to hear ? in politics, writing, lifestyles, science, social issues, and the arts. We will serve niche markets currently overlooked, neglected, or rejected by traditional media. With a motto of ?Politics, Lifestyle, and Entertainment for Heart, Mind, and Soul,? our content will offer value beyond much of the pointless entertainment in the marketplace today. We have already begun to lay the groundwork for our projected venture into this exciting field, and expect to launch our first shows in the very near future, with a full slate of programming implemented by Summer, 2007.
From CEO Mark Faulk, ?TogiEntertainment is excited to have the chance to bring quality internet radio to the masses. Our programming will not be controlled by the forces that currently influence America?s media, giving us the opportunity to provide politics, entertainment, and information beyond the narrow parameters of the Mainstream Media.?
Mark Faulk, DeWayne Reeves, and John Martin, CEO of The Owners Group, Inc., will discuss the future of Togi Internet Radio on Friday, March 9th, airing at 11:30 a.m. EST on www.cfrn.net, immediately following ?The Faulking Truth? from 10 to 11:30 a.m. EST
Both shows will be available for download afterwards at podcast.streetiq.com
TogiEntertainment, Inc, is a subsidiary of The Owners Group, Inc.
Visit our website at www.togientertainment.com
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