|BCSC not pursuing Nano World ex Hunter|
2005-03-04 14:25 ET - Street Wire
by Stockwatch Business Reporter
The B.C. Securities Commission, in its pending hearing for Nano World Projects Corp. and its president, Robert Papalia, is not pursuing former Nano World president David Hunter. Mr. Papalia blamed Mr. Hunter for landing the company in trouble with the U.S. Securities and Exchange Commission and even sued him in B.C. Supreme Court.
The BCSC goes after Nano World
The BCSC has scheduled a hearing for March 7 to try Mr. Papalia and Nano World for allegedly pumping the company with misleading news. The local regulator says Mr. Papalia and Nano World misled investors with false news releases claiming the company had two big deals in Europe.
Nano World, at the time, traded on the lightly regulated, but heavily prosecuted OTC Bulletin Board.
According to the BCSC, Mr. Papalia began issuing the misleading news releases on Sept. 12, 2000, in which he touted deals with Italian automotive giant Fiat and printing company Euroinks (pronounced Euro-inks, not Eur-oinks).
To back up these purported deals, the BCSC says Mr. Papalia issued further news claiming another OTC-BB company, Frefax Inc., was going to provide a loan.
The BCSC alleges that Mr. Papalia sold at least 300,000 shares of Nano World between January and February, 2001, for proceeds of up to $130,000.
The SEC goes after Mr. Papalia
The BCSC was not the first regulator to target Mr. Papalia for the Nano World promotion. The SEC, in a civil action, won a permanent ban against Mr. Papalia on Sept. 1, 2004, for his Nano World shenanigans.
In that case, Judge Marsha Pecham of the United States Federal District Court in Seattle found that Mr. Papalia pumped Nano World up to $24.50 using misleading or false news releases.
In a 15-page judgment she said, "Papalia's violation involved fraud, deceit, manipulation, or deliberate and reckless disregard of a regulatory requirement." In addition to the permanent ban, Judge Pecham fined Mr. Papalia $33,000.
Mr. Papalia, in a statement of defence, denied the SEC's accusations.
The SEC goes after Mr. Hunter
The SEC also named Mr. Hunter in the same civil action as Mr. Papalia. The U.S. regulator said Mr. Hunter misled Nano World investors with false news releases.
Mr. Hunter, who denied the SEC's allegations, settled with the U.S. regulator out of court. He agreed to a five-year ban from the markets and to an injunction barring future U.S. Securities Act violations. He did not admit to any wrongdoing in reaching the settlement.
Mr. Howe Street
David Hunter -- son of Ben, brother of Dan, father of five -- has spent much of his life up to his eyeballs in penny stocks. Many of them have gone to many dollars, and most have ended back where they began. Although Mr. Hunter has not been accused by the BCSC of any Nano World wrongdoing, Mr. Papalia alleged halfheartedly in a very brief lawsuit that Mr. Hunter was at least partly responsible for the company's trouble.
Mr. Papalia sued Mr. Hunter in B.C. Supreme Court on Aug. 16, 2002, on behalf of Nano World. In his self-filed writ, Mr. Papalia said Mr. Hunter misappropriated Nano World's money.
The case never made it before a judge. Mr. Papalia did not follow up his writ a formal statement of claim, which would have provided details, if not credibility, to the allegations against his former colleague. Mr. Hunter did not file a statement of defence.
Mr. Hunter landed at Nano World 10 days after leaving the Vancouver brokerage industry on March 31, 2000. His 25-year brokerage career began in 1975 and included stints at four Vancouver brokerages.
Mr. Hunter's last job in the brokerage industry was at Mark Valentine's Thomson Kernaghan, which he left on March 31, 2000. Prior to Thomson Kernaghan, Mr. Hunter worked at Canaccord Capital Corp. between Sept. 2, 1992, and Jan. 15, 1996. When David and brother Dan arrived at Canaccord from Yorkton Securities, David said: "Our style is probably more like that of venture capitalists/merchant bankers. We try to identify situations, especially junior industrials, that have merit."
During his years as a big-producing broker, seeking those junior industrials of merit, Mr. Hunter introduced some of the players in Brent Pierce's Ultra Pure Water Systems (Canada) Inc., a promotion that left seven brokerages with $2.36-million in unpaid debits. Stephen Taub, a key broker in the case, said he was introduced to two of Ultra Pure's founders, Louis Gorusch and Grant Atkins, by the Hunters.
Mr. Hunter and his brother were also parties of interest, but not suspects or targets, in the SEC's civil prosecution of Dimples Group Inc., a raucous Vancouver Stock Exchange diaper promotion of the early 1990s that ended up covered like most diapers.
Other enterprises of merit that Mr. Hunter was involved with included Cost Miser Coupons (International) Inc. and, a rare success, PLC Systems Inc.
Mr. Hunter could not be reached for comment on Nano World or any other matters. He was last thought to be in Mexico. Mr. Hunter's lawyer in the U.S. case, John Payseno, said he was too busy to comment on the matter.
The BCSC, for its part, says it is aware of Mr. Hunter's involvement with Nano World.
The commission's hearing against Mr. Papalia and Nano World is set to kick off Monday, March 7.