Herald Sun: Boiler room racket hits investors
Boiler room racket hits investors
By ADRIAN TAME and MANDI ZONNEVELDT - 05aug01
HUNDREDS of Australians have lost millions of dollars in the world's
largest sharemarket scam.
The racket was masterminded by a shady Filipino, Amador Pastrana,
31, who has made $6 billion in eight years. Pastrana is on the run.
The FBI will move soon to close the global operation, but it will
be too late for the Australians – two of whom are known to
have been cheated of $400,000 each. Last week's raid on a boiler
room – a sophisticated, "cold calling" operations
centre – in the Thai capital of Bangkok was the tip of a fraudulent
iceberg.
Pastrana, according to one of his victims, has built an empire of
50 boiler rooms in nine countries, and also receives "dirty" money
from criminal groups and from arms deals. The victim says Pastrana
then launders the money through his sharemarket scam, doubly profits.
Pastrana regularly works 20-hour days, seven days a week and has
become one of the world's richest people. He is close to the Thai
royal family, various archbishops and also is a friend of disgraced
former Philippines president Joseph Estrada.
Australia has been one of the countries most heavily targeted by
Pastrana and his army of high-pressure telephone salesmen. But last
week's arrest of 80 people in Bangkok was just the "tip of the
iceberg", according to the Australian Securities and Investments
Commission.
ASIC officials warned that unlicensed brokerage firms are still
operating in Asia. Thailand's securities watchdog, the Securities
and Exchange Commission, has asked police to file criminal charges
against seven men who allegedly ran Bangkok-based stock trading firms
that tried to scam investors, mostly in Australia and New Zealand.
The SEC alleges the seven men headed stock brokerage firms without
a licence from the Thai Government. It says they sought to sell shares
of non-existent or dubious companies to investors. The seven are
John Martin Kealy, Ronan Joseph Murray, Paul Mary Hickey, Scott Campbell
Fisher, Jason Garrick Rich, Adrian Robert Wallis and Steven Hooper.
The SEC provided no details about them. Hickey, an Irishman, and
Fisher, an Australian, are in custody.
The unlicensed firms employ English-speaking backpackers in Asia
to "cold call" people, encouraging them to buy shares on
the stock market. People are pressured into investing thousands of
dollars – which usually disappears.
ASIC's executive director of consumer protection, Peter Kell, said
the latest arrests were only a deterrent. "Quite a few cold
callers will continue to exist and consumers need to be vigilant
to make sure they are not tricked," Mr Kell said. ASIC has been
flooded with thousands of phone calls since the Thai arrests.
Overall losses are believed to be billions of dollars and by fraudulently
using the stock of just one company, Berten USA, Pastrana has fleeced
Australian investors of $25 million. The company's president, James
Martin, claims if US authorities and the FBI had listened when he
warned them a year ago of fraudulent transactions in his stock, up
to 90 per cent of the Australian losses could have been avoided.
Instead, US authorities told Mr Martin there was nothing they could
do about the scam because it had not taken place on American soil
and they had received no complaints from US victims.
It was not until Pastrana made his first major mistake in nine years – he
forged Mr Martin's signature on a document – that the FBI began
an inquiry. Berten USA started as a legitimate manufacturer of men's
cologne. After being dormant for a decade, Berten was purchased by
an American known as "Dan", who is implicated in Pastrana's
operation, and is a suspect in a $1.8 million US security fraud.
"Dan" sold Berten as a shell company to Pastrana shortly
before he introduced the Filipino to Mr Martin. At the time, Mr Martin
was operating a legitimate Silicon Valley company called Stratasys
and needed investment capital. "Dan" suggested Pastrana
to Mr Martin as a potential source of the investment capital. Pastrana
agreed to invest $US7.5 million on condition Mr Martin used Berten
as the vehicle and became company president.
Pastrana's background appeared impeccable and among his references
was then-president Estrada. "He was going to put in $US7.5 million
to add to the $US2.5 million my colleagues and I had invested," Mr
Martin said. "When I first met him in December 1999, he was
charming and deeply concerned I was happy with everything he was
doing.
It was a class act, very accomplished and polished." Mr Martin
and Pastrana met regularly over the next year and all went well until
Mr Martin caught two employees planning to embezzle $600,000 from
Stratasys. "I fired them immediately, and then I received a
quite forcible call from Pastrana saying I should reinstate them," he
said. "That's when I first smelled a rat."
His suspicions were soon confirmed when he started receiving phone
calls from Pastrana's friends asking when he was going to float Berten
USA. Information of that nature is illegal insider trading. In August
last year, following his float, Mr Martin went to the authorities
and asked them to take his stock off the market. But it already was
too late.
Mr Martin and his friends lost their $US2.5 million original investment
and Mr Martin lost a further $US27.5 million. He was declared bankrupt
but later discharged. He then set off to trace investors who had
lost money. So far he has been to Australia, New Zealand, Germany,
Austria, Switzerland and South Africa.
The FBI had Pastrana under surveillance for weeks and was due to
arrest him and close his operation any day. But last week's Thai-led
raid on the Bangkok boiler room, which snared 10 Australians and
70 other foreigners, was premature.
Mr Martin said Thai officials had needed a boost for a local election
and the raid provided the opportunity. The original plan was for
simultaneous raids on 25 boiler rooms in 15 countries but the other
boiler rooms have now been warned. And, Mr Martin said, one of the
two companies named by Thai police after the raid, Benson Dupont
Capital Management, was one of the least effective cogs in Pastrana's
operation.
"Everybody they picked up in the raid was very small fry," he
said. Mr Martin left Australia on Wednesday after meeting defrauded
investors. "For the past two months I have been touring the
world tracing investors who have been burned," he said. "There
is no legal obligation to do this, but I see it as a moral obligation.
These people placed their faith in my company and have lost large
amounts. "Their reaction to me has been understandably suspicious
to begin with, but I have addressed a lot of meetings now, and generally
my version of events has been accepted." Mr Martin has compiled
detailed lists of many of the 4000 victims worldwide who bought worthless
shares in Berten USA and has put together an international "hit
parade" of the worst-hit countries.
He believed it was almost impossible to work out global losses on
companies manipulated by Pastrana. "He picks up five new companies
every month, aiming for 60 a year. He plugs and dumps them at the
same rate," Mr Martin said. "Berten is the only one I know
about in detail and investors lost $25 million in Australia alone
in under a year. "If you start multiplying that figure by 60
times a year for nine years, you are probably starting to get close."
PCIJ Report: Filipino is king of boiler rooms
By Sheila Samonte-Pesayco
Philippine Center for Investigative Journalism - Philippine Headline
News Online - Newsflash.org
From The Philippine Star 04/15/2002
The operator of what could be the biggest scam syndicate in the
world is a Filipino, authorities in various countries say.
Just 30 years old, Amador Apungan Pastrana, has become the face of 21st-century
high-tech fraud. According to authorities here and abroad, he is the
brains of a global network of boiler room operation that have duped hundreds
of thousands of investors with little knowledge of the financial market,
but with lots of money to spare.
Pastrana’s alleged victims include 4,000 people who lost $35 million
they invested in one of his shell companies, thousands of retirees in
Australia and New Zealand, and nearly 700 South Africans who lost a total
of $28 million, of which $5 million belonged to businessman Lino Leoni,
one of the owners of the renowned DeBeers diamond company.
Accounts in the Internet and Australian newspapers say Pastrana has already
amassed some $6 billion in a mere eight years, a wealth accumulated largely
from running at least 150 boiler rooms in nine countries. But his operations
have also earned him the ire of the police and the Securities and Exchange
Commission (SEC) in the Philippines, Hong Kong, Singapore, Australia,
New Zealand, South Africa, Canada and in some European countries. None,
however, has managed to catch up with the slippery Filipino.
Pastrana, who maintains posh homes in Manila and Los Angeles, is now
on the watchlist of authorities in many countries, including the Philippines.
The US Federal Bureau of Investigation (FBI) has also begun to investigate
his activities. Police in Austria want to talk to him, as well as to
US national Regis Possino, a disbarred lawyer convicted of fraud and
drug dealing, and shady Saudi Arabian businessman Adnan Khashoggi. Media
reports say the three men were members of a consortium that bought a
small Viennese bank without a brokering license, and then turned it into
a boiler room.
But Tomas Syquia, acting director of the Compliance and Enforcement Division
of the Philippine SEC, says building a case against the international
syndicate is difficult because of the complexity of the modus operandi.
Most of the victims are all overseas, making it hard and costly to gather
information and court evidence.
As of this writing, the PCIJ has yet to hear from Pastrana or his legal
representatives in Manila, to whom it sent a written list of questions.
Still, James Martin, director of Sydney-based Stock Investigation Research
Society (SIRS), a network of victims of boiler room operators, says, "He
(Pastrana) is the Henry Ford of boiler rooms. He has taken it into mass
production scale like no one else."
Called "boiler rooms" because they usually work out of cramped
office spaces with desks and telephones and apply high-pressure sales
pitches on their victims, operations like that of Pastrana’s can
be found in practically every continent. Each office has an army of telemarketers
that call up retirees, pensioners, lottery winners — anybody who’s
neither a banker nor a broker — who are thousands of miles away,
and more than likely in another country. The glorified telemarketers
then pitch stocks of "pinksheet" companies, or those whose
shares sell for a fraction of a penny, listed on the unregulated Over-the-Counter
Bulletin Board (OTCBB) of the US NASDAQ.
These boiler rooms hire expatriates with Western accents who present
themselves as hotshot brokers of securities firms that have impressive-sounding
names such as Morgan Lynch (a cross of US investment banks J.P. Morgan
and Merrill Lynch), Griffin Securities, Muller & Sons, Dukes & Company,
and Knowle & Sachs. They send out glossy newsletters, put up Internet
sites and pester the potential victim with follow-up calls until he agrees
to part with his savings and buy the stocks. Clients, who plunk down
amounts that range from $1,000 to $5 million each, then receive instructions
on how to send the payment by telegraphic transfer to a bank overseas.
The companies collapse their operations after six months to a year or
when too many clients itching to see returns start burning their phone
lines. But like zombies, the firms come alive again in another office
address or in another part of the world, using a different name and another
set of incorporation papers. Often, too, the salespeople would say they
are calling from Bangkok, Hong Kong or China, even if they are making
the calls in, say, Manila.
Clients who try to cash in on their investments are never successful.
More often than not, the boiler rooms do not really buy the shares and
merely pocket the money. When the clients run to their respective SECs
for help, they find out they have put their trust in obscure companies
that do not even hold a license to trade stocks or a legitimate office
address. Their phone calls go to business centers paid to render secretarial
work and receive calls that are automatically re-routed to the boiler
room’s landlines.
Engineer Peter Harvey, who lives in the remote town of Kondinin in Western
Australia, admits losing $150,000 from investing in OTCBB shares offered
by boiler rooms allegedly owned by Pastrana. In an e-mail interview,
Harvey recounts how he was first "sold" shares of companies
believed to be part of Pastrana’s own pinksheet empire, and then
later told that his account was being transferred to another firm and
then another.
As Harvey tells it, he had first dealt with First Federal Capital, a
company operating in Makati City but based in Palau, in 1997. A year
later, he was told his account was being transferred to Pryce Weston,
which had supposedly bought First Federal. In 1999, another company called
Saxon and Swift, which also had offices in Vanuatu and Hong Kong, took
over Pryce Weston.
Harvey says the same thing happened with Bradshaw Global Asset Management,
another boiler room company then based in Makati but with a representative
office in Rancho Sta. Margarita in California. Sometime in early 2000,
Bradshaw’s operations were taken over by Newport Pacific Securities
and Management, also based in Makati. According to Harvey, Newport eventually
ceased operations, and his account was moved to Gibson and Peterson Company,
based in Bangkok.
"I even flew over to the Philippines to meet them and have a look at their
operations," says Harvey. He says he did not find anything suspicious at
the time. Now, though, he has only one word to describe these companies: "parasites."
Yet while Pastrana seems to be the present king of boiler rooms, he was
not the inventor of this elaborate scam. Experts say boiler rooms began
more than a decade ago in the United States, particularly in Florida,
where they reportedly flourished due to lax investment rules there as
well as the large population of retirees.
SIRS’s Martin reckons boiler rooms boomed soon after 1990, when
the US SEC allowed the trading of the so-called "Regulation S" shares.
The policy, meant to respond to the increasing globalization of the capital
markets, allows the sale of securities not registered with the US SEC
to be sold to offshore investors. But Martin says what it has really
done is to allow boiler rooms to mislead investors outside of the United
States. These investors are led to believe they are being sold shares
in legitimate US companies, and that the transactions have the seal of
approval of US regulators. Coming at a time when stock markets were doing
very well, the boiler rooms hit pay dirt in the hundreds of thousands
of people eager to invest even their nest eggs.
When the FBI conducted a major sweep in the early 1990s, the boiler rooms
simply moved their operations outside of the United States, eventually
choosing countries that had no extradition arrangements with US law enforcement
agencies, or with weak rules of law. Many of the boiler rooms thus set
up their dialing offices in Canada, Hong Kong, the Bahamas, Panama, Costa
Rica, Liberia and South Africa. Some apparently wound up in the Philippines,
with one of them eventually employing Pastrana.
A BS Computer Science graduate of Trinity College in Quezon City, Pastrana
had first worked as a crewmember in a McDonald’s outlet before
he chanced upon a newspaper ad for telemarketers in a Makati-based firm
called Griffin Securities. It turned out to be a boiler room operation,
but Pastrana lasted long enough in the company to master the "business." Some
of his former employees were told that Pastrana took some vital diskettes
with him when he resigned from Griffin. They believe he used these to
help set up his first company, which became First Federal Capital.
According to the Philippine SEC records of AAP Management, Inc., his
flagship company, Pastrana managed to have more than 10 companies in
just a span of five years. It is believed these companies form part of
his legitimate business and still do not include his boiler rooms. Among
those listed as his previous positions were managing director of First
Federal Capital, Inc. and president of Mendez Prior Hall, which authorities
raided and were able to seize documents from showing the extent of its
boiler room operations.
Today, Pastrana is said to own more than 100 boiler rooms and shell companies
around the world. Some of them are incorporated in small tax-haven territories
such as the Bahamas, Belize, British Virgin Islands, Mauritius, Cayman
Islands, Western Samoa, Turks and Caicos, St. Vincent and the Grenadines,
Island of Nevis, and the republics of Liberia and Seychelles. Those in
the United States were incorporated in Nevada, Florida, Delaware and
South Carolina.
Martin, who says he was duped by Pastrana in an even more complicated
way, has also received reports that Pastrana in the early 1990s had crossed
paths with Sherman Mazur, a German national who was then running boiler
rooms in the United States. In 1993, Mazur was sentenced to five years
in prison in California for securities fraud. While he was serving time,
Mazur reportedly passed on the management of his boiler rooms to Pastrana, "whom
he trusted," says Martin. "But Amador not only took over these
boiler rooms, (he) set up more."
Records obtained on Pastrana's US corporate empire as of June 2000, though,
lists only seven OTCBB-listed companies created out of a series of reverse
mergers and acquisition of dormant firms. The results are several holding
companies operating only on paper, usually with the same corporate secretary,
Roy Rayo, or Filipino lawyer Claudine Montenegro whom Martin also sued
for practising in the US without a license.
The seven US holding companies are neatly spread out into different sectors.
Apart from Digital Reach Holdings Corp., which takes care of investments,
there is Key Holdings Corp., which was incorporated in Nevada, but is
an "online gaming company based in Antigua or Dominican Republic." Netsat
Holdings Ltd. is said to focus on telecommunications and Internet service,
Your Future Holdings Inc. on educational development and technology,
Labco Pharma on pharmaceuticals, and another Cayman-based holding company
for food. There is also Stratasys, once owned by Martin but is now Pastrana's,
which is a Bermuda-based holding firm supposedly handling software development.
The shares of these companies are listed on the OTCBB, which is highly
vulnerable to price manipulation. Not surprisingly, these nearly worthless
company stocks are among the offerings of Pastrana's boiler rooms. Harvey
himself says he was among those who loaded up on Labco Pharma shares.
While the clients of his operations permanently part ways with their
money, Pastrana has yet to stop raking it in. According to one of his
former employees here in Manila, his companies tills rang up a total
of some $5 million a day in 2000. Other ex-employees say more than a
third of that automatically went to Pastrana while only a tenth was used
to buy legitimate stocks in behalf of clients.
A former resident of a squatter community in Guadalupe Viejo in Makati,
Pastrana is now said to own a $2.8-million apartment penthouse on Wilshire
Boulevard in Los Angeles, California.
"He also bought his mother a lovely gift: a $14-million house in Rancho
Santa Margarita in Mission Viejo, California," says Martin. "A very
nice son, don't you think?"
In the Philippines, his properties reportedly include two luxury condominium
units in the high-end Essensa East in Taguig, a villa with a view of
the sea in Caylabne Bay, the Winners restaurant on Arnaiz Avenue in Makati,
and units at The Peak, also in Makati. Authorities hot on Pastrana’s
trail say some of the properties have been placed under the name of his
front companies such as Euro Pacific Trade Inc., or those of members
of his immediate family.
Pastrana’s megabucks have also found their way into listed conglomerates
such as Hong Kong’s Hutchison Whampoa Ltd., as well as Singapore
Telecoms, US metal producer Alcoa Inc., Pacific Cyberworks of Hong Kong,
and US semiconductor firm Intel.
United Resources Asset Management Inc., which was set up in May 2000
and now acts as investment manager for the entire Pastrana group of companies,
had a portfolio of $200,000 invested in these stocks. In its first year
of operation, the company targeted an investment of over $20 million
a year, according to AAP Management records.
Some of his associates say that despite his supposed riches, Pastrana
still has some simple joys, among them buying brand-name shoes at bargain
prices in either Bangkok or Hong Kong. But he is also known for e-mailing
his personal secretary to keep replenishing his stock of blue and black
Mont Blanc pens, as well as showing off the results of his latest liposuction
or the wonders cosmetic surgery has done on his face.
Obviously, too, Pastrana is making good a promise his former associates
say he made to himself several years back. When he was still a struggling
college student, Pastrana was said to have sworn in true Scarlett O’Hara
fashion: "I shall never go hungry again." (To be continued)
By Sheila Samonte-Pesayco Philippine Center for Investigative Journalism
From The Philippine Star 04/16/2002
Laws, raids fail to thwart boiler room activities
By Sheila Samonte-Pesayco
Philippine Center for Investigative Journalism
(Conclusion)
From The Philippine Star 04/17/2002
Even the US Federal Bureau of Investigation is now looking into his
companies’ activities, but Pangasinense Amador Apungan Pastrana
has managed to elude authorities across the globe who want to pin him
down for the shenanigans of his alleged boiler room firms.
Indeed, Pastrana, who is said to head a global network of "collapsible" companies
that hype nearly worthless stocks to gullible investors and then just
suddenly close shop months later, remains free to enjoy the billions
of dollars he is reported to have earned in the few years that he has
been in business.
And despite raids last year in Bangkok and Manila, boiler rooms still
thrive in both cities as well as other places around the world. Authorities
also admit that these operations have grown even more sophisticated as
years pass. They say that the heads of some networks have even started
to buy banks, intending to use these not only to launder their money,
but also to use as centers for their boiler room transactions.
James Martin, who claims to have lost $35 million to Pastrana in a completely
different scam and now heads Sydney-based Stock Investigation Research
Society (SIRS), says, "Those that were picked up by authorities
(so far) were just small fry. They haven’t gotten the big one (like
Pastrana)."
Authorities say that the big bosses of boiler rooms are hard to catch
largely because the transactions cross borders, giving rise to questions
on jurisdiction. Up until last year, in fact, US authorities seemed uninterested
in checking boiler room operations, even if the stocks these firms were
selling were those listed in the unregulated Over-the-Counter Bulletin
Board (OTCBB) of the US NASDAQ. Former boiler room employees themselves
say that they were given strict instructions not to call anyone in the
US or pitch shares to American citizens, fearing the long arm of US laws.
It was only after US national Christopher Coppola was stabbed to death
in Pasig last May that the FBI began scrutinizing boiler room operations,
especially those linked to Pastrana. Coppola had reportedly been employed
by a Pastrana boiler room in Manila.
The PCIJ has learned that the US Customs police is now also following
leads that Pastrana has been laundering proceeds of his illegal operations
by amassing properties in the United States.
But Tomas Syquia, acting director of the Compliance and Enforcement Division
of the Philippine Securities and Exchange Commission (SEC), echoes Allan
Cantado of the National Bureau of Investigation (NBI) in saying that
it is difficult to make a case against boiler room companies because
of the inadequacies of local and international laws, and the sheer shortage
of official manpower.
Cantado points out, too, that in the Philippines alone, prosecuting agencies
should first prove that the company does not really hold a license to
deal with securities, and that the transactions really existed for a
case involving violations of the Securities Regulations Code to prosper.
"The problem is that the complainants are all foreigners and don’t
want to come here (to the Philippines)," he says. "They only send documents.
Under our jurisprudence, victims have to physically appear before the fiscal
to lodge a formal complaint."
Cantado also does not rule out the possibility that boiler rooms get
prior warnings before they are raided, leaving the police with little
to show afterwards. "Considering that the syndicate is moneyed," he
says, "it’s not totally impossible that they pay off or have
paid off insiders to tip them off" whenever a raid was or is going
to be conducted.
He suspects this is precisely what happened in an NBI raid of a Makati-based
boiler room. Recounts Cantado: "When we came in, the coffee on their
office desks was still hot. We found out they had left just minutes ago
through the emergency exit at the back door."
Yet in March last year, the Philippine SEC thought it finally had some
goods on Pastrana after a raid on 88 Corporate Business Center in Makati.
The bust had been conducted after a Saudi national who lost $48,811 to
two boiler rooms lodged a formal complaint against the companies that
duped him. According to the SEC, the raid on 88 Corporate Business Center
established the interlocking relationships of boiler rooms linked with
Pastrana: not only were several documents on the illegal stock brokering
operations of 21 firms all found in one office, but they also share some
names as incorporators.
A month later, the SEC filed a criminal case with the Department of Justice
(DoJ) against 21 companies and 14 individuals, including nine foreigners
and John/Jane Does believed to be working as brokers or telemarketers.
Among those charged with the criminal offense of running an operation
that trades securities without a license were Pastrana, Rufina Abad,
Noel Galang, Hilda Ronquillo, Greshiela Compendio and British national
Gregory P. Barnes.
The SEC thought it had an airtight case. Apart from documents, it was
also able to gather sworn testimonies from witnesses who were privy to
the inner workings of Pastrana’s companies.
But Pastrana’s lawyers got an injunction order from the Regional
Trial Court of Muntinlupa preventing the SEC, NBI and the Department
of Justice (DOJ) from using documents seized from the raid as court evidence.
The court ruled that the search warrant used to get the documents was
invalid as it violated the legal procedure of stating only one offense.
The court also charged the SEC and NBI for contempt after the agencies
failed to return the documents within the deadline it imposed.
With the documents declared inadmissible by the court, the DOJ last November
decided to junk the case for lack of evidence.
Those close to the case say the police in Hong Kong were dismayed to
learn what had happened here. The week after the March 2001 raid in Makati,
five Filipinos were arrested in a Hong Kong hotel for allegedly trying
to launder some $50 million in proceeds from boiler rooms. All five were
believed to be working for Pastrana, and were actually based in Manila.
The Organized Crime and Triad Bureau of Hong Kong alleged that many of
their victims had paid through Hong Kong accounts set up through company-formed
agents there.
Today, only one of the five Filipinos remains in detention, the rest
having been released on bail. But one of Pastrana’s ex-employees
says the alleged boiler room mogul would have been among those caught
in that Hong Kong raid had he not gone to the toilet just minutes before
the police arrived. According to the former employee, Pastrana had even
left his laptop and coat at the hotel lounge. Pastrana is said to have
avoided alerting Hong Kong authorities about his departure for the Philippines
by renting a private yacht for P10 million and using this for his trip
home.
Some observers speculate that the Filipinos would not have had the need
to be in Hong Kong had the Bangko Sentral ng Pilipinas allowed Pastrana
to keep the small Imus, Cavite-based thrift bank he bought two years
ago. Although Pastrana’s income tax returns for 1997 to 1999 showed
he had "limited sources of income," the Bangko Sentral still
concluded that he was "capable of investing" in the Northpoint
Development Bank based on his declared assets and liabilities as of March
2000.
But a "tip" from the banking industry that Pastrana and one
of the bank’s new directors, Rufina Abad, had an ongoing securities
fraud case with the SEC prompted Central Bank authorities to dig deeper.
Asked to explain these reports, the thrift bank, then already run by
Pastrana, submitted a photocopy of an SEC order exonerating him and Abad
from the criminal case involving an alleged boiler room, the First Federal
Capital Inc. Upon verification with the SEC, the Central Bank discovered
it had been given a forged document, as the SEC investigation into First
Federal and Pastrana’s other companies was still ongoing at the
time. Because of this, coupled with reports that he was engaged in "nefarious
activities," the Central Bank rejected the sale of Northpoint to
Pastrana.
Carmelita Climente, who has been president of Northpoint since its inception
as a thrift bank in 1996, says businessman William Hernandez bought it
from Pastrana last December. She says the new owner does not have links
with Pastrana, and that the two have yet to meet in person.
Climente denies having any knowledge of Pastrana’s alleged boiler
room operations. She says, "My only connection with him was through
the bank. (When Pastrana left the bank,) I offered to resign but the
Central Bank told me to stay out and run it."
Climente admits, however, that Pastrana once tapped her as a consultant
in setting up an investment house that would sell nonconvertible preferred
shares to foreigners – which the SEC does not allow. She says nothing
happened of the plans because "I was not for it."
According to Climente, Pastrana had envisioned Northpoint to be a "technology
bank" that would cater to the ATM needs of small banks. A prospectus
of AAP Management, Inc. – Pastrana’s flagship company – given
to clients does say that what Pastrana had renamed as United Resources
Bank (URB) "will be positioned as a full-technology bank that will
capitalize on its relationship with Infoserve Inc., a leading software
developer for the banking industry." (Infoserve is not a Pastrana
company.)
But the same prospectus indicates that Pastrana had more ambitious plans
for the bank in which he had agreed to put in a fresh P400-million equity
in December 1999. In truth, it maps out Pastrana’s plans to transfer
URB’s head office from Cavite to Makati and then set up a branch
in Ortigas Center, where most of his companies are located. By pumping
in more cash and merging it with more banks, URB was envisioned to grow
into a full-fledged commercial bank with a license to offer trust and
foreign currency deposit products, hence freely catering to clients across
borders.
A former Pastrana employee says URB was supposed to take care of all
the banking needs of Pastrana’s companies, including the alleged
boiler rooms, instead of giving out the business to other private banks.
But lawyer Rodolfo Pineda, who was president of URB when it was still
under Pastrana, denies knowing about any plans that would have the bank
becoming a depository of any boiler room. Pineda says aside from incorporating
some of Pastrana’s companies, he merely helped Pastrana look for
a bank to acquire.
"When I met him, he said he made money from investing in the NASDAQ," says
Pineda. "I didn’t realize it was illegal until I heard about it in
the news."
Reports in the Austrian media, as well as in the Internet, reveal that
Northpoint was not the only bank Pastrana had bought. These reports say
Pastrana was part of a group that had bought WMP Bank AG in Vienna in
November 2000.
In August last year, newspapers in Vienna reported that the Federal Bureau
of Investigation (FBI) had started to look into "a gang of worldwide
active financial artists who allegedly bilked a gigantic 15 billion Austrian
schillings (US$1 billion) from clients." This syndicate turned out
to be the new owner of WMG Bank AG – then already renamed General
Commerce Bank (GCB).
Internet reports then said that the bank had been converted into a brokerage
house that had become the nerve center of the "large-scale scam." Citing
an FBI dossier, the reports said the "perpetrators" of the
scam were "Manila- and Los Angeles-based Amador A. Pastrana, the "mastermind
of the operations" and US citizens Regis Possino and Sherman Mazur,
as well as prominent Saudi arms merchant Adnan Khashoggi.
Two months later, the Banking and Finance Commission of Belgium issued
a public warning against the bank, which it said was offering investment
instruments to Belgian and foreigners without a license. Various media
reports say Austrian police raided the bank, which has since been closed.
The reports had securities regulators in Australia, New Zealand and Thailand
scrambling to include GCB in its blacklist of boiler rooms and warning
investors not to deal with the bank.
Oddly enough, the Viennese bank to this day maintains a website despite
the reported FBI probe and the international blacklist. At its website,
www.gcbankag.com, the bank claims to have been in operation for more
than 10 years now, and trading on the Vienna Stock Exchange. It even
recommends investors to buy shares of Thaon Communications, Inc., an
obscure company trading for a fraction of a penny on the OTCBB of the
US NASDAQ.
UR Capital (one of Amador Pastrana's fronts).
Leo Tan is a personal high school buddy of Amador and was put on the
Berten USA board to represent Pastrana's interest.
The Belgian Raoul Berthaumieu who grew up in Canada appeared as the
new chairman of the banking corporation which is working with a restricted
banking license as broker house: In turn, Berthaumieus particular contacts
to glowing con artists resulted in a new shareholder for the bank: the
legendary arabian arms dealer Adnan Kashoggi."
The FBI are after a gang of worldwide active financial artists who allegedly
bilked gigantic 15 Billion ATS (1 Billion USD) from clients. Since last
Autumn, the instigators of the gang own a banking corporation in Vienna.
Behind the facades of the small "General Commerce Bank AG" which
operated under federal administration since last year [the police] believe
to find certain information about a large scale scam. Two weeks ago the
US federal police has discovered the scandal after having conducted investigations
for more than one year and through infiltration of undercover agents.
The FBI report in which the shocking dimensions of the deals are described:
It lists the names of 18 Boiler rooms, reaching from the Philippines
over Thai to Singapore and Czechia, in which the gang has cashed in the
amazing sum of 1 Billion Dollars.
For the Austrians it is very revealing what the FBI dossier says about
the perpetrators of the affair: In the organisation hierarchy ranked
behind Manila and Los Angeles based Amador Pastrana, the "mastermind
of the operations" according to the FBI are the US citizens Regis
Possino and Sherman Mazur. 52-year old Possino appeared in Vienna last
summer for the first time where he resided in an "approbiate" luxury
flat in Radisson SAS Palais (Rent: 62.500 ATS)
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