Boiler room scams connected to Jeffrey Senger
IDA Rampart target Kasman abruptly fires defence lawyer
2002-09-24 18:12 PT - Street Wire
by Brent Mudry
Former Rampart Securities chairman and chief executive officer Barry Kasman, one of two Rampart executive hold-outs, has abruptly terminated his lawyer on the eve of a three-day Investment Dealers Association of Canada hearing which may cost, or greatly curtail, his controversial career in the brokerage industry.
Mr. Kasman, who won a brief adjournment at the scheduled start of the IDA hearing on Tuesday, is expected to return Wednesday to identify his new lawyer, replacing Helen Daley, and the hearing itself is expected to be rescheduled to next Monday at the earliest.
In one of its harshest prosecutions ever, the IDA launched its case against Rampart and its executives on Aug. 2, 2001, scuttling the plans of parent Rampart Mercantile, a Canadian Venture Exchange promotion, to acquire BayStreetDirect, which featured Bay Street dignitaries Jim Beqaj and Richard Nesbitt, for $6-million.
The IDA, the self regulatory organization, booster and lobbyist for the brokerage industry, had quietly expressed concerns about Rampart Securities for more than four years, but its prosecution was launched just three days after Alec Popovic, a respected former RCMP commercial crime senior officer, began work in his new job as the IDA's vice-president of enforcement.
Mr. Kasman presided over Rampart since it acquired his Merit Investment, another trouble-plagued Bay Street brokerage, in 1997. Under Mr. Kasman's watch, Rampart was rife with compliance and capital deficiency problems dating back to its Merit acquisition, and served as a key conduit brokerage in numerous dubious OTC Bulletin Board promotions.
Rampart and Mark Valentine's Thomson Kernaghan, also shut down by regulators, were the only two Canadian brokerages named last month as key conduits in Operation Bermuda Short, a two-year undercover joint FBI-RCMP sting which snared 60 penny stock players, including 20 Canadians, either for agreeing to bribe corrupt fund managers to buy penny stock promotions or to launder drug money for operatives from Colombia's Cali cocaine cartel.
Mr. Kasman's sudden switch of lawyers comes six days after fellow Rampart senior executive Nicolas Tsaconakos, the now-defunct brokerage's former chief operating officer and chief financial officer, was fined $175,000 in a consent settlement with the IDA approved Sept. 17.
Mr. Tsaconakos, who joined Rampart in September, 1999, also agreed to a lifetime bar on serving in any regulatory compliance or regulatory supervision position at any brokerage in Canada.
Former Rampart president Henry George Cole settled two months ago, agreeing to a $125,000 fine and severe restrictions, in a consent settlement approved July 23. Mr. Cole, a key Rampart executive since September, 1997, also agreed to a 10-year suspension from serving in any significant management position at any Canadian brokerage, all the way down to the assistant branch manager or compliance officer level.
In the wake of the IDA's uncollectable $3-million headline fine imposed Jan. 25 against bankrupt Rampart Securities, Mr. Kasman and DM, the chairman and CEO of parent Rampart Mercantile and former head of the brokerage, have yet to settle with the regulator.
Mr. Kasman arguably has the most to lose, as he was the key transition man from Merit to Rampart, and took the reins at the merged firm.
The IDA has chronicled capital and compliance deficiencies at Rampart Securities dating back to early 1997, just after Rampart Mercantile acquired Merit, a troubled, small 35-year-old Toronto-based brokerage which had taken a disastrous $1-million hit from offshore client accounts in a Vancouver-Calgary rig job.
Rampart Mercantile bought Merit for just $1.2-million in August, 1996, and changed the brokerage's name to Rampart Securities in mid-1998.
In 1995, Merit's Toronto head branch took a million-dollar hit when regulators halted trading in Ultra Pure Water Systems (Canada) Inc., a wash-trading rig job involving controversial Vancouver promoter Gordon Brent Pierce. The Ultra Pure ring left $2.36-million in unpaid debits at seven brokerages when the Alberta Stock Exchange abruptly halted the stock in March, 1995, led by $960,000 in debits in UPW accounts handled by Merit broker Stephen Traub.
Although Mr. Pierce's behind-the-scenes Ultra Pure involvement was first revealed by Stockwatch in April, 1995, rumours of Merit's million-dollar hit had already been the talk of Howe Street and Bay Street.
A number of Mr. Pierce's fronts, including Ultra Pure president Grant Atkins and Harvey Gorsuch, key players in the promoter's former Vancouver Stock Exchange disaster, Cost-Miser Coupons, opened or dealt in dubious offshore accounts at Merit, although Mr. Pierce was careful to keep his name off any public documents for Ultra Pure.
The Ultra Pure case was the feature of a major probe by the commercial crime section of the RCMP. The Mounties capped up a 13-month criminal investigation in April, 1996, with a recommendation that charges be laid, but a Crown prosecutor subsequently "no-charged" the file, in a controversial decision.
Mr. Pierce's long-time front, Mr. Atkins, is now busy with another dubious penny stock promotion, GeneMax, which targeted Vancouver brokerages Global Securities and Union Securities in a naked shorting suit on Sept. 4.
Although Merit head Barry Kasman had the misfortune of watching his firm sink after being torpedoed by at least one barely supervised broker and a number of dubious offshore accounts, he went on to head Rampart, which now finds itself accused of failing to supervise its brokers, verify identities of offshore account clients and other compliance troubles, including failing to take acceptable antimoney-laundering measures.
With Mr. Kasman at the helm, Rampart, like Merit before it, had the misfortune of attracting a number of dubious clients, none of whom are identified in the IDA's detailed 26-page notice of hearing.
The latest notable Rampart client to be flushed out is Jeffrey Ray Senger, 36, of West Palm Beach, Fla., who was arrested by the FBI on Aug. 14 in Operation Bermuda Short.
In a 23-page grand jury indictment, returned on May 21 in United States District Court for the Southern District of Florida, and unsealed the day after his arrest, Mr. Senger faces a total of 28 counts in two separate wire, mail and securities fraud conspiracy.
Rampart is featured prominently in the first case, in which Mr. Senger faces 27 counts for masterminding the pump-and-dump rig job of Lifekeepers International, which included a small network of bribed brokers, from November, 1998, through March, 1999, which resulted in investor losses of $3-million. (All figures in U.S. cases are in U.S. dollars.)
In the second, Mr. Senger was snared in Bermuda Short's bribed mutual fund manager sting, allegedly agreeing to pay a 50-per-cent kickback for an $8-million investment by the fictitious fund in Piccard Medical and International Stores.
If convicted, Mr. Senger faces maximum statutory terms of imprisonment of five years for each count of mail, wire and securities fraud conspiracy, 10 years for securities fraud, and 20 years for money laundering.
In a co-ordinated action, the United States Securities and Exchange Commission also named Mr. Senger in a civil complaint relating to a later pump-and-dump of Lifekeepers, from November, 1999, through February, 2000.
His co-defendants in this action are broker Brad M. Nirenberg, 38, of Coral Springs, Fla., and Norman F. Piatti, 48, of West Palm Beach, Fla., the president and CEO of Lifekeepers.
The identity of Mr. Senger's employer should have caused a few red lights to go off in Rampart's compliance department. Mr. Senger controlled a branch of Baxter Banks & Smith, a junky U.S. brokerage later shut down by regulators. (In the unrelated Maid Aide case, Las Vegas penny stock lawyer Max Tanner and a number of licenced and unlicenced Baxter Banks brokers, virtually all since convicted, used Howe Street brokerage Pacific International Securities, facing a landmark British Columbia Securities Commission hearing Oct. 7, as a key conduit for illicit offshore trading.
A second Canadian brokerage is also believed to have been used by the Maid Aide ring, but was never identified in court filings.)
The grand jury indictment claims Mr. Senger acquired large blocks of Lifekeepers shares from November, 1998, to January, 1999, directed Baxter Banks boiler room brokers to flog the stock in return for secret kickback commissions, manipulated the stock and dumped his shares through accounts at other brokerages, mainly Rampart and discount brokerage Charles Schwab.
"Once defendant Jeffrey Senger and other co-conspirators who are not named in this indictment finished liquidating their Lifekeepers stock, they would stop touting that stock and would cease offering further payoffs to the conspiring brokers for promoting and selling that stock to their clients.
At that point, the conspiring brokers would generally stop soliciting customers to purchase Lifekeepers stock, and the market price for that stock would decrease substantially."
U.S. authorities claim that as a further part of the conspiracy, Mr. Senger's greased brokers agreed that they would not get paid by him if their brokerage clients sold their Lifekeepers shares before he gave the go-ahead.
The indictment claims the brokers never told their clients their main motivation in touting Lifekeepers shares was the cash bribes Mr. Senger was paying them.
Although Mr. Senger allegedly greased "numerous" dirty brokers, none of these unindicted co-conspirators are identified.
According to the indictment, between December, 1998, and January, 1999, Mr. Senger transferred 180,000 shares of Lifekeepers to a brokerage account in his name at Rampart, formerly known as Merit Investments.
Starting a month earlier, he also deposited 285,000 shares into an account in his name at Charles Schwab. It is unclear when Mr. Senger opened his account at Rampart, and whether the brokerage's compliance staff ever wondered why a client in Florida would take such a keen interest in a brokerage in Toronto.
While Mr. Senger had a smaller initial position at Rampart, it dominated his selling. The indictment claims Mr. Senger dumped 208,500 Lifekeepers shares through his Rampart account, but just 15,000 shares through his Schwab account.
Mr. Senger did not wait long to whisk off his illicit loot. "From in or about December, 1998, through in or about March, 1999, defendant Jeffrey Senger wire transferred approximately $529,000 from his securities brokerage account at Rampart Securities into a bank account under the name C&S Capital at Republic Security Bank," states the grand jury indictment.
Rampart is featured in no less than 19 of Mr. Senger's 27 Lifekeepers counts, all relating to single specific transactions, including 17 of the 21 share-sale counts and the sole two money laundering counts.
These latter two charges, entitled, "financial transactions with proceeds from specified unlawful activities," including a $115,600 wire from Mr. Senger's account at Rampart on Jan. 20, 1999, and a similar $120,000 wire on Feb. 9, 1999, both to the C&S Capital bank account.
Around the same time as Mr. Senger's Lifekeepers pump and dump, he was also getting involved in Piccard and International Stores, the two promotions which led to him being snared in Bermuda Short.
The indictment claims Mr. Senger acquired large blocks of both these stocks between January, 1999, and August, 2000. The brokerages Mr. Senger used in these two deals are not identified.
Mr. Senger was apparently one of the first Florida targets of Bermuda Short. Similar to Lifekeepers, Mr. Senger allegedly began a pump-and-dump conspiracy for his Piccard and International Stores positions in June, 2000.
Around this time, Mr. Senger had his fateful meeting with the undercover FBI agent posing as an operative for a dirty fund manager.
That July and September, Mr. Senger allegedly paid kickbacks of $12,500 and $10,000 to the undercover agent for small "test trades" of these two stocks, in preparation for the supposed $8-million financing, which never materialized.
Bermuda Short's Mr. Senger was hardly the only dubious client attracted to, and serviced by, Rampart during this period. Rampart was also a key conduit in two other unrelated U.S. penny stock promotions which caught the eyes of U.S. authorities: Rajiv Vohra's 1997-98 rig job of New Directions Manufacturing, and the early-1998 pump-and-dump rig job of Mountain Energy by a ring including California penny stock lawyer Marc R. Tow.
Mr. Vohra is best known as the former partner of controversial West Vancouver stock promoter Rene Hamouth in the Penway Explorers scandal, a high-profile Canadian penny stock manipulation a decade ago which featured Vito Rizzuto, the top Canadian mafioso who is dubbed the John Gotti of Montreal.
Both Mr. Hamouth and Mr. Vohra were acquitted in 1993 after a criminal trial in Toronto, and there is no suggestion that either have had any business dealings with any Mafia figures since.
(Mr. Hamouth denies ever having been a partner of Mr. Vohra, ever being involved in any promotion featuring Mr. Rizzuto and ever having heard of the Mafia figure.
Mr. Vohra relocated from the Toronto suburb of Scarborough a few years ago to the penny stock haven of Fort Lauderdale, Fla.)
This January, the SEC won an $843,000 court award against Mr. Vohra, who made illicit proceeds of $500,000 with partner Sean Healey in the New Directions case. Ina consent settlement in April, 2001, Mr. Healey was fined $146,000 and banned for five years.
The Mountain Energy case was much bigger. That ring made at least $3.6-million in illicit profits trading shares through Merit, which changed names to Rampart during the promotion, according to the SEC.
The Ontario Securities Commission is believed to have played a key supporting role assisting the SEC in its lengthy investigation.
In consent settlements in September, 2001, Mountain Energy players George W. Guttman and Joseph M. Blumenthal, both of Brooklyn, N.Y., were ordered to pay disgorgement of $1.35-million. Mr. Blumenthal, fined $350,000, also agreed to a permanent bar from participating in future offerings of penny stocks.
Mr. Guttman, fined $1-million, agreed to a penny stock bar with liberty to reapply after five years.
Mr. Guttman worked as a broker at a series of U.S. firms between 1980 and 1996, when he began working as a consultant for a number of OTC companies, which later included International Casino Cruises Inc., Mountain Energy's predecessor.
In 1999, Mr. Guttman was permanently barred by the National Association of Securities Dealers from association in any capacity with any member firm, for making unauthorized transactions in a client's account.
In June, 1999, he pleaded guilty in the Southern District of New York to a felony charge of making false statements to the SEC.
Most of the Mountain Energy group's millions of shares were funnelled into and laundered through Rampart and Merit, in accounts of a series of dummy companies, including Mr. Guttman's Growth International and C. Saw Investments Ltd. Shares were also deposited in the name of Merit itself, which held the shares on Mr. Guttman's behalf.
While these three cases have not been noted in the IDA's Rampart prosecution so far, more client and compliance surprises may emerge once Mr. Kasman's hearing unfolds.
IDA enforcement staff expect to introduce as exhibits 13 bankers' boxes full of documents relating to Rampart, its compliance department and external reviews.
IDA bans, fines Kasman; one Rampart client still in jail
2002-11-19 17:40 PT - Street Wire
by Brent Mudry
Barry Kasman, the controversial former chairman and chief executive officer of now defunct Rampart Securities, has been effectively thrown out of the industry by the Investment Dealers Association of Canada.
In a negotiated settlement, Mr. Kasman has agreed to a $200,000 fine and a lifetime ban on serving in any regulatory compliance or regulatory supervision role at any brokerage in Canada, although he is not precluded from going back to work as a broker.
The Kasman penalty tops the negotiated settlements of Rampart former executives Nicolas Tsaconakos, fined $175,000 and banned for life on Sept. 17, and Henry George Cole, fined $125,000 and banned for 10 years on July 23.
The IDA also imposed an uncollectable $3-million headline fine against Rampart on Jan. 25, three months after a Rampart bankruptcy trustee was appointed by the Ontario Superior Court of Justice.
In an eight-page settlement agreement released Tuesday, Mr. Kasman admitted management responsibility for scores of deficiencies, irregularities and other serious problems at Rampart dating back to 1997, soon after it acquired his Merit Investment, another trouble-plagued Bay Street brokerage.
Under Mr. Kasman's tenure, Rampart failed IDA reviews of sales compliance, financial compliance and regulatory capital in 1997, 1998 and 1999, even after Rampart was notified in 1998 that its sales compliance troubles had been referred to the enforcement division of the slow-moving IDA for formal investigation.
Meanwhile, the latest Rampart client to face his own troubles, Jeffrey Ray Senger, arrested Aug. 14 in Operation Bermuda Short, remains in a Florida jail after losing a bail appeal based on flight risk and a chief magistrate's ruling of "clear and convincing evidence" he is an "economic danger to the community."
Mr. Senger's Rampart dealings are featured in 19 of his 27 counts of masterminding the pump-and-dump rig job of Lifekeepers International. (Mr. Senger faces 22 counts of securities fraud, four counts of conspiracy and four counts of money laundering in connection with two fraudulent stock manipulation schemes.)
There is no suggestion that Mr. Kasman or anyone else at Rampart had any idea Mr. Senger was anything but a fine upstanding citizen and a good client of the Toronto brokerage.
Recent court filings in United States District Court for the Southern District of Florida show Mr. Senger was under investigation by U.S. authorities since early 1999, during the early stages of his Lifekeepers promotion, for his activities at Baxter Banks, a notorious boiler operation.
U.S. securities regulators received more than 200 complaints related to the flogging of Lifekeepers shares by Mr. Senger's boiler room brokers at Baxter Banks.
Mr. Senger, based in West Palm Beach, Fla., was evidently a fan of Canadian brokerages. "He had two accounts in Canada that were at Rampart and Union Securities. Both of those accounts were closed when Canada -- they are brokerage accounts, and both of them were closed when Canada changed their law and apparently precluded U.S. citizens from holding brokerage accounts," stated Miami defence lawyer Samuel Rabin in a detention hearing soon after Mr. Senger's arrest. (Canada has not changed any laws on foreign clients of brokerages, but the practice has come under increasing scrutiny by Canadian securities regulators in recent years.)
While Rampart collapsed a year ago, Mr. Senger continued to fly to Toronto on business, although his recent brokerage contacts or dealings are not identified.
On Jan. 30, in a conversation taped by Bermuda Short agents, Mr. Senger said he had just gotten back from a business trip to Toronto. "He says that, 'Rick and I,' Rick being his brother and him, 'had been making money faster than we can count it,'" Assistant U.S. Attorney Rolando Garcia told the judge.
Customs records also show Mr. Senger entered the U.S. from Toronto twice in late July, a few weeks before he was arrested at his home in Florida.
Before his Bermuda Short arrest, the longest time Mr. Senger spent behind bars, the only stretch noted in his bail hearing, was a six-week stint for failing to appear on a DUI, or driving under the influence, charge. "I did 45 days in jail for that," Mr. Senger recently told a Miami judge.
Several Lifekeepers co-conspirators were charged in a separate grand jury indictment last year, while Mr. Senger was a key target of Bermuda Short FBI undercover agents. (His recent Bermuda Short indictment rolled in the Lifekeepers charges.)
A number of these indicted Lifekeepers associates were also fond of Canadian brokerages as stock and money laundering conduits. In July, 1998, South American native Valentin Fernandez, through a nominee, opened an account at controversial Vancouver brokerage Pacific International Securities under the name Kuatro Ltd.
In February, 1999, Mr. Valentin, again using a nominee, opened an account in the name of Dominion Investments at First Marathon Securities in Toronto. His brother, Juan (John) Fernandez, who controlled a branch of Baxter Banks, and four other Baxter Banks brokers were also indicted.
(Pacific International and First Marathon are both now controlled by National Bank Financial of Montreal. Pacific International is currently in the early stages of a landmark hearing by the British Columbia Securities Commission, which claims it attracted and serviced far more than its Howe Street share of dubious clients.
The BCSC citation notes Pacific International was named in a conduit in numerous U.S. indictments, but Mr. Fernandez and his fellow Lifekeepers riggers were not on this list.
National Bank Financial is currently fighting an Ontario Securities Commission prosecution over the underwriting of magnetic Russian mob promotion YBM Magnex International by First Marathon.)
In late 1998 and early 1999, Valentin Fernandez sold 1.3 million shares of Lifekeepers and another rig job, BIZ Holdings Inc., through his Dominion Investments accounts, and used his nominee to wire $2.66-million from these brokerage accounts offshore to Barclays Bank in Nassau, Bahamas, to another Dominion Investments account. (All Senger figures are in U.S. dollars.)
Similarly, he sold 190,000 shares of BIZ through his Kuatro account at Pacific International in Vancouver and wired almost $354,000 from this account offshore to a Kuatro bank account at Barclays in Nassau.
Valentin Fernandez faced eight counts for his Canadian wires offshore. Six were for wire transfers from First Marathon in Toronto: $250,000 on Jan. 25, 1999, $320,000 on Feb. 19, 1999, $175,000 on Feb. 24, 1999, $145,000 on March 3, 1999, $93,000 on April 7, 1999, and $150,000 on April 20, 1999.
The other two were for wires from Pacific International in Vancouver: $31,352 on April 7, 1999, and $213,881 on May 7, 1999.
These Canadian wires offshore were all made while Lifekeepers was under increasing investigation by U.S. authorities, but Mr. Senger was undeterred.
"For example, in February of 1999, the State of Florida paid a visit to his Baxter, Banks & Smith office and told him their concerns about Lifekeepers, and basically he closes that operation, and instead of running another boiler room, he pumps Lifekeepers stock using E-mails, press releases and a web site campaign," prosecutor Mr. Garcia told the court.
"In June of 1999, the FBI begins its investigation. The FBI interviews Senger's brokers there at Baxter, and that gets back to him, and we know this because he has a meeting with the undercover agent and the co-operating witnesses."
Lifekeepers was just one of numerous dubious deals Mr. Senger worked on, according to U.S. authorities. (Mr. Senger retained defence lawyer Mr. Rabin on Oct. 14, 1999, soon after the arrest of Monty Myler, a very close friend and Lifekeepers business associate who later flipped and copped a plea.
As part of their sentence deals, Mr. Myler and the Valentines were barred from doing any sort of telemarketing work in the future.)
Despite knowingly being under investigation for Lifekeepers, Mr. Senger lined up another penny stock deal, to buy the BIZ shell. "It turned out that the owner of that shell contacted the FBI, and they sent an undercover agent to pose as the boyfriend of the shell corporation (owner)," states Mr. Garcia. "
The undercover FBI agent basically kind of stalls him, and essentially the FBI is able (sic) to afford any pump of that stock."
"He continues. In June of 2000, he moved his operation to Georgia to escape the heat, as he puts it ... there he does another deal," Mr. Garcia told the court.
In this deal, Mr. Senger sold a $300,000 or $400,000 private placement of Design Pallets, a shell owned by an associate.
"And while he is doing this deal, this Design Pallets deal, he was also pumping the Piccard Medical stock, doing these E-mails and false press releases and bribing the undercover agent and the co-operating witnesses in the sting, and we know that the Design Pallets deal based on recorded taped conversations that the defendant has with the undercover agent and the co-operating witness," the prosecutor told the judge.
In September of 2000, the National Association of Securities Dealers shut down Mr. Senger's office in Georgia, and that same month he brought the "eye store deal" (Piccard) to the undercover agents and co-operating witnesses in Bermuda Short.
Then, in November of 2000, Mr. Senger got involved in a foreign currency boiler room called Stratus. "In his recorded conversations, he is selling foreign currency options using a Bahamian clearing firm called Suvix ( Suvex ).
Well, FBI Agent John Munet who is in the courtroom here, made a visit to Suvix in the Bahamas, and it wasn't a trading firm.
It didn't employ traders. It wasn't in the business of buying options. It consisted of one employee there who was simply typing up trade confirmations," states the prosecutor.
STRATUS FINANCIAL GROUP, INC. - Florida
1605 B PROSPERITY FARMS RD LAKE PARK FL 33403
Event Date Filed
Event Effective Date
Name & Address
BOVI, DAVID M
David M. Bovi was the attorney for a Jeff Senger for his SEC filing of HAAS NEUVEUX & CO.
A few months later, in February of 2001, Mr. Senger introduced the undercover Bermuda Short FBI agents and the two co-operating witnesses to other unindicted co-conspirators setting up another stock fraud.
"They eventually did do the same kickbacks as Senger, but it was a different deal," states Mr. Garcia.
The court also heard of Mr. Senger's involvement in several other dubious penny stock promotions, including Internet Stock Market Resources and International Stores.
The court also heard that between November, 2001, and February, 2002, Mr. Senger generated more than $270,000 from the sale of shares of five penny stocks through his brokerage account at SAL Financial Services Inc.: Direct Wireless Communication Inc., Ivoice Inc., Knowledge Networks Inc., Micro Laboratories Inc. and Xtreme Webworks.
"Prior to Senger's sale of those stocks, unauthorized spams (mass unsolicited Internet E-mails touting the stocks) were sent. Senger was one of the largest sellers of those stocks during that time frame.
The large volume of sales caused the price of those stocks to plummet," states one court filing. "The SEC office in Boston, Massachusetts, and the NASD office in Washington, D.C., have initiated investigations concerning the potential manipulation of those stocks."
Defence lawyer Mr. Rabin argued that everything was blown out of proportion. "The government talks about, 'Well, we think that he is engaged in widespread fraud.' They have talked to you today about, I guess they have mentioned five, 10 companies in total," Mr. Rabin told the judge. "He has probably since 1988 in the past 14 years that he has been involved, in the 14 years that he has been involved, Judge, he has probably been involved in over 100 companies."
After several heated detention hearings, Mr. Senger remains in jail, with his trial set for next February.
"Your Honor, our main concern, frankly, is the risk he poses. As recently as August 6th, in an undercover video meeting he indicates to the agent and the co-operators that he and (brother) Rick had four deals rolling now, and they had six million shares, and they would keep everything in family names," prosecutor Mr. Garcia told the judge.
During this taped conversation, Mr. Senger scoffed at the authorities. "They can still make the argument that I've been an ongoing criminal enterprise but there's been periods when I can show I took time off," Mr. Senger laughed.
The judge also heard evidence Mr. Senger travelled to Venezuela in September, 2001, and spent three days on Margherita Island, which is just off the coast. While defence lawyer Mr. Rabin described this island as "a place like Ft. Lauderdale for spring break," Mr. Senger may have had more in mind than some fun in the sun.
"In an August 6, 2002, tape recorded conversation with the CWs (co-operating witnesses), Senger stated that he was thinking of opening a room on Margherita Island and selling offshore investments.
During that conversation, Senger asked the CWs if he could bring deals to a broker-dealer that the CWs were purportedly going to open in Florida," states prosecutor Mr. Garcia in a court filing.
"Senger stated that he could bring back some of his ex-guys and they could call Europe, 'who's going to know.' Senger said that he had people who would buy his paper on the open market."
Mr. Senger, meanwhile, is trying to claim indigent status in court, even though he spent $45,000 on a Rolex watch at Hamilton Jewelers on Feb. 28, talked on July 30 of plans to build a 7,400-square-foot home, and frequently bragged on tape of his offshore prowess.
"In October, 2000, Senger introduced an individual to the UCA (undercover agent) and CWs that could facilitate the hiding of money in Panama.
In a video recorded meeting, this person stated that you can get a Panamanian passport in your true name, change your name through the courts in Panama and they reapply for a new passport in the fictitious name," states the U.S. Attorney's office in a filing.
"Once you did that, you could do your banking in Panama without tracing the money to you. During the meeting, Senger stated that he had a Panamanian account with one million shares of stock in it."
Evidence also shows that during the Lifekeepers promotion period, a corporate bank account controlled by Mr. Senger received $100,000 from British West Indies Securities and $34,000 from BKG Co., an offshore company in the Turks and Caicos Islands.
At his detention hearing, Mr. Senger claimed to have bank account in the Bahamas with a balance of $2,000 to $3,000 and a brokerage account in Bermuda valued at about $150,000.
West Palm Beach—Three stockbrokers were arrested today on federal charges due to illegal actions that resulted in investor losses of over $12 million.
Three other brokers are awaiting arrest. The men were allegedly involved in a “pump and dump” stock manipulation scheme and a foreign currency investment scam while with a now defunct West Palm Beach securities firm.
The U.S. Attorney for the Southern District unsealed an 85-count indictment today. Valentin Fernandez, 35, of Palm Beach Gardens; Juan Fernandez, 30, of Lake Worth; and Daniel Phillips, 28, of Stuart are in custody.
Authorities are trying to locate Emmanuel Kavekos, 28, of West Palm Beach; Haskel Stone, 33, and Matthew Stone, 31, both of Stuart. Juan Fernandez ran two securities firms, Baxter, Banks & Smith (BBS), in West Palm Beach, and later Stonebriar Securities in Savannah, Georgia. The Florida Department of Banking and Finance (DBF) permanently revoked BBS's registration on April 28, 2000.
The defendants are being charged with various counts of conspiracy, securities fraud, wire fraud, and money laundering. If convicted on all counts, maximum penalties for Valentin and Juan Fernandez could be 45 years in jail and millions of dollars in fines.
Emmanuel Kavekos could be sentenced to a maximum of 25 years in prison, Daniel Phillips to 35 years, and Haskel and Matthew Stone each face five years.
The indictment alleges that from December 1998 to August 2000, the defendants participated in a scheme where they sought to artificially inflate the stock prices of three publicly traded companies: Lifekeepers International, Inc. (LIFR), BIZ Holdings, Inc. (BIZ), and Piccard Medical Corp. (PICCARD).
Valentin and Juan Fernandez allegedly misrepresented the merits of the companies and induced brokers Kavekos, Phillips, Haskel Stone and Matthew Stone to recommend the stocks to clients.
Investigators say the Fernandezes made secret payments to the brokers and paid undisclosed commissions up to 10 percent.
The brokers discouraged their customers from selling their stocks until Valentin Fernandez was able to “dump” his own shares into the market, the proceeds of which were wired to banks in the Bahamas, according to DBF.
Defendants Valentin and Juan Fernandez are additionally charged in a “boiler room” operation selling foreign currency options contracts totaling $3.9 million out of International Currency Strategies, Inc. (ICS) in West Palm Beach, and Fairfield Currency Group, Inc. in Delray Beach.
Defendants Kavekos and Phillips worked at ICS. Investors' money from ICS and Fairfield, collected between July 2000 and January 2001, was wired to accounts in the Bahamas.
Instead of being used to purchase foreign currency options, the money was wired back to West Palm Beach bank accounts controlled by Valentin and/or Juan Fernandez, according to investigators.
The Fernandezes allegedly used the money for their own benefit, including the purchase of a 53-foot sport fishing boat.
These indictments are the result of a joint effort among DBF, which is directed by Comptroller Robert F. Milligan, the U.S. Attorney, Federal Bureau of Investigation, and Internal Revenue Service.
The initial alleged stock manipulation scheme was first uncovered by a series of branch examinations conducted by DBF's Southeast Regional Office in West Palm Beach.
Regional Director Brenda Liberti stated, “Many fraudulent operators tend to move from one scam to the next as long as we are chasing them with only fines and license revocations.
It takes criminal charges to shut down the more brazen fraudsters who victimize our citizens and poison the well for the legitimate financial industry.”
Financial Examiner Jessica Vizcarra led the DBF investigative effort. Assistant U.S. Attorney Rolando Garcia in West Palm Beach is prosecuting the case.
CFTC Alleges that the ICS Common Enterprise, Valentin, Phillips, and Kavekos Misrepresented Profits and Risks Associated with FOREX Options and Misappropriated Investor Funds Through a Nationwide Telemarketing Scheme
The complaint against the ICS Common Enterprise in the Florida District Court action charges the defendants with fraudulently soliciting customers to purchase illegal forex options contracts through false claims about the profitability and risk of forex options trading.
The complaint also names Financial Clearing Corp. as a relief defendant. Financial Clearing Corp. is a British Virgin Islands corporation that receives correspondence in the Bahamas and which allegedly holds funds that are traceable to the funds and assets fraudulently obtained from ICS Common Enterprise customers.
The CFTC's complaint estimates that total customer losses exceed $3 million. The complaint also alleges that defendants are misappropriating funds and using those funds for personal expenses, such as purchases at Saks Fifth Avenue and jewelry and furniture stores.
In a related criminal action, the Office of the United States Attorney for the Southern District of Florida issued indictments against and arrested Fernandez, Phillips, and Kavekos as well as Juan Fernandez for criminal violations arising out of the same activities.
The CFTC coordinated its action with the U.S. Attorney's Office and the Federal Bureau of Investigation.
ACCESSION NUMBER: 0001066812-00-000019 DATE: 20000309
HAAS NEUVEUX & CO CENTRAL INDEX KEY: 0000799070
IRS NUMBER: 841032191
SEC FILE NUMBER: 005-56597
1999 BROADWAY STREET, SUITE 3250
DENVER, CO 80202
ITEM 1. SECURITY AND ISSUER This statement relates to the common stock, $.0001 Par Value ("Common Stock") of HAAS NEUVEUX & COMPANY (the "Issuer"). The principal executive offices of the Issuer are presently subject to ongoing litigation proceedings which have not been resolved as of the date of filing of this Statement.
ITEM 2. IDENTITY AND BACKGROUND This statement is filed by Jeff Senger, an individual. Mr. Senger's principal occupation is that of (i) an officer and director of Mymedic.com, Inc., a privately held Internet heath care portal, and (ii) a self employed securities investor.
Mr. Senger's business address is 2300 Palm Beach Lakes Blvd., Suite 210, West Palm Beach, FL 33409. Mr. Senger's resident address is 13889 82nd Lane North, West Palm Beach, Florida 33412.
During the last five (5) years, Mr. Senger has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the last five (5) years, Mr. Senger has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgement, decree or final order enjoining final violations of, or prohibiting or mandating activities subject to federal or state securities laws or finding any violation with respect to such laws. Mr. Senger is a U.S. citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION On May 21, 1999, William Richard Smith, an affiliate shareholder of the Issuer, issued a promissory note to the order of Jeff Senger in the principal sum of Sixty Three Thousand Dollars.
The principal sum, together with accrued unpaid interest, bears simple interest at the rate of Six Percent (6%) per annum and was due on February 28, 2000.
In order to induce Mr. Senger to accept the promissory note and as security for the payment by Mr. Smith of the Note, Mr. Smith agreed to pledge with Mr. Senger all 78,996,000 shares of the Issuer's Common Stock Mr. Smith owned.
Pursuant to the terms of the promissory note, Five days prior to the promissory note's due date, Mr. Senger was given the option to convert the promissory note into the right to retain these shares as full payment of the promissory note and retain all rights of ownership with respect to such shares.
On February 23, 2000, Mr. Senger exercised his option to convert the promissory note into the right to retain the 78,996,000 shares as full payment of the promissory note and retain all rights of ownership with respect to such shares.
The Common Stock of the Issuer was previously acquired by Mr. Smith as a result of the acquisition by the Issuer of all of the outstanding stock of Productos Forestales de Bolivar, CA, a Venezuelan corporation ("PFB") of which Mr. Smith was the sole shareholder, officer and director.
All of Mr. Smith's shares in PFB were exchanged for 78,996,000 shares of the Issuer's Common Stock.
Ongoing litigation proceedings which have not been resolved as of the date of filing of this Statement are presently ensuing with respect to Mr. Smith's transaction with the Issuer concerning PFB.
Mr. Senger is in settlement discussions with adverse parties in connection with this litigation and his ownership of the Issuer's Common Stock, but no agreement has yet been reached between the parties. The litigation proceeding, and possible settlement, may or may not have an effect on Mr. Senger's Common Stock.
Smith's Venezuela ID #E82196664 and William Richard Smith Fla D.L#s 526-436-66-1660)
February 23, 2000 VIA REGISTERED/CERTIFIED MAIL -----------------------------
William Richard Smith
Calle Circunvalacion Del Sol Edificio Tarabay Piso 1-1N
cc: AST (via certified mail) David Bovi, Esq. Tom Howard, Esq. Roger Tomkins John Treddenick, Esq.
David M. Bovi, Esquire P.A.
319 Clematis Street, Suite 812
West Palm Beach, Florida 33401
Haas Neuveux & Company (HANX)
Jeff Ray Senger