SW article on BCSC charges and players BCSC cites large group for abusive share issuances
BC Securities Commission (C:*BCSC)
Monday November 26 2018 - Street Wire
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by Mike Caswell
The B.C. Securities Commission has issued a temporary order against a large group of people and entities, claiming that they have been illegally distributing shares in Canadian Securities Exchange listings. The BCSC says that the group has been abusing exemptions for share issuances normally reserved for consultants. The temporary order prevents the group from participating in such issuances until the BCSC can further investigate.
The allegations are contained in a temporary order that the BCSC issued on Monday, Nov. 26. The case centres around share issuances by 11 CSE issuers between February, 2018, and August, 2018. The BCSC only describes the scheme in vague terms, but it makes it clear that it considers the conduct to be serious, calling it abusive and illegal.
The scheme, as set out by the BCSC, involved listed companies issuing private placement shares without a prospectus. The issuances were done under an exemption normally reserved for consultants. The number of shares issued was substantial, with the BCSC calculating the amount to be 252.1 million.
After selling shares to the purported consultants, the issuers paid most of the private placement money back to the consultants, the BCSC claims. The issuers were then able to publish news releases informing the market that they had raised the full amount of money, when in fact they had only realized a small portion of those amounts, according to the order. The so-called consultants later sold the private placement shares on the market, usually below their acquisition cost, the BCSC says.
Monday's order is relatively brief, as the BCSC undoubtedly intends to set out the scheme in full detail upon further investigation. For now, the regulator has simply imposed a temporary restriction on the 11 CSE listings and the purported consultants. The order bars them from relying on the same exemption in issuing private placement shares.
The many people that the BCSC has identified as being part of the scheme include West Vancouver resident Jason Christopher Shull. He was a broker for several years in Vancouver, and is the son of Osoyoos resident Robert Shull. (In 2010, Robert Shull pleaded guilty to criminal charges in the United States for the manipulation of a company called Fairmont Resources Inc. and was sentenced to 168 days in a halfway house.)
Also on the list is Aly Babu Mawji, a Coquitlam man who spent time in jail in Germany. Prosecutors there said that he was part of the manipulation of a company called De Beira Goldfields Inc. in 2006. The stock was listed in Frankfurt and heavily promoted in Germany, and at one time had a $600-million (U.S.) market capitalization. Authorities in Austria arrested Mr. Mawji for the scheme in 2011, and a judge in Stuttgart later convicted him and two others.
Another name on the list is West Vancouver resident Justin Edgar Liu. He shares an address with May Joan Liu, a controversial promoter who the Vancouver Stock Exchange effectively banned in the 1990s. Mr. Liu also had links to Bravo Enterprises Ltd., a company that the U.S. Securities and Exchange Commission halted in 2014, citing a need to protect investors. The SEC said that the company was one of several that could be exploiting a then-recent Ebola outbreak.
The other consultants that the BCSC's order lists are: Bridgemark Financial Corp., Jackson & Company Professional Corp., Anthony Kevin Jackson, Lukor Capital Corp., Rockshore Advisors Ltd., Cameron Robert Paddock, Simran Singh Gill, JCN Capital Corp., John Rosarino Bevilacqua, Essos Corporate Services Inc., Sway Capital Corp., Von Rowell Torres, David Matthew Schmidt, Detona Capital Corp., Danilen Villanueva, Natasha Jon Emami, Altitude Marketing Corp., Ryan Peter Venier, Platinum Capital Corp., 658111 B.C. Ltd., Tryton Financial Corp., Abeir Haddad, Tavistock Capital Corp., Robert John Lawrence, Jarman Capital Inc., Scott Jason Jarman, Northwest Marketing and Management Inc., Rufiza Babu Husein Mawji-Esmail, Denise Marie Trainor, Randy White, Escher Invest SA, Hunton Advisory Ltd., Kendl Capital Ltd., 1153307 B.C. Ltd., Russell Grant Van Skiver, Bertho Holdings Ltd., Robert William Boswell, Haight-Ashbury Media Consultants Ltd., Ashkan Shahrokhi, Saiya Capital Corp., Tara Kerry Haddad, Keir Paul MacPherson, Tollstam & Company Chartered Accountants, Albert Kenneth Tollstam, 727 Capital, David Raymond Duggan, Viral Stocks Inc., and 10X Capital
The 11 CSE companies that the BCSC's order lists are: Cryptobloc Technologies Corp., New Point Exploration Corp., Green 2 Blue Energy Corp., Blok Technologies Inc., Kootenay Zinc Corp., Affinor Growers Inc., Beleave Inc., Liht Cannabis Corp. (formerly known as Marapharm Ventures Inc.), Preveceutical Medical Inc., Speakeasy Cannabis Club Ltd. and Abattis Bioceuticals Corp.
One of those companies, Cryptoblock (which obviously had some discussions with the BCSC before Monday's order), issued a news release on Friday distancing itself from the scheme. It said that present management had nothing to do with the share issuances that the BCSC is investigating.
The BCSC's temporary order is in effect until Dec. 7, 2018. The regulator intends to seek an extension of the order, after giving all parties a chance to respond.
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