Here we go again. Penny stock promoter Rene Branconnier is involved in another stock deal.
If history repeats itself, investors will take a big hit in their wallets and Branconnier will earn a few more bucks to maintain his expansive hobby farm in Langley. Regulators will intervene, but their action will be too late and too little.
Before we get into Branconnier's latst deal, let's review his past deals.
I first ran cross Branconnier in the early 1990s when he was pumping Thermo Tech Technologies Inc. on the Vancouver Stock Exchange.
Under Branconnier's stewardship, the company misrepresented its affairs, exaggerated its business prospects, associated with disreputable people and companies, engaged in questionable accounting practices, and lost millions of dollars of shareholders' money.
Meanwhile, Branconnier paid himself and family members hundreds of thousands of dollars per year in salaries, and reaped millions through various private business deals with the company.
In 1995, VSE officials squeezed Thermo Tech off the exchange and it migrated to the OTC Bulletin Board, where it continued to rack up huge losses.
By April 2000, when it filed its last financial statements, cumulative losses had soared to $80.4 million.
In July 1999, the B.C. Securities Commission found that Thermo Tech had paid $11.5 million for a 50 per cent interest in two Ontario transfer and waste management facilities that were valued at only $5.9 million.
It issued a cease-trade order until the company explained itself, but an explanation was never provided. The cease-trade order has been partly lifted, but is still in effect for Branconnier and several associates.
By 2001, Branconnier had spun off another waste conversion company called Duro Enzyme Products Ltd., which eventually changed its name to EAPI Entertainment Inc., then Organic Recycling Technologies Inc., and finally Global 8 Environmental Technologies Inc.
Branconnier was neither an officer nor director of Global 8, but he was clearly pulling the strings. He was the company's largest shareholder; his nephew, Chad Burback, served as chief financial officer; his old Thermo Tech crony, Edwin Kroeker, served as president and CEO; and Don Dyer, who handled investor relations for Thermo Tech, performed the same function for Global 8.
Branconnier also served as a consultant and collected astronomical fees. During the year ending September 2008, the company paid him US$3,231,640 in fees. The company didn't fare as well. By June 2009, when it filed its last financial statements, cumulative losses totalled $29.5 million.
Branconnier kept the company afloat by persuading unsophisticated investors to buy shares. One of his favourite watering holes was Fort McMurray, Alta., where Global 8 advertised on the local Christian radio station. (Branconnier often played the Christ card, even saying grace at restaurants before lunching on prospective pigeons.)
Problem is, Global 8 was not registered to sell shares in Alberta. In July 2009, the Alberta Securities Commission issued a cease-trade order against the company on grounds that it illegally sold $19.5 million worth of stock to 950 Alberta investors from May 2003 to June of this year. The matter is pending.
In January this year, the B.C. Securities Commission cited Dyer (Branconnier's "smile-and-dial" guy) for allegedly phoning prospective investors at their residences, which is against the law in B.C.
In total, he is alleged to have illegally sold $836,000 worth of shares to 85 investors. A hearing is set to start Sept. 30.
So what is Rene up to now?
His current deal is Digagogo Ventures Ltd., which bills itself as "the next evolution of private social networking."
"The company aims to empower individuals with their own online household portals that can digitally connect them to other people that they know," the company says on its website.
"Portals will also serve as virtual storefronts where individuals can buy and sell products and services and share information among connected households."
People pay to get connected, and can earn money by getting other people to join, in classic multi-level-marketing style. Or at least that's the plan.
At this point there is no operating business. As of March 31 (its last reporting date), it had only $173 in total assets.
But this has not impeded the stock promotion. Global Equity Reporter, a U.S. penny stock tout service, has been pumping out emails urging investors to jump on board.
This has had the desired effect. On July 11, the stock - which is quoted on the OTC Bulletin Board - traded at a mere eight cents on volume of just under 20,000 shares. By July 22, it had jumped to 70 cents on huge volume of 1.78 million shares.
The stock has since settled at 50 cents, but with 85 million shares outstanding, the company's stock market value is still a very rich $42.5 million.
As we have seen in other deals, Branconnier does not show up as an officer or director, but his fingerprints are all over it.
On May 29, Digagogo signed a letter of intent to sell an exclusive 10-year licence for its networking business to Dennis Branconnier for Red Deer County in Alberta, for $500,000. Dennis is another one of Rene's nephew and had dealings in Global 8.
According to SEC records, Digagogo sold the licence through its Nevadaregistered subsidiary, Impact Technologies Inc. According to Nevada state records, Impact was incorporated in March this year with Rene Branconnier as its sole director and officer.
In June and July, Digagogo - once again through Impact Technologies - signed an agreement to buy all the software associated with the networking business from several private companies. The contact name provided for both Impact and Digagogo in these agreements is Rene Branconnier, and the contact address is Branconnier's hobby farm in Langley.
That's a close enough connection for me to take a wide berth around this company.
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Epilogue: At press time, the B.C. Securities Commission announced a three-day trading halt against Digagogo due to circumstances that "could result in other than an orderly market" for the company's shares. BCSC corporate finance director Martin Eady said these orders are typically issued when there is an active spam campaign or unexplained share prices changes.
dbaines@vancouversun.com
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