Vir­ginia tout fac­ing 33 months for ma­nip­u­la­tive trades

SEC de­fen­dant Lan­dis to plead guilty

Stockwatch Daily - - FRONT PAGE - By Mike Caswell

VIR­GINIA STOCK tout Eric Lan­dis has agreed to plead guilty for car­ry­ing out a scheme to boost 97 pub­lic com­pa­nies. The gov­ern­ment claims that he car­ried out scores of ma­nip­u­la­tive trades in stocks that he was paid to pro­mote. The list­ings in­cluded In­ter­ac­tive Multi-Me­dia Auc­tion Corp., an OTC Mar­kets com­pany that Van­cou­ver-area res­i­dents Ken­neth Telford and Ja­son McDiarmid were sep­a­rately fined for ma­nip­u­lat­ing.

Mr. Lan­dis’s up­com­ing guilty plea is set out in a let­ter that pros­e­cu­tors filed in fed­eral court in Bos­ton on Wed­nes­day, Dec. 5. The let­ter states that Mr. Lan­dis has agreed to plead guilty to one count of se­cu­ri­ties fraud, a charge that car­ries a maxi--

mum term of 20 years. Pros­e­cu­tors and de­fence lawyers ap­pear to have set­tled on a jail term of 33 months, with each side agree­ing not to ap­peal such a sen­tence. The judge will, of course, be free to im­pose a dif­fer­ent term. Mr. Lan­dis will also for­feit his gains from the scheme, which pros­e­cu­tors pre­vi­ously cal­cu­lated to be $3.3-mil­lion. (All fig­ures are in U.S. dol­lars.) The plea agree­ment comes just one week af­ter Mr. Lan­dis’s le­gal trou­bles be­came pub­lic, with the U.S. Se­cu­ri­ties and Ex­change Com­mis­sion fil­ing a par­al­lel civil suit against him in Bos­ton. The SEC ac­cused him of car­ry­ing out a three-year scheme that in­volved thou­sands of ma­nip­u­la­tive trades. The SEC cited three com­pa­nies in par­tic­u­lar, with all three hav­ing Cana­dian con­nec­tions.

Among them was In­ter­ac­tive Multi-Me­dia, a pur­ported dealer of fine art. Ac­cord­ing to the SEC, some­body paid Mr. Lan­dis to pro­mote the stock be­tween March and May, 2015. The SEC did not say who that some­body was, but In­ter­ac­tive Multi-Me­dia was the sub­ject of a sep­a­rate case that the reg­u­la­tor pur­sued against two Van­cou­verites, Mr. Telford and Mr. McDiarmid. The SEC claimed that the men ran a $3.1-mil­lion pump-and­dump with the com­pany from Oc­to­ber, 2014, to May, 2015. Dur­ing the scheme, Mr. Telford and Mr. McDiarmid sold 2.48 mil­lion shares as the stock went to a $1.62 high, the SEC claimed. (The SEC has since won fines and bans against both men. Mr. Telford set­tled the case out of court, with­out ad­mit­ting any wrong­do­ing. The judge later de­ter­mined that he should pay $5.26-mil­lion. Mr. McDiarmid ig­nored the mat­ter en­tirely, and the SEC ob­tained a $5.1-mil­lion judg­ment against him.)

The charges against Mr. Lan­dis were some­what un­usual, in that he did not tell his clients about the ma­nip­u­la­tive trades. The clients had paid him to is­sue pro­mo­tional ma­te­rial on their com­pa­nies through three tout sheets that he con­trolled (The Street Alert, The Penny Reporter and The Stock Bea­con). He did pub­lish the ma­te­rial, but his dis­tri­bu­tion lists were far smaller than he claimed. To make it ap-

pear as if he had dis­trib­uted his tout sheets more widely than he had, he car­ried out the trades, the SEC said.

This was the case with an­other of the stocks that the SEC listed in its com­plaint, En­vi­ron­men­tal Pack­ag­ing Tech­nolo­gies Hold­ings Inc. (which claimed to have some sort of spe­cialty liq­uids tanks, among other things). Ac­cord­ing to the SEC, Mr. Lan­dis touted the stock in June, 2017. He told his client that he would dis­trib­ute e-mails to 72,000 sub­scribers, but in fact only sent the ma­te­ri­als to around 3,600. Mean­while, he used bro­ker­age ac­counts that he con­trolled to carry out co-or­di­nated trades in the stock, the SEC claimed. The stock went to a $2.25 high in 2017, but later came down con­sid­er­ably, last trad­ing at 25 cents. (The com­pany no longer trades. A TSX Ven­ture Ex­change shell, Blue Bay Cap­i­tal Corp., has since ac­quired it.)

En­vi­ron­men­tal Pack­ag­ing is the sub­ject of a sep­a­rate case that pros­e­cu­tors in Bos­ton are pur­su­ing against an­other Cana­dian, Mor­rie Tobin. They claim that he boosted that com­pany and an­other through paid pro­mo­tional cam­paigns while se­cretly sell­ing $3.6-mil­lion worth of stock. Mr. Tobin has agreed to plead guilty and awaits sen­tenc­ing.

The last ex­am­ple that the SEC cited Mr. Lan­dis for was that of Agora Hold­ings Inc., a Toronto com­pany that is de­vel­op­ing prod­ucts called eSilkroad and eSilknet. (The com­pany says that it will “make the in­ter­ac­tion be­tween busi­nesses and non-profit or­ga­ni­za­tions through­out the world faster, more ef­fec­tive, and less costly.”) Ac­cord­ing to the com­plaint, Mr. Lan­dis re­ceived $200,000 to tout the stock in 2016. Again, he cre­ated the ap­pear­ance of mar­ket in­ter­est by trad­ing the stock him­self, buying and sell­ing Agora through ac­counts that he con­trolled. (Agora had a 49-cent high in 2016. The stock was last at 9.99 cents.)

For Mr. Lan­dis, the case is not the first time the SEC has pur­sued him. In 2004, he set­tled a prior mat­ter that the reg­u­la­tor brought against him for his part in the pump-and-dump of 2DoTrade Inc., a Van­cou­ver-linked anti-an­thrax pro­mo­tion from 2001. The SEC claimed that he was part of a group that boosted the stock to 58 cents amidst pub­lic fears of an an­thrax at­tack. (In 2001, en­velopes con­tain­ing the lethal bac­te­ria were mailed to sev­eral news of­fices and to two Demo­cratic se­na­tors.) 2DoTrade claimed that it had a prod­uct that would elim­i­nate nu­mer­ous strains of an­thrax, but within weeks the SEC halted the stock, ques­tion­ing the ac­cu­racy of the com­pany’s news re­leases. The reg­u­la­tor said that the scheme re­sulted in $1.6-mil­lion in il­le­gal gains. In ad­di­tion to set­tling the SEC case, Mr. Lan­dis pleaded guilty to re­lated ob­struc­tion of jus­tice charges.

The de­fen­dants in the SEC’s 2DoTrade case in­cluded a one-time Howe Street tout, Do­minic Roe­landt. The SEC said that Mr. Roe­landt, a Bel­gian, dumped 1.85 mil­lion shares dur­ing the scheme. He ig­nored the case en­tirely, and the SEC even­tu­ally ob­tained a $1.1-mil­lion judg­ment against him. Prior to that trou­ble, Mr. Roe­landt had boosted many Van­cou­ver-linked com­pa­nies, in­clud­ing Wamex Hold­ings Inc., Winch­ester Min­ing Corp., SmarTire Sys­tems Inc. and E-Ve­ Inc.


Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.