Judge in­creases disgraced se­cu­ri­ties lawyer’s sen­tence

SEC de­fen­dant Dalmy’s jail term grows to five years

Stockwatch Daily - - FRONT PAGE - By Mike Caswell

A JUDGE in Con­necti­cut has added two years to the prison term of Diane Dalmy, a Van­cou­ver-linked se­cu­ri­ties lawyer who lied about her as­sets be­fore she went to jail for a pump-and-dump scheme. The ex­tra two years re­flects the dis­cov­ery of a chest of cash that she had stashed in a stor­age locker. She had failed to dis­close the money, at­tempt­ing to avoid hav­ing to pay it to the vic­tims of her

crime, pros­e­cu­tors said. Ms. Dalmy re­ceived the ex­tra two years in an ap­pear­ance on Fri­day, Dec. 7, be­fore U.S. Dis­trict Court Judge Jef­frey Meyer in New Haven. The ex­tra jail time means that she will now spend a to­tal of five years in prison for her part in a $10-mil­lion pump-and-dump scheme. (All fig­ures are in U.S. dol­lars.) She pre­vi­ously pleaded guilty to a con­spir­acy charge, ad­mit­ting that she wrote fraud­u­lent le­gal opin­ion let­ters that al­lowed oth­ers to re­ceive trad­able shares in at least two com­pa­nies. The let­ters helped those be­hind the fraud to make mil­lions, ac­cord­ing to the gov­ern­ment.

The judge had ini­tially sen­tenced Ms. Dalmy to three years in jail and or­dered her to pay $2-mil­lion in resti­tu­tion. Not long into her prison term, pros­e­cu­tors re­ceived a tip that she had a large amount of cash. The tip­ster told them that Ms. Dalmy had asked for help hold­ing $60,000. The per­son re­fused to take the money, and sub­se­quently learned that Ms. Dalmy planned to place it in a stor­age unit in Colorado. The gov­ern­ment lo­cated that stor­age unit, and dis­cov­ered a chest con­tain­ing $47,000 in cash.

The judge has not is­sued his rea­sons for adding two years to Ms. Dalmy’s sen­tence, but he was un­doubt­edly dis­mayed that she had lied dur­ing her ini­tial sen­tenc­ing hear­ing. At that hear­ing, she had told the judge of her in­ten­tion to “do what­ever I can to make resti­tu­tion.” She also ex­pressed how “very, very sorry” she was and how she was “con­sumed by guilt ev­ery day over these cir­cum­stances from my wak­ing mo­ment un­til when I go to sleep, and the con­se­quences on the in­vestors.” Pros­e­cu­tors, of course, pointed out just how un­true her words were. They said that if she was in­deed so “con­sumed by guilt” she would not have set aside thou­sands of dol­lars for her­self, when the money could have been used for resti­tu­tion. The five-year term that the judge im­posed on Fri­day is the sen­tence that pros­e­cu­tors had ini­tially sought.

For her part, Ms. Dalmy por­trayed the money as a sim­ple mis­un­der­stand­ing. She said that she had no in­ten­tion of vi­o­lat­ing a court or­der. When the judge or­dered her to pay $2-mil­lion, no­body ex­pected her to come up with a lump-sum pay­ment. The judge in­stead set monthly pay­ments for Ms. Dalmy at $500. She claimed that she did not re­al­ize she was sup­posed to hand over all of her as­sets, and that she thought she was to make monthly pay­ments.

The in­tended pur­pose for the money, if Ms. Dalmy is to be be­lieved, was for med­i­cal treat­ment. She suf­fers from os­teoarthri­tis in both knees and her left hip and re­quires knee and hip re­place­ment surgery. The costs will ex­ceed what Medi­care will pay for the pro­ce­dures. She said that she wanted to be able to en­sure she could af­ford proper care. The events that landed Ms. Dalmy in jail stemmed from a scheme in which she wrote false opin­ion let­ters for a Florida man named Wil­liam Lieber­man (who has since pleaded guilty to re­lated fraud charges and is serv­ing seven years in jail). Those opin­ion let­ters al­lowed Mr. Lieber­man and oth­ers to re­ceive mil­lions of free-trad­ing shares. Ms. Dalmy pre­pared the let­ters while know­ing that Mr. Lieber­man and his as­so­ciates should have been dis­closed as in­sid­ers. Ms. Dalmy con­tin­ued pre­par­ing the let­ters even af­ter the OTC Mar­kets banned her. She cir­cum­vented the ban by us­ing the name of an­other lawyer, with that lawyer hav­ing no rel­e­vant le­gal back­ground and suf­fer­ing from a de­gen­er­a­tive dis­ease.

The stocks in the scheme in­cluded Mam­moth En­ergy Group Inc., a pur­ported lithium ex­plorer. It reached a 20-cent high in 2013 be­fore fall­ing un­der a penny. Also in the scheme was Fox Petroleum Inc., which was look­ing for oil in Texas, Colom­bia, Peru and other places. It went to 63 cents in 2009, and also fell to un­der a penny.

The five-year jail term rep­re­sents just one of Ms. Dalmy’s le­gal trou­bles. The

U.S. Se­cu­ri­ties and Ex­change Com­mis­sion pre­vi­ously pur­sued her in a case that leads back to Van­cou­ver. On Sept. 18, 2015, she re­ceived a $680,000 fine from the SEC for a shell fac­tory scheme that in­volved for­mer Van­cou­ver lawyer John Briner. The SEC said that she wrote opin­ion let­ters in sup­port of an ef­fort by Mr. Briner at list­ing 20 pur­ported min­ing com­pa­nies. Mr. Briner had at­tempted to cre­ate the com­pa­nies as shells by us­ing sham prop­erty deals and nom­i­nee of­fi­cers.

Mr. Briner is no longer in the se­cu­ri­ties in­dus­try. The Law So­ci­ety of Bri­tish Columbia has since dis­barred him for mis­us­ing a client’s money. He now lives in Chilli­wack and works in the hop farm­ing busi­ness.


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