DAVID BAINES:
James W. Mcleod has been associated with so many exploration clunkers that the SEC directed the companies to list him as a ‘ risk factor’
B. C. GEOLOGIST LISTED AS ‘ RISK FACTOR’
‘ J ames W. McLeod repeatedly advertises that he has been working as a professional geologist for 39 years, and that he is a member in good standing of the Association of Professional Engineers and Geoscientists of B. C., and that he is a Fellow of the Geological Association of Canada,” I wrote in a column dated April 3, 2010.
“But the ugly reality is that he has spent a large part of his career working for Howe Street hucksters, helping sham exploration companies go public on the OTC Bulletin Board in the United States.
“Why his professional association [ APEGBC] permits this is beyond me. If I were a member of that organization, I would be complaining bitterly.”
So it was no surprise to me when McLeod, who lives in the Kamloops area, was identified as a facilitator of allegedly bogus exploration companies in a complaint filed by the U. S. Securities and Exchange Commission last week. The complaint, filed in U. S. District Court in Fort Worth, Texas, alleges that former Vancouver stockbroker Tom Coldicutt, his wife Elizabeth and four associates conspired to create and sell at least 15 “sham” exploration companies.
The complaint alleges that, between 2006 and 2011, the couple installed nominee officers and directors in companies they secretly funded and controlled, then helped them file reports indicating they were being formed to pursue mining activities, “when in fact they neither conducted, nor were intended to conduct, any real mining activities.”
As a result of their illicit scheme, the SEC alleges, the defendants grossed nearly $ 5 million.
The allegations have not yet been proven.
The SEC complaint also says McLeod and another B. C. geologist, Laurence Sookochoff, facilitated their scheme, although neither is named as defendants.
As mentioned, this is no surprise to me. Of the 15 Coldicutt companies named by the SEC last week, 10 featured McLeod as the consulting geologist. And of those 10 companies, I had identified six of them as obvious “sham” exploration companies more than two years ago.
Those companies are Rite Time Mining Inc., Red Sun Mining Inc., Wilson Creek Mining Corp., Canusa Capital Corp. Mondas Minerals Corp. and Saguaro Resources Inc.
All followed similar patterns. Rite Time, for example, acquired four claims in Washington State for a mere $ 680. McLeod, as the company’s consulting geologist, recommended a three- phase work program, the first phase to cost just $ 7,000. The company’s president was listed as Linda Farrell of Indio, Calif., who had no prior experience in exploration.
Rite Time’s statement was cleared by the SEC in March 2007. In December that year — after spending only $ 6,000 in its mineral project — the company shifted gears and signed a letter of intent to merge with a professional minor league baseball firm. Weeks later, Farrell stepped aside as president.
The SEC now alleges Farrell was simply a nominee for the Coldicutts and has named her as a defendant in its complaint.
I also identified several other companies that are not on the SEC’s list, but nevertheless followed the same pattern.
One was Wildrose Mining Inc. McLeod sold the company some Nevada mineral claims for $ 7,000.
Then he charged $ 3,500 for his geological report, in which he recommended a two- phase program costing $ 21,000. Then he agreed to execute the work program.
The company’s president was listed Robin Hansen of Fullerton, Calif., who had no prior experience in exploration. When I tried to talk to her about the company, she referred me to her “assistant,” who happened to be Linda Farrell.
Wildrose’s lawyer was Abby Ertz of San Diego, who is married to Andrew Coldicutt, and its accountant was George Stewart of Seattle, who is the accountant of record for six of the 15 companies on the SEC’s list.
Alas, Wildrose never went anywhere. It withdrew its registration statement in May 2010, just one month after I dismissed it as a sham. Somebody, it appears, got cold feet.
Another Coldicutt- related company that I identified as a sham was Impact Explorations Inc. In this case, McLeod sold the company some B. C mineral claims and a geological report as a package, for a grand total of $ 4,000. Then he recommended a twophase work program costing $ 24,000, which he agreed to undertake.
The filing solicitor was Andrew Coldicutt of San Diego, who is Tom Coldicutt’s son, and the accountant was, once again, George Stewart.
In both cases, the SEC was so concerned about McLeod’s association with so many exploration clunkers that it directed both companies to include the following “risk factor” in their registration statements:
“Since 1999, Mr. McLeod, our consulting geologist, has been an officer, director, or geologist for over 20 companies, most of which have not moved forward with exploration activities, and at least five of which have changed businesses and completely abandoned exploration activities.”
Even this disclaimer appears to have understated the case. In its complaint, the SEC notes that, “Of the 47 issuers for whom McLeod has been listed as a geologist in commission filings, including the Coldicutt companies, none has operated a successful mining venture.”
Not mentioned is what I view as a glaring conflict of interest.
In the case of Impact and Wildrose — and several other companies I have reviewed — McLeod sold the properties, provided the geological reports and undertook to perform the work programs. The upshot is that he collected money every step of the way for mineral projects that were almost certain to be abandoned.
The SEC complaint similarly notes that Sookochoff served as the consulting geologist in what in Mesquite Mining Inc., which it alleges to be another Coldicutt- related sham exploration company.
It further notes that Sookochoff “is listed as the sole geological expert in filings by several other Coldicutt companies, all of which abandoned mining after their public offerings and were ultimately sold as public shells.”
I note that Sookochoff is also identified as “risk factor” in registration documents, presumably at the direction of the SEC.
To date, APEGBC has not taken any disciplinary action — at least none that has been publicly reported — against any members who have been involved in this sort of activity, which is why McLeod and Sookochoff can still advertise themselves as “members in good standing” even though they are identified as “risk factors.”
Go figure.