Great read on highjacking of shells ect.
http://www.osc.gov.on.ca/en/Proceedings_enr_20130917_boocki.htm

IN THE MATTER OF THE SECURITIES ACT,
R.S.O. 1990, c. S.5, AS AMENDED

- AND -

IN THE MATTER OF
IRWIN BOOCK, STANTON DEFREITAS, JASON WONG, SAUDIA ALLIE, ALENA DUBINSKY, ALEX KHODJAIANTS SELECT AMERICAN TRANSFER CO., LEASESMART, INC., ADVANCED GROWING SYSTEMS, INC., INTERNATIONAL ENERGY LTD., NUTRIONE CORPORATION, POCKETOP CORPORATION, ASIA TELECOM LTD., PHARM CONTROL LTD., CAMBRIDGE RESOURCES CORPORATION, COMPUSHARE TRANSFER CORPORATION, FEDERATED PURCHASER, INC., TCC INDUSTRIES, INC., FIRST NATIONAL ENTERTAINMENT CORPORATION, WGI HOLDINGS, INC. and ENERBRITE TECHNOLOGIES GROUP

REASONS AND DECISION
(Section 127 of the Securities Act)


Hearing:

August 7-10, 13 and December 5, 2012







Decision:

September 13, 2013







Panel:

Vern Krishna, Q.C.

--

Commissioner and Chair of the Panel



Appearances:

Donna Campbell

--

For Staff of the Commission



Swapna Chandra







Alexander Khodjaiants

--

For himself





--

No one appeared for the other respondents

REASONS FOR DECISION

I. BACKGROUND

A. Overview

[1] This was a hearing before the Ontario Securities Commission (the "Commission"), pursuant to section 127 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act"), to consider whether Alexander Khodjaiants ("Khodjaiants") and Alena Dubinsky ("Dubinsky") (collectively, the "Individual Respondents") breached the Act and/or acted contrary to the public interest.

[2] The merits proceeding was commenced by a Statement of Allegations and Notice of Hearing, dated October 16, 2008. Subsequently, on January 4, 2012, an Amended Statement of Allegations was filed by Enforcement Staff of the Commission ("Staff") and on January 5, 2012, an Amended Notice of Hearing was issued by the Commission. Shortly thereafter, Staff withdrew allegations against Saudia Allie ("Allie"), who had been named as a respondent in this matter.

[3] Staff alleges that between June 2006 and March 2007, the Individual Respondents: (a) were involved in fraudulent and manipulative trading of shares of a number of issuers and (b) participated in an illegal distribution of those shares. Specifically, it is alleged that Dubinsky and Khodjaiants operated trading accounts in Ontario for the purpose of receiving and trading fraudulent or false securities in a number of the issuers named as respondents, and that Khodjaiants, through Dubinsky's account, engaged in manipulative trading in respect of two specific issuers.

[4] There are no allegations with respect to the corporate respondents: Leasemart, Inc., Advanced Growing Systems, Inc., International Energy Ltd., NutriOne Corporation, Pocketop Corporation, Asia Telecom Ltd., Pharm Control Ltd. (collectively, the "Issuer Respondent(s)"), Select American Transfer Co. ("Select American"), Cambridge Resources Corporation, Compushare Transfer Corporation, Federated Purchaser, Inc., TCC Industries, Inc., First National, Entertainment Corporation, WGI Holdings, Inc. and Enerbrite Technologies Group (collectively and together with the Issuer Respondents, the "Corporate Respondents"). In fact, on the first day of the merits hearing Staff expressly stated that it would not be introducing evidence with respect to the latter eight corporate respondents, despite there being a temporary cease trade order against them. Staff did not provide a service affidavit for the Corporate Respondents and Staff does not seek findings against the Corporate Respondents. For these reasons, I will not be making further analysis or findings with respect to the Corporate Respondents.

B. History of the Proceeding

[5] Prior to the commencement of the hearing on the merits, the Commission approved a number of settlements in this matter. Nutrione Corporation ("NutriOne"), Stanton DeFreitas ("DeFreitas"), Jason Wong ("Wong"), and Irwin Boock ("Boock"), also named as respondents in this matter, each entered into approved settlement agreements (Re Irwin Boock et al. (2009), 32 O.S.C.B. 9028; (2012) 35 O.S.C.B. 888; (2012) 35 O.S.C.B. 1128; and (2012) 35 O.S.C.B. 1718, respectively).

[6] The hearing on the merits began on August 7, 2012, continued over the course of five sitting days and resumed on December 5, 2012 for closing submissions (the "Merits Hearing"). On the first day of the Merits Hearing, Staff advised that for the second time Khodjaiants had filed for judicial review. Staff submitted that the application was an attempt to further adjourn the Merits Hearing. Khodjaiants did not appear or make submissions. As discussed below, I was not satisfied that an adjournment was in the public interest or necessary to provide an opportunity for a fair hearing of this matter and provided oral reasons for my decision before proceeding with the Merits Hearing.

[7] Over the course of four hearing days, I heard evidence from four witnesses, three called by Staff and Khodjaiants on his own behalf.

[8] For the reasons set out below, I conclude that the Individual Respondents breached subsections 53(1) and 126.1(b) of the Act, and that their conduct is contrary to the public interest.

C. The Individual Respondents

[9] Khodjaiants is a resident of Ontario, who traded in securities of the Issuer Respondents. Dubinsky, who is Khodjaiants's partner, is also a resident of Ontario. Dubinsky opened trading accounts for the purpose of facilitating Khodjaiants's trading of the Issuer Respondents' shares.

D. The Allegations

[10] Staff alleges the Individual Respondents engaged in fraudulent and manipulative trading of shares of various Issuer Respondents, contrary to subsections 126.1(a) and 126.1(b) of the Act and contrary to the public interest. Staff further alleges that the Individual Respondents participated in an illegal distribution of those shares, contrary to subsection 53(1) of the Act and contrary to the public interest.

II. PRELIMINARY ISSUES

A. Failure of Some Respondents to Attend

1. Respondent Participation

[11] On April 16, 2012, the merits hearing that was scheduled to commence in ten days was adjourned on a peremptory basis to begin on August 7, 2012, on the request of Khodjaiants, for the purpose of retaining and accommodating his counsel's schedule (Re Irwin Boock et al. (2012) 35 O.S.C.B. (the "April 16 Order")). At the adjournment hearing of April 16, 2012, it was made clear to Khodjaiants that the Merits Hearing would proceed on the ordered August 2012 dates sought by him. On the first day of the Merits Hearing, Staff appeared and advised that Khodjaiants had filed a Notice of Application to the Divisional Court for judicial review four days prior. Khodjaiants did not appear or seek any further adjournment of the Merits Hearing.

[12] Staff tendered into evidence a chronology of documents evidencing communications Staff had had with the Individual Respondents in preparation for the Merits Hearing, including delivery of hearing briefs of evidence and witness list, requests for Khodjaiants to provide contact information for his counsel and requests for Dubinsky to advise if she planned to attend the Merits Hearing. Staff submitted to the Panel that the Notice of Application to the Divisional Court for judicial review was an attempt to stall the merits proceeding once again. Staff further argued that Khodjaiants had no grounds for review, since his application sought to review Staff's decision not to settle with Khodjaiants, which was not a final decision of the Commission. Staff argued that the Merits Hearing should continue as scheduled.

[13] Dubinsky did not appear at the Merits Hearing. Khodjaiants later appeared on the fifth day of the Merits Hearing for the purpose of tendering evidence on his own behalf. Khodjaiants appeared again on the date scheduled for closing submissions and confirmed that his written submissions were on his own behalf and on behalf of Dubinsky.

2. The Law

[14] Subsection 6(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended (the "SPPA") requires that the tribunal provide "reasonable notice of the hearing" to the parties to a proceeding.

[15] Subsection 7(1) of the SPPA, authorizes a tribunal to proceed in the absence of a party when that party has been given notice of the hearing. The provision states:

Effect of non-attendance at hearing after due notice

7.(1)Where notice of an oral hearing has been given to a party to a proceeding in accordance with this Act and the party does not attend at the hearing, the tribunal may proceed in the absence of the party and the party is not entitled to any further notice in the proceeding.

[16] Further, Rule 7.1 of the Commission's Rules of Procedure (2012), 35 O.S.C.B. 10071 ("Rules of Procedure") echoes the language of subsection 7(1) of the SPPA.

3. Authority to Proceed in Absence of Respondents

[17] On the first day of the Merits Hearing, I determined that I was satisfied that proper notice of the hearing had been given and I fully accepted that, in accordance with subsection 7(1) of the SPPA and the Commission's Rules of Procedure, Khodjaiants was not entitled to any further notice and that the hearing may proceed in his absence. Nevertheless, I decided to resume the Merits Hearing the next morning and asked Staff to communicate to the Individual Respondents that the Merits Hearing would proceed at that time.

[18] I am also satisfied that Dubinsky had notice of the Merits Hearing, as evidenced by email communications to her and by the fact that written submissions were made on her behalf by Khodjaiants. I also note that the Notice of Hearing, the Statement of Allegations, the Amended Notice of Hearing and the Amended Statement of Allegations were posted on the Commission's website, as was the April 16 Order which set out the dates on which the Merits Hearing was scheduled to take place. The Notice of Hearing included the caution that if any party failed to attend the hearing, the hearing would proceed in their absence and they would not be entitled to any further notice of the proceeding. Accordingly, pursuant to section 7 of the SPPA and Rule 7.1 of the Commission's Rules of Procedure, I was authorized to proceed with the Merits Hearing without further notice to Khodjaiants or Dubinsky.

B. The Standard of Proof

[19] The standard of proof in this hearing is the civil standard of proof on a balance of probabilities and evidence must be sufficiently clear, convincing and cogent (F.H. v. McDougall, [2008] 3 S.C.R. 41 at paras. 46 and 49). The Panel must scrutinize the evidence with care and be satisfied whether it is more likely than not that the conduct underlying the allegations occurred.

C. Hearsay Evidence

[20] This Panel has the discretion to admit relevant evidence that might not otherwise be admissible as evidence in a court, including hearsay evidence, under subsection 15(1) of the SPPA, subject to the weight given to such evidence.

III. ISSUES

[21] The following issues were raised in the hearing:

(a) Did the Individual Respondents distribute securities without having filed a prospectus, contrary to subsection 53(1) of the Act and contrary to the public interest?;

(b) Did the Individual Respondents engage in conduct that resulted in or contributed to a misleading appearance of trading activity in, or artificial price for, a security, contrary to subsection 126.1(a) of the Act and contrary to the public interest?; and

(c) Did the Individual Respondents engage or participate in acts, practices or courses of conduct relating to securities that they knew or reasonably ought to have known perpetrated a fraud on persons or companies contrary to subsection 126.1(b) of the Act and contrary to the public interest?

IV. EVIDENCE

A. Overview

[22] Over the course of four hearing days, I heard evidence from four witnesses, three called by Staff and Khodjaiants on his own behalf. Staff called DeFreitas, Allie and Commission investigator Craig Gallacher ("Gallacher").

[23] Staff tendered 14 exhibits at the hearing through their own witnesses. Khodjaiants testified on his own behalf and tendered one exhibit. None of the other respondents tendered any evidence at the hearing.

B. Credibility

[24] Khodjaiants's testimony in chief contradicted documentary evidence with respect to dates upon which shares were issued and much of his recollection was not supported by documentary evidence of any kind.

[25] Further, in his examination-in-chief, Khodjaiants challenged the credibility of DeFreitas. He appeared to blame DeFreitas for the use of his name on corporate records of certain Issuer Respondents. However, Khodjaiants did not appear at the Merits Hearing to cross-examine DeFreitas. Further, DeFreitas's testimony did not bear on Khodjaiants's alleged conduct directly, but explained the overall scheme and how shares were issued by Select American.

[26] When weighing the conflicting evidence in this case, I have considered whether the evidence is in harmony with the preponderance of probabilities disclosed by the facts and circumstances in this case.

C. The Corporate Hijacking Scheme

[27] The corporate hijacking scheme involved a reincorporated entity with a new corporate name, new CUSIP number, as defined below, and new trading symbol, which issued shares through Select American. The new shares were issued to new shareholders, following a consolidation of shares and an increase in authorized share capital. The Issuer Respondents were closely held by Boock and his associates, which resulted in discretionary issuance of shares to parties related to him for the purpose of trading in those shares.

[28] Gallagher testified with respect to the mechanics of the corporate hijacking scheme. The first step in the scheme was to find a dormant or defunct issuer that had previously traded on the Pink Sheets. Gallacher explained that Pink Sheets are one of three over-the-counter markets that operate in the United States ("U.S."), meaning their securities are not listed on the New York Stock Exchange or the NASDAQ stock market. The Pink Sheets, Gallacher testified, is privately operated and companies do not apply to list, rather brokers/dealers apply to trade on the Pink Sheets. As a result, there are no stringent filing or ongoing disclosure requirements of the Pink Sheets as there are with companies whose securities are listed on a formal stock exchange.

[29] The next step in the scheme, Gallacher testified, is to perform a reverse due diligence of the dormant or defunct entity to analyse corporate filings and make sure there are no persons associated with the dormant or defunct company that could be readily located. Once that is established, the person hijacking the company files new articles of incorporation with the same name as the old defunct corporation. Gallacher explained that while it varies by jurisdiction, it was his understanding that typically in the U.S. when a corporation is inactive or had not paid its filing fees for four to five years a person may reincorporate a company by the same name.

[30] To place distance between the original company and the hijacked company, the person would then conduct a corporate name change and a reverse stock split. The idea of the reverse stock split, Gallacher explained, is to consolidate the old base of shareholders by reducing their holdings in the company. The share consolidation in this scheme was commonly done on a one-thousand-to-one share basis. The following step in the corporate hijacking would be an amendment to authorize the share flow to increase. The effect of the latter two steps are to eliminate the influence of the old shareholder base and allow the new hijacked entity to issue shares to whomever it chooses.

[31] Once the name change, reverse stock split and amendment to increase share capital were complete, the individuals conducting the corporate hijacking would communicate with the NASDAQ Corporate Action Department requesting a name and symbol change. While the NASDAQ is a stock exchange, it has a department commonly referred to as NASDAQ Reorg which is responsible for issuing trading symbols for every issuer. Therefore, whenever a name change or corporate action is taken, NASDAQ Reorg is contacted and a new trading symbol is applied.

[32] Securities in the U.S. also have a Committee on Uniform Security Identification Procedures ("CUSIP") number. The CUSIP number, Gallacher testified, is a unique security identifier which acts much like a person's social insurance number. Gallacher stated that the CUSIP number is assigned by a division of Standard & Poor's, known as the CUSIP Service Bureau. The CUSIP Service Bureau would require proof of corporate filings from the Secretary of State to accompany an application for a new CUSIP number. Gallacher testified that a CUSIP number must be applied whenever there's a name change, a stock consolidation or corporate action is taken and that it was his understanding that CUSIP numbers are not. Post-reincorporation, the person conducting the hijacking would represent in dealings with the Pink Sheets, NASDAQ and CUSIP Service Bureau that they are the old company. They could do this because the old CUSIP number was readily available on the internet.

[33] Gallacher also testified that a transfer agent, like Select American, has a gatekeeper role to verify, as an independent third party, the corporate actions of the issuer. When the transfer agent sends a letter requesting a new CUSIP number, the CUSIP Service Bureau relies entirely on the independence of the transfer agent to issue a new CUSIP number. Similarly, when a "transfer agent verification form" is sent to NASDAQ, it is meant to independently verify corporate actions.

[34] Select American was incorporated in Delaware on April 14, 2005 by DeFreitas, Boock and Wong. DeFreitas testified that it was Boock's idea to set up Select American as a transfer agent because the U.S. Securities and Exchange Commission (the "SEC") had changed its regulations to require that Pink Sheet companies have an independent transfer agent. DeFreitas stated that Boock was never a director or officer, but was involved in Select American's operations. By August 2005 Wong ceased to be president of Select American.

[35] DeFreitas testified that Boock would find dormant and/or bankrupt companies that were listed on the NASDAQ stock market years prior, usually ten years or more. Boock would then reincorporate the name, in the same state or in another state altogether. Once the company was reincorporated, the relevant party would be contacted for a new CUSIP number. Once that was done the principals would affect corporate name changes and revise terms of share capital by way of corporate resolution or minutes to the minute book. These changes triggered a new CUSIP number and would trigger a new trading symbol to be provided by NASDAQ.

[36] Gallacher testified that once the corporate hijacking was complete one of two things was done with the hijacked companies. Some reincorporated entities were sold to third parties as shell companies. Others, including the Issuer Respondents, were held closely by Boock, Wong and DeFreitas, who appear to have controlled this operation. Gallacher testified that "Select American was effectively used as a printing press to print share certificates and these share certificates were put on deposit by[...] the respondents and parties related to them and liquidated from brokerage accounts for profit" (Gallacher -- Hearing Transcript of August 9, 2012 at p. 85). Allie, an employee of Select American, testified about the procedure she followed to create and print share certificates for the Issuer Respondents on the direction of DeFreitas and Boock. Allie identified an email from Boock which provided her with a number of addresses she could use to fill in the shareholder list wherever an address was needed; it did not matter what name the address was matched to. Gallacher testified that many of the addresses on that list did not exist, but the street names were the same or close to the real addresses of some of the traders.

D. Actors Involved in the Corporate Hijacking Scheme and Trading

1. Principals of the Corporate Hijacking Scheme

[37] DeFreitas testified that he met Boock in late 2003 or early 2004 through Alex Kaplun ("Kaplun"), whom DeFreitas was doing some consulting for at the time. Kaplun had had prior business dealings with Boock. DeFreitas was told that Boock was an individual who could assist in raising money for investments abroad.

2. Traders

[38] DeFreitas testified that he met Roufat Iskenderov, whom he also knew as Alik, ("Iskenderov") through Boock. DeFreitas stated that Iskenderov was a close friend and associate of Boock's who referred to them two or three entities that wanted to go public: El Apparel, which later became NutriOne, Asia Telecom and Magellan Energy. DeFreitas referred to a group of "Roufat's people" who were supposed to help in the promotion of the companies and were paid for those services by way of shares. Gallacher testified that Iskenderov was a trader of many of the securities in question. Allie confirmed that Iskenderov would come to the Select American office to pick up share certificates.

[39] Elena Lazareva is Iskenderov's spouse and the president and chief executive officer of El Apparel, later NutriOne. Natalya Lazareva is Elena's sister. Gallacher testified that Elena and Natalya Lazareva were traders of the securities in question.

[40] According to DeFreitas, Vicky Zaltsman ("Zaltsman") was a friend of Iskenderov's and Tale Aliev ("Aliev") was a real estate agent referred to DeFreitas by Iskenderov. Gallacher testified that Zaltsman and Aliev were traders of the securities in question.

[41] Boock told DeFreitas that Khodjaiants was a friend of Iskenderov. DeFreitas stated that he knew Khodjaiants as a person supposedly helping with public relations or investor relations with a couple of the issuers for whom Select American was a transfer agent. DeFreitas testified that he linked the name Alex Khodja, listed on corporate documents for International Energy, to Khodjaiants for two reasons. First, the play on names and use of aliases in the scheme make it too coincidental. Second, DeFreitas testified that he had seen Khodjaiants's full name appear on another issuer that was not listed in this matter.

[42] In her compelled examination, Dubinsky admitted that she was Khodjaiants's girlfriend and Khodjaiants testified that Dubinsky was his fiancée. Gallacher testified that a facebook search of Dubinsky revealed she attended high school with an individual named Ruufy Iskenderov. Gallacher's interview of Iskenderov confirmed that he had a son named Roufat who was commonly referred to as Ruufy and that Ruufy did indeed attend the same high school as Dubinsky.

[43] Gallacher testified that Rashad Ahmadov ("Ahmadov") and Maksud Guluzade ("Guluzade") were also traders of the securities in question.

[44] The documentary evidence, tendered through Gallacher, records dates and volume of share deposits and trading activity for accounts held by Dubinsky (for trading by Khodjaiants), Elena Lazareva, Natalya Lazareva, Ahmadov, Aliev, Iskenderov, Zaltsman and Guluzade (collectively, the "Eight Traders").

E. Conduct of Khodjaiants and Dubinsky

1. Dubinsky's Compelled Examination

[45] Dubinsky admitted in her compelled testimony of October 25, 2007 that she opened a Royal Bank of Canada ("RBC") Direct Investing Account on June 17, 2006 (the "RBC Account") and a HSBC Bank Canada trading account on February 5, 2007 (the "HSBC Account") (together, the "Trading Accounts"). Dubinsky stated the Trading Accounts were opened at the request of Khodjaiants so that he could trade in securities and that she knew nothing about the shares deposited into the Trading Accounts.

[46] Dubinsky admitted that she verbally authorized Khodjaiants to trade in the HSBC Account and that it was always her intention that Khodjaiants trade in the Trading Accounts. Dubinsky stated that she received statements from the Trading Accounts, which she passed on to Khodjaiants and that she never discussed with Khodjaiants what he was doing in the Trading Accounts. Dubinsky acknowledged that she went with Khodjaiants to deposit the shares in the Trading Accounts, she identified the shares of certain Issuer Respondents and she confirmed that she had signed the shares for deposit.

[47] Dubinsky also identified her voice and that of Khodjaiants on a series of voice recordings, dated March 13 through 19, 2007, in which the Individual Respondents asked various HSBC employees to transfer $400,000 out of the HSBC Account. She further admitted to having made calls on the direction of Khodjaiants to HSBC, and she identified a fax, dated March 12, 2007, signed by her which requested the immediate transfer of $400,000 from the HSBC Account. Dubinsky admitted that a U.S. dollar HSBC account was specifically set up to receive the funds from the trading and that she had sole signing authority on the account, but she stated that the funds belonged to Khodjaiants.

2. Khodjaiants's Testimony at the Merits Hearing

[48] Khodjaiants testified that in 1996, before he moved from Moscow, Russia to Canada, he gave Oleg Oskov ("Oskov") $30,000 in cash to invest in real estate. Oskov, Khodjaiants testified, was a friend of his from university whom he had known for many years. Under cross-examination, Khodjaiants admitted he never saw the real estate, never got a deed for the property and did not otherwise have a description for the address. Khodjaiants confirmed nothing except that he understood the property was in Moscow.

[49] In his compelled examination, Khodjaiants stated that Oskov called him in 2006 to let him know he had sold the property. Khodjaiants recalled at the Merits Hearing that Oskov had called him for that purpose, but did not recall when the call was made. Khodjaiants testified that Oskov gave him shares as payment for the sale of the property they had purchased together and that Oskov had the shares delivered to Khodjaiants by someone travelling to Canada as Oskov did not trust mail, Fedex or UPS. Under cross-examination, Khodjaiants stated that he did not ask to be paid in cash instead of share certificates because he considered share certificates to be good too. Khodjaiants confirmed that he could not personally trade, so he recalled giving Oskov Dubinsky's name to put on the shares.

[50] Khodjaiants testified under cross-examination that he received the share certificates from an unidentified man at Pearson Airport. He stated that Oskov described the man Khodjaiants was to meet at the airport, but Khodjaiants did not know who the man was or his name. Khodjaiants stated that he never thought of meeting the man at his home and couldn't recall exactly where they met at Pearson Airport. Khodjaiants testified that the encounter in the airport was the only time that he was given share certificates. Khodjaiants claimed that he received all the shares deposited into Dubinsky's accounts on that occasion and stated that he did not check the dates on the share certificates. He did not explain the misalignment of dates between receipt of shares in June 2006 and the recorded issuance dates of post- June 2006 shown on the face of the shares.

[51] Khodjaiants further testified at the Merits Hearing that he had recently been contacted by Oskov several months prior. It was Khodjaiants testimony that Oskov was looking for DeFreitas because DeFreitas owed him money. In that conversation, Khodjaiants testified, Oskov confirmed that the buyer of their real estate had been a St. Vincent company owned by Merma DeFreitas, who is DeFreitas' mother, and that DeFreitas had sent Oskov the shares.

[52] It was Khodjaiants's evidence that he asked Dubinsky to open accounts in order for him to sell the shares he received from Oskov. Under cross-examination, Khodjaiants acknowledged that the HSBC Account was opened when RBC stopped accepting the share certificates.

[53] Khodjaiants admitted that he did the trading in the Trading Accounts and stated that Dubinsky did none. Khodjaiants stated that he deposited the shares on several separate occasions, but did not recall why. Khodjaiants also testified that he decided when to sell the shares certificates based on internet research and whether it was a good price to sell, but stated that he did not consult with anyone prior to selling them. When Staff presented Khodjaiants with summaries of Issuer Respondent share deposits made by certain of the Eight Traders, which showed that Dubinsky's deposits coincided with the same or similar dates and the same share volume per issuer as those traders, Khodjaiants testified that it could be a coincidence. He had a similar response when faced with documentation recording sales within the same time period by himself and the Eight Traders whose deposits matched Dubinsky's. Staff showed Khodjaiants's similar patterns for BigHub, later known as Advanced Growing Systems Inc., and Leasemart, Inc. Khodjaiants repeatedly stated he did not know who the other traders were, what they doing or why there were coinciding Issuer Respondent share deposits and sale patterns.

[54] Khodjaiants's evidence with respect to the use of his name, or a similar name, on the corporate records of Select American's clients was that he attended the office of Select American, the transfer agent listed on the shares he received, to transfer the shares for deposit and paid by way of credit card. Khodjaiants stated that this may have been how his information was used without his knowledge and could explain how a name similar to his was used on documentation filed in California. Khodjaiants testified that prior to the Commission's investigation neither he nor Dubinsky knew or had any relationship with DeFreitas, Wong or Boock.

[55] The remainder of Khodjaiants testimony did not assist me in determining this matter.

3. Gallacher's Investigation

[56] Gallacher is a senior investigator and has been with the Commission since 2004. His involvement in the investigation of this matter commenced in May 2007. Staff tendered, through Gallacher, relevant documentation pertaining to the Issuer Respondents. Specifically, Gallacher identified:

• Corporate filings for each of the Issuer Respondents and subsequent amendments to the articles of incorporation from the Secretary of State in the jurisdiction where the issuer is domiciled;

• The last SEC filing for the original company that predates the corporate hijacking;

• Documents obtained from the SEC, Pink Sheets LLC and NASDAQ with respect to each Issuer Respondent;

• Press releases for the respective Issuer Respondents; and

• Screen shots of websites he observed for certain relevant entities;

[57] Gallacher testified that by the time he became involved in the investigation Select American had been sold to a third party in Montreal and was operating under the name Fair Ross Stock Transfer. In the course of his investigation, Gallacher discovered that Select American was the transfer agent of record for approximately 50 companies in which he saw similar patterns consistent with the corporate hijacking scheme.

[58] Gallacher obtained account opening documents and bank account statements from RBC and HSBC with respect to the Trading Accounts. The documents confirm Dubinsky's real address, despite the insertion of a fake address in the shareholder list. As stated above, the documentary evidence also records dates and volume of share deposits and trading activity for accounts held by the Eight Traders. Staff, through Gallacher, tendered into evidence the share certificates placed on deposit and the deposit slips for the Eight Traders.

(a) The RBC Account

[59] The RBC Account was opened on June 17, 2007. Dubinsky and Khodjaiants made the following deposits into the RBC Account:

Date

Security (Formerly known as)

Number of Shares Deposited



July 1, 2006

Leasemart

12,000,000



July 6, 2006

Bighub (Advanced Growing)

12,000,000



July 6, 2006

International Energy

250,000



July 6, 2006

El Apparel (NutriOne)

12,000,000



August 1, 2006

Bighub (Advanced Growing)

12,500,000



August 31, 2006

Bighub (Advanced Growing)

18,000,000



August 31, 2006

Leasemart

18,000,000



August 31, 2006

Universal Seismic (Pocketop)

1,800,000



December 11, 2006

International Energy

750,000

(Exhibit 6, Tab 1)

[60] From July 17, 2007 to March 6, 2007, Khodjaiants sold shares from the RBC Account in all five of the Issuer Respondents listed above for proceeds of US$12,267.66. Gallacher explained that the total amount withdrawn from the RBC Account was actually US$14,763.94 because of a nominal sum made from trading in other issuers which were beyond the scope of this matter.

[61] On March 5, 2007, RBC sent a letter to Dubinsky which stated that the bank wished to discontinue their relationship and that no further deposits or trading would be accepted on the RBC Account. Gallacher testified that the closure of the RBC Account was the impetus for opening the HSBC Account so that Khodjaiants and Dubinsky could continue to deposit Issuer Respondent securities.

(b) Dubinsky's HSBC Account

[62] The HSBC Account was opened on on February 5, 2007. Gallacher testified that the HSBC Account had a Canadian cash portion and a U.S. dollar portion.

[63] Dubinsky and Khodjaiants made the following deposits into the HSBC Account:

Date

Security (Formerly known as)

Number of Shares Deposited (Account)



February 27, 2007

Asia Telecom

5,000,000 (Cdn Account)



February 27, 2007

Pharm Control

250,000 (Cdn Account)



February 27, 2007

International Energy

5,000,000 (Cdn Account)



March 6, 2007

International Energy

50,000,000



March 6, 2007

Pharm Control

30,000,000



March 6, 2007

Asia Telecom

40,000,000



March 12, 2007

Asia Telecom

17,400,000



March 12, 2007

Bighub (Advanced Growing)

10,000,000



March 12,2007

International Energy

1,800,000



March 12, 2007

International Energy

1,800,000



March 12, 2007

International Energy

5,000,000



March 12, 2007

International Energy

12,000,000



March 12, 2007

International Energy

21,800,000



March 12, 2007

Pharm Control

8,750,000



March 12, 2007

Leasemart

10,000,000



March 13, 2007

Universal Seismic (Pocketop)

1,500,000

(Exhibit 6, Tab 2)

[64] Gallacher identified a handwritten letter of direction from Dubinsky, dated March 12, 2007, which he understood accompanied the share certificates placed on deposit that day in the U.S. portion of the HSBC Account. This letter of direction corroborates the bank records.

[65] From March 1, 2007 to March 14, 2007, Khodjaiants sold shares from the HSBC Account in five of the Issuer Respondents listed above for proceeds of CDN$53,138.71 and US$984,625.63. Gallacher identified a faxed letter from Dubinsky, also dated March 12, 2007, which was marked "RUSH" and requested the transfer of $400,000 instantly from the HSBC Account to Dubinsky's personal bank account. Further, Gallacher also provided transcripts of telephone calls between Dubinsky and Khodjaiants and representatives of HSBC in an effort to transfer the $400,000 from the HSBC Account.

[66] Gallacher testified that none of the funds were ultimately removed from the HSBC Account because HSBC alerted the Commission to matters relating to Select American and specifically this account in mid-March 2007, and by May 18, 2007 the Commission effected a freeze order on the HSBC Account (the "Freeze Order"). The Freeze Order remains in effect at the time of writing this decision.

[67] It should be noted that on May 13, 2008 the Superior Court ordered $7,878.08 to be paid from the HSBC Account to Revenue Canada for the credit of Dubinsky. Updated bank records reflect that the HSBC Account as of June 30, 2012 held balances of CDN$46,218.91 and US$1,016,518.79. This can be explained by the fact that HSBC paid interest on the HSBC Account until the fall of 2008, when the bank ceased to pay interest on these types of accounts due to the economic downturn.

(c) Misleading Appearance of Trading Activity

[68] Gallacher testified that between March 7 and 14, 2007, 60 million shares of Asia Telecom were liquidated through the HSBC Account, which represented 25 percent of the total trading in that security during that time period. Further, Gallacher testified, between March 7 and 13, 2007, 40 million shares of Pharm Control were sold, which amounted to 40 percent of the total volume of trading activity in that time period for that security. Gallacher testified that he was able to calculate the trading volume based on publicly available information on BigCharts.com and taking a fraction of the total volumes of the respective security traded for the relevant period. Gallacher noted that only securities of Select American's clients were sold by Khodjaiants in the Trading Accounts.

[69] The Eight Traders each held a personal RBC Action Direct trading account. Gallacher acquired opening account documents, account statements and correspondence between RBC and each of the Eight Traders. Gallacher testified that he analyzed the trading data of the Issuer Respondents and noticed certain commonalities amongst the Eight Traders. First, shareholder records showed that they lived at the same addresses which Allie had been given by Boock to "fill in the blanks" on shareholder lists.

[70] Account records for the Eight Traders revealed further commonalities with respect to trading activity, including quantities and dates for deposits and subsequent liquidation of securities of the Issuer Respondents. Gallacher testified that it seemed like wholesale liquidation of the securities in question commenced at around the same time by the Eight Traders.

[71] Gallacher guided the Panel through the contemporaneous patterns of share deposits and trading by the Eight Traders for securities of the Issuer Respondents. For example, with respect to securities of International Energy ("IE shares"), Gallacher testified that between July 6 and 11, 2006, Aliev, Dubinsky and Elena Lazareva each deposited a certificate of 250,000 IE shares into their own RBC Direct accounts. Prior to that, between May 1 and 5, 2006, Elena Lazarevna, Iskenderov, Aliev, Zaltsman, Ahmadov and Natalya Lazareva deposited 400,000 IE shares each into their respective accounts.

[72] It was Gallacher's evidence that over a three day period between November 28, 2006 and November 30, 2006, seven of the Eight Traders, Iskenderov, Aliev, Dubinsky, Elena Lazareva, Natalya Lazareva, Ahmadov and Zaltsman, engaged in trading, with all of them liquidating their IE shares in that time frame. Gallacher testified that the summary information concerning trades was taken from the brokerage records of the Eight Traders.

[73] On March 5, 2007, RBC sent a letter to each of the Eight Traders which, similar to that of Dubinsky, stated that the bank wished to discontinue their relationship and that no further deposits or trading would be accepted on their accounts.

V. EVIDENCE MOTION

[74] When Khodjaiants filed written closing submissions he argued that his explanation for receipt of the shares was legitimate and he sought leave to submit to the Panel a document evidencing his real estate purchase and sale agreement (the "Agreement"), which he allegedly obtained a few weeks prior to making his written submissions. The documentation was not provided in English, the language of the proceeding. Instead, Khodjaiants appeared to presume that Staff would translate and somehow authenticate the document.

[75] Staff argued that Rule 4.3(1) of the Commission's Rules of Procedure requires each party to deliver to every other party copies of the documents to be relied upon at least 20 days before the commencement of the hearing or as determined by the Panel. Staff took the position that Khodjaiants had testified at the Merits Hearing that Oskov had contacted him several months prior in relation to the real estate investment, yet when Khodjaiants testified he still had no direct knowledge of the sale details and did not seek to call evidence from witnesses to substantiate the details.

[76] Staff relied upon the test to adduce fresh evidence in R. v. Palmer, [1980] 1 S.C.R. 759, cited in Ontario Federation of Anglers & Hunters v. Ontario (Ministry of Natural Resources), [2002] O.J. 1445 (C.A.). Staff argued that there was no evidence to explain why Khodjaiants did not take steps to obtain and disclose the Agreement in advance of the Merits Hearing or at least at the time of his testimony or why he was silent about the existence of the Agreement. Staff further submitted that the evidence is not credible in the sense that it is not reasonably capable of belief because of the timing of production, the failure to translate the Agreement into English, the fact that the few English words in the Agreement implicate DeFreitas and his mother and the lack of transparency concerning its origin. Staff argue that this suggests the document did not exist until August 13, 2012.

[77] Finally, Staff also submitted that even if the Agreement was found to be credible, when taken with the other evidence adduced at trial it does not counterbalance the preponderance of credible evidence led by Staff which establishes that Khodjaiants and Dubinsky obtained, deposited and sold the shares as part of a group, in furtherance of a scheme designed to defraud investors.

[78] Khodjaiants argued that he only got the Agreement after obtaining legal advice after he had testified, and stated that he had not provided a translation because he didn't have time. His explanation was that he received the Agreement from Oskov by email within a month of the date scheduled for closing submissions. The Agreement purportedly evidenced the sale of Oskov's property, because title was held under Oskov's name.

[79] Staff noted there was not even peripheral reference to the existence of the document prior to the proceedings and Staff had not had the opportunity to cross-examine on the evidence. Staff added that when Gallacher attempted to obtain contact information for Oskov from Khodjaiants during his compelled interview of December 3, 2007, Khodjaiants advised that contact information was not available.

[80] On December 5, 2013, I ruled that I was not persuaded that the Agreement should be admitted. I determined it was inappropriate timing and in a foreign language, lacking authentication. Further, it would deny, in effect, the opportunity to have it properly cross-examined. I also had no firm evidence as to its connection to the matter, its reliability or its credibility. In addition to being introduced at an entirely inappropriate period of the proceeding, the Agreement also contradicted evidence Khodjaiants gave as part of his interview earlier on. My ruling was that the Agreement in Russian attached as appendix A in Khodjaiants's submissions would be excluded from the evidence. I acknowledge that pursuant to subsection 15(1) of the SPPA a panel has the discretion to admit relevant evidence that might not otherwise be admissible as evidence in a court, including hearsay evidence. Under the circumstances, I chose not to exercise that discretion. In closing, my determination was based on a lack of diligence by Khodjaiants and the unreliable nature of the document itself.

VI. SUBMISSIONS

A. Staff's Submissions

[81] Staff submits that each of the Issuer Respondents was a hijacked Pink Sheets company for which no prospectus or final prospectus was circulated or filed with the Director. Staff argues that the evidence clearly demonstrates that Dubinsky and Khodjaiants traded and carried out acts in furtherance of trading the securities of Pharm Control Ltd. ("Pharm Control") and Asia Telecom Ltd. ("Asia Telecom") and in so doing participated in an illegal distribution of those securities contrary to section 53 of the Act.

[82] Staff also argues that Dubinsky and Khodjaiants directly or indirectly engaged in acts, practices or a course of conduct that they knew or reasonably ought to have known resulted in or contributed to a misleading appearance of trading activity in or an artificial price for the securities contrary to subsection 126.1(a) of the Act. Staff made no specific submissions on the application of the evidence to this allegation.

[83] Further, Staff submits that there is compelling evidence that the Individual Respondents engaged in an ongoing course of conduct that is characterized by deceit, falsehoods or other fraudulent means, including opening trading accounts for the express purpose of selling significant quantities of Issuer Respondent shares, which they knew or ought to have known were part of a scheme to defraud investors. Staff also submitted that deceitful conduct is evidenced by making statements on the RBC Account and HSBC Account applications which were untrue or inaccurate to enhance the likelihood that the application would be granted, so that a fraud could be perpetrated. Lastly, Staff argued that depositing and selling the Issuer Respondent shares in concert with others to optimize the proceeds realized from sales and selling shares in increasingly significant quantities to create a misleading appearance of trading activity in Pharm Control and Asia Telecom securities to the detriment of investors amounts to deceit, falsehood or other fraudulent means. These actions, Staff submits are conducted by the Individual Respondents in breach of subsection 126.1(b) of the Act.

[84] Staff also submits that Dubinsky was wilfully blind to the actions of Khodjaiants and facilitated the fraud through her acquiescence with Khodjaiants's requests and by deliberately choosing not to ask questions which could have confirmed the fraudulent nature of his conduct.

[85] Staff also argues that the Individual Respondents had subjective awareness that they were undertaking the dishonest act which could put investors' financial interest at risk. Specifically, Staff submitted that Khodjaiants knew he was perpetrating a fraud because he directed Dubinsky to open the Trading Accounts, controlled the accounts, told Dubinsky to make untrue and inaccurate statements on the RBC and HSBC application forms, repeatedly deposited into the RBC account shares in the same denomination as the Eight Traders and repeatedly sold shares in the same time frame as the Eight Traders. Staff also submitted that Khodjaiants knew his conduct was fraudulent because when the Eight Traders were no longer able to use their RBC trading accounts, he deposited hundreds of millions of shares of Asia Telecom and Pharm Control into the HSBC Account and engaged in a wholesale liquidation of them within days of depositing them. Further, Staff argues that Khodjaiants knew he was perpetrating a fraud because he directed Dubinsky to tell HSBC that the shares deposited in the account were obtained through a private transaction with Select American.

[86] It is Staff's position that all of the Individual Respondents' conduct described above is also contrary to the public interest.

B. Khodjaiants's Submissions

[87] Khodjaiants filed written closing submissions. He argued that there was a lack of evidence with respect to documentation proving that Select American was directed to issue shares to various parties. Given that there was email correspondence before the Panel on point, I presume his submissions related to issuance of shares to Dubinsky and Khodjaiants specifically.

[88] With respect to the contemporaneous trading activity, Khodjaiants reiterated that he and Dubinsky did not know the Eight Traders and questioned Staff's choice not to examine any of the Eight Traders.

[89] Khodjaiants submitted that his explanation for receipt of the shares was legitimate and argued that culturally it was not unusual for individuals who were raised in the Soviet Union to be distrustful of the mail.

[90] Khodjaiants also relied on the Ontario Superior Court's decision with respect to a separate, but related freeze order against Mr. Papa. In that decision, the Superior Court acknowledged that Staff raised legitimate suspicions regarding Mr. Papa's credibility, but noted that Staff was unable to support suspicions with documentary evidence or otherwise. The Superior Court went on to decide that the evidence considered before it did not constitute a prima facie case that Mr. Papa knew or ought to have known that his sale of NutriOne shares was part of a scheme of market manipulation (Ontario Securities Commission v. 1367682 Ontario Ltd. (c.o..b as De Freitas & Associates), Jason Wong, JWV Consulting Inc., 1606884 Ontario Inc., Alena Dubinsky and Ralph Papa (22 May 2008), Toronto 07-CL-7045 (Ont. Sup. Ct.)).

[91] Khodjaiants submitted that neither he nor Dubinsky was aware, nor did they turn a blind eye, to any activity that constituted perpetration of a fraud or market manipulation. In summation, Khodjaiants took the position that Staff had not offered credible or reliable evidence that Dubinsky and he were involved in the alleged fraudulent scheme and that rather than calling any of the Eight Traders to testify, Staff relied on the admitted fraudster, DeFreitas, to prove its case.

C. Staff's Reply

[92] Staff submitted that Khodjaiants had the opportunity to cross-examine DeFreitas, but chose not to. Staff further argued that with respect to further witnesses, there is no property in a witness and Khodjaiants could have elicited the evidence from the Eight Traders as witnesses if he sought to rely upon their testimony in his defense. Having chosen not to do so, Staff states that no reference can be made to evidence which is not part of the evidentiary record.

VII. ANALYSIS

A. Did the Respondents distribute securities without a prospectus, contrary to subsection 53(1) of the Act and contrary to the public interest?

1. The Law

[93] Subsection 53(1) of the Act sets out the statutory prospectus requirement:

53. (1) Prospectus required -- No person or company shall trade in a security on his, her or its own account or on behalf of any other person or company if the trade would be a distribution of the security, unless a preliminary prospectus and a prospectus have been filed and receipts have been issued for them by the Director.

[94] The prospectus is the primary disclosure document of an issuer for the benefit and protection of investors. In accordance with section 56 of the Act, a prospectus must provide "full, true and plain disclosure of all material facts relating to the securities issued or proposed to be distributed". The prospectus ensures that investors have sufficient information to ascertain risks involved with their investment and make informed decisions (Re Al-Tar Energy Corp. (2010), 33 O.S.C.B. 5535 ("Al-Tar Energy") at paras. 136-137, citing Re First Global Ventures, S.A. (2007), 20 O.S.C.B. 10473 at para. 145).

[95] The terms "trade" or "trading" are defined in subsection 1(1) of the Act as:

"trade" or "trading" includes,

(a) any sale or disposition of a security for valuable consideration, whether the terms of payment be on margin, instalment or otherwise

[...]

(e) any act, advertisement, solicitation, conduct or negotiation directly or indirectly in furtherance of any of the foregoing;

[96] The inclusion of the word "indirectly" in the definition of "acts in furtherance", cited above in subsection 1(1)(e) of the Act, reflects an express legislative intention to capture conduct which seeks to avoid the registration requirement by doing indirectly that which is prohibited directly. The Commission has established that trading is a broad concept that includes any sale or disposition of a security for valuable consideration, including any act, solicitation, conduct or negotiation directly or indirectly in furtherance of such a sale or disposition. The Commission has found that a variety of activities constitute acts in furtherance of trades.

[97] Subsection 53(1) of the Act specifically contemplates inclusion of a trade by a person on his or her own behalf or on behalf of any other person or company.

[98] A "distribution" is defined in subsection 1(1) of the Act and includes "a trade in securities of an issuer that have not been previously issued."

2. Analysis and Findings

[99] Khodjaiants traded and Dubinsky acted in furtherance of trades in the securities of Asia Telecom and Pharm Control. It was admitted by Khodjaiants that he traded in the Trading Accounts. Documentary evidence supports the finding that those trades included trades of Asia Telecom and Pharm Control shares. Further, Dubinsky admitted that it was always her intention that Khodjaiants use her personal Trading Accounts for the purpose of effecting trades and that she signed and deposited the securities in furtherance of Khodjaiants's trading. In allowing her Trading Accounts to be a vehicle for trading and by assisting in the signature and deposit of the securities, Dubinsky acted in furtherance of trading Asia Telecom and Pharm Control securities.

[100] The trades by Khodjaiants were made on his own account and for his own benefit. Acts in furtherance of trades by Dubinsky were made on behalf of Khodjaiants. As Dubinsky admitted, the funds in the HSBC Account, acquired through trading of Issuer Respondent shares, belong to Khodjaiants.

[101] For the trades to constitute distributions of those securities they must not have been previously issued. The evidence adduced demonstrates that there was one cohesive distribution, which was implemented in various steps. The evidence supports a finding that Asia Telecom and Pharm Control were hijacked corporations through a fraudulent scheme. Part of the fraudulent scheme caused the hijacked corporations to issue new shares. The shares were issued in the name of Dubinsky, for the purpose of distribution to the public through their deposit into the Trading Accounts, which Khodjaiants controlled. There is no evidence that a prospectus or preliminary prospectus was filed, nor a receipt issued by the Director in respect of the Asia Telecom or Pharm Control securities. I accept Gallacher's evidence that the Individual Respondents were participating in a liquidation of shares that had been issued by the Issuer Respondents, through Select American, for sale to the public.

[102] The evidence proves on a balance of probabilities that the Individual Respondents traded in or acted in furtherance of trades in Asia Telecom or Pharm Control securities, which constitute distributions of those securities, contrary to subsection 53(1) of the Act.

[103] I find that the Individual Respondents have contravened subsection 53(1) of the Act that their conduct in this regard was contrary to the public interest.

B. Did the Individual Respondents engage in conduct that resulted in or contributed to a misleading appearance of trading activity in, or artificial price for, a security, contrary to subsection 126.1(a) of the Act and contrary to the public interest?

1. The Law

[104] Subsection 126.1(a) of the Act sets out the market manipulation provision as follows:

126.1 Fraud and market manipulation -- A person or company shall not, directly or indirectly, engage or participate in any act, practice or course of conduct relating to securities or derivatives of securities that the person or company knows or reasonably ought to know,

(a) results in or contributes to a misleading appearance of trading activity in, or an artificial price for, a security, derivative or underlying interest of a derivative [...]

[105] Notably, both direct and indirect acts, practices or courses of conduct relating to securities, which "results in or contributes to" a misleading appearance of trading activity may constitute a contravention of subsection 126.1(a) of the Act. The conduct need not cause the misleading appearance of trading in its entirety. Instead, acts which "contribute to" a misleading appearance of trading may satisfy a finding that the respondent breached the provision, provided that it is also established that the respondent knew or reasonably ought to have known that his or her actions would lead to the misleading appearance.

2. Analysis and Findings

[106] I do not find that the Individual Respondents engaged in market manipulation for two reasons. First, I am not satisfied that Staff has discharged its burden to prove on a balance of probabilities that the Individual Respondents engaged in the conduct alleged in breach of subsection 126.1(a) of the Act. Second, the conduct that was proven by Staff supports findings of fraud in contravention of subsection 126.1(b) of the Act.

[107] Staff did not provide the Panel with legal authorities or factual analysis of the elements of market manipulation. I have no evidence of who bought the shares sold by the Individual Respondents or whether they were sold at a price that was artificially high. I have no evidence of uptick trades or matched trades, which could confirm that the Individual Respondents participated in market manipulation.

[108] Furthermore, in R. v. Kienapple, [1975] 1 S.C.R.729, the Supreme Court of Canada adopted the principle that there should not be multiple convictions for the same delict or conduct and that "If there is a verdict of guilty on the first count and the same or substantially the same elements make up the offence charged in a second count, the situation invites application of a rule against multiple convictions"(pp. 10 and 14). I will not make a finding that the Individual Respondents breached subsection 126.1(a) of the Act for market manipulation because the conduct that Staff relies upon is the same conduct which supports a finding that the Individual Respondents engaged in fraud, in breach of subsection 126.1(b) of the Act.

[109] For the reasons elaborated above, I make no findings with respect to allegations that Khodjaiants and Dubinsky participated in a course of conduct that they knew or reasonably ought to have known resulted in or contributed to a misleading appearance of trading activity in securities of the Issuer Respondents, contrary to subsection 126.1(a) of the Act.

C. Did the Individual Respondents engage in conduct relating to securities that they knew or reasonably ought to have known perpetrated a fraud on persons or companies, contrary to subsection 126.1(b) of the Act and contrary to the public interest?

1. The Law

[110] Subsection 126.1(b) of the Act sets out the fraud provision as follows:

126.1 Fraud and market manipulation -- A person or company shall not, directly or indirectly, engage or participate in any act, practice or course of conduct relating to securities or derivatives of securities that the person or company knows or reasonably ought to know,

[...]

(b) perpetrates a fraud on any person or company.

[111] It is well established, by previous Commission decisions, that the elements of fraud under subsection 126.1(b) of the Act are:

... the actus reus of the offence of fraud will be established by proof of:

1. the prohibited act, be it an act of deceit, a falsehood or some other fraudulent means; and

2. deprivation caused by the prohibited act, which may consist in actual loss or the placing of the victim's pecuniary interests at risk.

Correspondingly, the mens rea of fraud is established by proof of:

1. subjective knowledge of the prohibited act; and

2. subjective knowledge that the prohibited act could have as a consequence the deprivation of another (which deprivation may consist in knowledge that the victim's pecuniary interests are put at risk).

(R. v. Théroux, [1993] 2 S.C.R. 5 ("Théroux") at 21; Al-Tar Energy Corp. at paras. 216-221)

[112] In Anderson v. British Columbia (Securities Commission) (2004), 192 B.C.A.C. 119 (leave to appeal to the Supreme Court of Canada denied) ("Anderson"), the British Columbia Court of Appeal discussed the mental element of the fraud provision in the British Columbia Securities Act, R.S.B.C. 1996, c. 418, as amended (the "BC Act") and stated:

... [the fraud provision of the BC Act] does not dispense with the requirement that there must be a fraud involved in the transaction, which requires a guilty state of mind....[the fraud provision of the BC Act] simply widens the prohibition against participation in transactions to include participants who know or ought to know that a fraud is being perpetrated by others, as well as those who participate in perpetrating the fraud. It does not eliminate proof of fraud, including proof of subjective knowledge of the facts constituting the dishonest act, by someone involved in the transactions.

(Anderson, supra at paras. 24 and 26)

As the fraud provision of the BC Act has identical operative language to section 126.1 of the [Ontario] Act, the Commission has adopted the analysis in Anderson in cases involving subsection 126.1(b) of the Act (Al-Tar Energy, supra at para. 218).

[113] The first element of the actus reus of fraud is the prohibited act, including an act of deceit, a falsehood or some other fraudulent means. The second element of the actus reus of fraud is deprivation. The element of deprivation may be satisfied by actual loss to the investor, prejudice to an investor's economic interest or the risk of prejudice to the economic interest of the investor (Théroux, supra at 15-16). Therefore, no actual economic loss is necessary for conduct to be found fraudulent.

[114] In respect of the mental element of fraud, the Commission is conscious that the legislature statutorily widened the scope of the prohibition against fraud by imposing liability where a respondent "reasonably ought to have known" that their conduct perpetrates a fraud. Subjective knowledge that a prohibited act could have as a consequence the deprivation of another is established when it is determined that the respondent "knowingly undertook the acts in question, aware that deprivation, or the risk of deprivation, could follow as a likely consequence" or was reckless as to the consequences (Théroux, supra at 20-21).

2. Analysis and Findings

[115] I find that there is cogent evidence that establishes on a balance of probabilities that the Individual Respondents engaged in conduct which they knew or ought to have known perpetrated a fraud. It is apparent from the brokerage records in evidence that share certificates of the Issuer Respondents were deposited by Dubinsky and traded by Khodjaiants in concert with the Eight Traders. I do not accept that the trading in concert was a coincidence, as proposed by Khodjaiants. Nor do I find Khodjaiants's testimony of how he and Dubinsky acquired the Issuer Respondents' shares to be credible. I found his explanation implausible and do not accept that an unidentified man at Pearson Airport provided him with, what the documentary evidence proves to be, over $1 million in shares for a $30,000 real estate investment that he made 10 years prior. Khodjaiants had no evidence to support his claim that he had entered into a contract with Oskov, did not know where the property was located and had no contact information for Oskov. Furthermore, Khodjaiants could not explain the discrepancy between the date he obtained the shares and the fact that the shares on their face were issued at later dates. I do not accept that the Issuer Respondent shares were acquired in the manner purported by Khodjaiants.

[116] I accept Staff's submissions that the following acts were deceitful, falsehoods or constitute other fraudulent means:

• opening trading accounts for the express purpose of selling significant quantities of Issuer Respondent shares;

• making statements on the Trading Account applications which were untrue or inaccurate, specifically with respect to Dubinsky's income, to enhance the likelihood that the application would be granted;

• depositing and selling the Issuer Respondent shares in concert with the Eight Traders to optimize the proceeds realized from sales; and

• selling shares in increasingly significant quantities to effectively liquidate the shares of certain hijacked companies, specifically Pharm Control and Asia Telecom securities.

[117] The uncontested evidence also shows that Khodjaiants participated in the trading of large volumes of Asia Telecom and Pharm Control shares, which resulted in the liquidation of those shares, including 25 percent of the total trading in securities of Asia Telecom from March 7 to 14, 2007 and 40 percent of the total trading in securities of Pharm Control from March 7 to 13, 2007. Khodjaiants admitted in his compelled testimony that he had experience trading in the past. As the trader, Khodjaiants knew he was embarking on this large scale liquidation of shares. As the signatory to the shares and person depositing share certificates totaling 62.4 million shares of Asia Telecom and 39 million shares of Pharm Control, Dubinsky contributed to the fraudulent trading activity. Dubinsky received the account statements which showed the trading activity and should have informed herself of the trading activity in her HSBC Account.

[118] The actions described above contributed to a scheme to defraud investors. The Individual Respondents' acceptance of the Issuer Respondents' share certificates, deposit of those shares and subsequent liquidation of them for no plausible reason can only be described as fraudulent conduct, which resulted in deprivation to investors.

[119] I accept Staff's arguments that the following is proof of the subjective awareness of the Individual Respondents:

• Khodjaiants directed Dubinsky to open the Trading Accounts in her own name, encouraged Dubinsky to make untrue and inaccurate statements on the RBC and HSBC application forms and controlled trading of Issuer Respondent shares in the Trading Accounts;

• Dubinsky knowingly opened the Trading Accounts in her name and made untrue and inaccurate statements on the applications to RBC and HSBC for the purpose of relinquishing control of the Trading Accounts to Khodjaiants;

• Dubinsky repeatedly endorsed and deposited share certificates with her name on them even though she had not purchased the shares and had no knowledge of them until Khodjaiants presented them to her;

• Khodjaiants repeatedly sold shares, which had been deposited around the same time and in the same denomination, in the same time frame as the Eight Traders;

• Khodjaiants admitted that the HSBC Account was opened when they were no longer able to use their RBC Account for trading; and

• Dubinsky and Khodjaiants deposited over one hundred million shares of Asia Telecom and Pharm Control into the HSBC Account and Khodjaiants subsequently engaged in a wholesale liquidation of them within days of the deposits.

[120] I find that Khodjaiants had subjective awareness that he and Dubinsky were undertaking dishonest acts which could and did put investors' financial interests at risk. Dubinsky ought to have known that her conduct in facilitation and acquiescence of Khodjaiants' trading could have as a consequence the placing of investors' financial interests at risk.

[121] Taken in the aggregate, the evidence shows that Dubinsky was reckless, wilfully blind and ought to have known that her deceitful actions could put investors' financial interests at risk. Khodjaiants deliberately coordinated his conduct with others and continued to engage in fraudulent liquidation of Issuer Respondent shares after RBC ceased to provide service to the Eight Traders. His explanation that he did research on share price does not assist the Panel as the evidence supports that the hijacked companies issued shares, which had no inherent value, and that Khodjaiants sold those shares as part of a scheme to defraud investors.

[122] I conclude that the Individual Respondents participated in acts which they knew or reasonably ought to have known perpetrated a fraud within the meaning of subsection 126.1(b) of the Act. Their conduct in this respect was contrary to the public interest.

VIII. CONCLUSION

[123] For the reasons given above, I conclude that:

(a) the Individual Respondents engaged in an illegal distribution of securities contrary to subsection 53(1) of the Act and contrary to the public interest; and

(b) the Individual Respondents engaged or participated in acts, practices or courses of conduct relating to securities that they knew or reasonably ought to have known perpetrated a fraud on persons or companies, contrary to subsection 126.1(b) of the Act and contrary to the public interest.

[124] For the reasons outlined above, I will also issue an order dated September 13, 2013 which sets down the date for the hearing with respect to sanctions and costs in this matter.

Dated at Toronto this 13th day of September, 2013.

"Vern Krishna"

SEC seeks summary judgment against Jason Wong

2011-03-04 14:56 ET - Street Wire

by Mike Caswell, StockWatch.com

The U.S. Securities and Exchange Commission has filed a motion for a summary judgment against Jason Wong, the Ontario man facing civil fraud charges for his role in a pink sheets hijacking scheme. The regulator claims that he and others improperly took over 43 inactive public companies and sold them as shells. The evidence against Mr. Wong is so overwhelming that there is no need for a trial, according to the motion.

The SEC initially charged Mr. Wong and others with the hijacking scheme in September, 2009. It said that they took control of inactive public companies by filing false paperwork with the Cusip Bureau and with multiple secretaries of state. They then sold the companies to various buyers. One of the companies went on to become Toronto Stock Exchange listing Paramount Gold and Silver Corp., and another became Surrey-based pink sheets listing World Hockey Association Corp. (The SEC did not accuse either company of any wrongdoing.)

Motion for summary judgment

The SEC filed its motion for a summary judgment against Mr. Wong on Feb. 25, 2011, in the Southern District of New York. In it, the regulator claims to have evidence from more than a dozen witnesses, banks, phone companies and other regulatory agencies that shows Mr. Wong played a substantial role in the scheme. Moreover, two of his co-defendants have admitted to the allegations in the complaint, and both implicated Mr. Wong, the motion states.

The mechanics of the fraud, as described by the motion, were fairly simple. Mr. Wong and his long-time friend, Irwin Boock, sought out public shells that had gone dormant. Using false paperwork and bogus corporate resolutions, they obtained a new Cusip number and a new trading symbol for each company, as well as control over its shares. Then they sold the shells to clients, usually people looking to raise money in the market, the motion states. In some cases, they participated in promoting the stocks, and sold shares of the companies on the market.

According to the SEC, Mr. Wong participated in the scheme with full knowledge that the companies were hijacked. The evidence against him includes several e-mails between him and his co-defendants, in which they discussed the day-to-day issues they faced in taking over and selling the shells. One, dated Sept. 19, 2004, came after they received a complaint from the real president of one of the hijacked companies. The e-mail instructed Mr. Wong to threaten the president with legal action. Another e-mail instructed Mr. Wong to request $150,000 from an individual named J.F. Amyot as payment for a shell.

Other evidence cited in the motion came from government sources. This included testimony from Peter McNally, the manager of operations at Cusip Global Services. He told the SEC that Mr. Wong's name raised a red flag, because he or others connected to him sent an extraordinary number of Cusip requests.

Mr. Wong's activity also gained the attention of the Nasdaq, which processed name change requests for the hijacked companies. The exchange found it unusual that Mr. Wong's name appeared on requests as both the president of the public company and the president of the company's transfer agent, the SEC says.

Central to the scheme, as described by the SEC, was Mr. Wong's control over an Ontario transfer agent called Select American Transfer. The SEC says Select American Transfer served as the agent for many of the hijacked companies, and filed the necessary paperwork for name changes and share issuances. The firm's only employee, a 24-year-old student from Guyana, told the SEC that she simply did what Mr. Wong told her to do.

Mr. Wong's compensation for the scheme was largely with shares of the hijacked companies, the SEC says. Trading records indicated that he deposited stock for nine of the companies with an account at RBC Bank, and that he sold the shares almost immediately. The motion does not state how much money he made from the sales.

The SEC says the evidence against Mr. Wong is sufficient to prove that he committed securities fraud, and that there is no genuine issue for trial. It asks for a judgment against Mr. Wong, and that the judge determine appropriate disgorgement at a later date.

Wong says gains not ill-gotten

Mr. Wong, for his part, says the SEC is not entitled to any order requiring him to disgorge ill-gotten gains. In a motion for partial summary judgment filed on Feb. 25, 2011, he says that he simply sold stock that he either bought on the market or received for services. The only evidence against him, as he sees it, is that he received shares and later sold them, which proves nothing.

Mr. Wong also denies knowing about the hijackings. Between 2003 and 2007 (the time of the scheme), he performed consulting services, in which he "put different people in contact with each other," the motion reads. He then received shares in seven companies as payment for his work. "At the time Wong received stock payments ... he was unaware that the companies he received stock in had been 'hijacked' or were being 'hijacked' - as a result, Wong accepted the stock without issue," the motion states.

Moreover, he did not actually make any money on three of the companies that the SEC listed, he says. He claims that he suffered a $4,465 loss in trading those three stocks, so there are no gains that he could disgorge.

Mr. Wong contends that the SEC must do more than claim he participated in "some non-specific, grandiose scheme." He asks that the judge dismiss the claim for disgorgement against him.

http://www.stockwatch.com/News/Item.aspx?bid=Z-C:*SEC-1816052&symbol=*SEC&news_region=C

Any person with information relating to this matter should contact John Polise, Assistant Director, Division of Enforcement of the Securities and Exchange Commission.

Phone: 202-551-4600
Email: ENF-17suspensions@sec.gov

SEC wins ban by default against Boock


2010-04-06 14:36 ET - Street Wire

Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (C-PZG) Paramount Gold and Silver Corp
Also Street Wire (U-WHKA) World Hockey Association Corp (2)


by Mike Caswell

The U.S. Securities and Exchange Commission has won a penny stock ban and yet-to-be-determined financial penalties against Irwin Boock, the Ontario man who is facing civil fraud charges for hijacking the identities of 43 public companies. The decision is a victory by default, as Mr. Boock, 55, failed to answer the charges.

The order also includes one of Mr. Boock's co-defendants, Stanton DeFreitas, 33, of Toronto. The SEC said Mr. DeFreitas transferred $2.2-million in proceeds from the scheme to a bank in Toronto. (All figures are in U.S. dollars.) As with Mr. Boock, he failed to answer the case, and is facing a penny stock ban and financial penalties that the judge will determine.

SEC's complaint

On Sept. 29, 2009, the SEC filed a civil fraud complaint against Mr. Boock, Mr. DeFreitas and others in the Southern District of New York. The regulator said the men ran a four-year scheme in which they hijacked the identities of inactive public companies, and then sold them as shells. In addition to Mr. Boock, the defendants were Jason Wong, 32, of Markham, Ont., and two Houston lawyers, Roger L. Shoss, 64, and Nicolette D. Loisel, 52. Also named was Select American Transfer, a transfer agency that Mr. Boock, Mr. DeFrietas and Mr. Wong ran.

The scheme, which began in November, 2003, targeted inactive companies that still traded, but lacked a current transfer agent or contact person. The SEC said Mr. Boock or one of the others scanned the pink sheets website, searching for companies that met their criteria. Once they identified a target, they contacted the appropriate secretary of state, and reactivated the company using false names and addresses.

In some instances, they found that the secretary of state had declared the company void. In these cases, they incorporated a new company with the same name, and used that new entity to assume the identity of the old one, the complaint stated. The new company would then roll back at a fairly high ratio, typically 1:1,000, and would change its name and obtain a new Cusip number and trading symbol, the SEC claimed.

The next step in the scheme, as described by the SEC, was to obtain free-trading shares in the companies. To accomplish this, the men hired the two Houston lawyers, Mr. Shoss and Ms. Loisel, to draft bogus opinion letters. The letters purported to rely on a Rule 504 exemption, which is normally only available to accredited investors who do not plan to sell the stock. Using these letters, the men obtained 223 million free-trading shares in 19 of the companies, the SEC said. According to the complaint, Ms. Loisel also prepared fraudulent transfer agent verification forms. She received $455,000 for her services.

The complaint did not state exactly how much money all of the defendants made. With Mr. Boock, the SEC said he received $267,625 in 2007 by selling shares of five of the hijacked companies through a Florida brokerage account. With Mr. DeFreitas, the SEC said he held shares of 30 of the hijacked stocks through offshore companies. He sold those shares through New Jersey brokerage Franklin Ross, and directed the brokerage to transfer $2.2-million of the proceeds to a Toronto bank account.

The SEC sought appropriate civil penalties and disgorgement orders, as well as penny stock bans.

SEC halt

The SEC halted 26 of the stocks that Mr. Boock and the others hijacked on March 13, 2008, citing questions about their status as publicly traded companies. The regulator released little other information until it filed the lawsuit 18 months later.

The companies produced from the hijacked shells included Paramount Gold and Silver Corp., a Toronto Stock Exchange company. Another was World Hockey Association Corp., the Surrey-based pink sheets listing that ran a junior hockey league. The others were: Advanced Growing Systems Inc., PCC Group Inc., AEI Transportation Holdings, Alcar Chemicals Group Inc., Asia Telecom Ltd., Bicoastal Communications Inc., China ADnet Enterprises Inc., Innolife Pharma Inc., International Energy Ltd., KSW Industries Inc., LeaseSmart Inc., Level Vision Electronics Ltd., Lotta Energy Acquisition Corp., Magellan Energy Ltd., Marinas International Inc., Microlink Solutions Inc., NutriOne Corp., Packaged Home Solutions, Natural Medicines Ltd., United Environmental Energy Corp., VShield Software Corp., Aerofoam Metals Inc., Andros Island Development Corp., Asante Networks Inc., Brekford Communications Inc., Cavico Corp., Complete Care Medical Inc., El Alacran Gold Mining Corp., Extreme Fitness Inc., Gaming Transactions Inc., Interage Ltd., Life Exchange Inc., Motion Picture Group, Mvive Inc., Reality Racing Inc., Regal Technologies Inc., Remington Ventures Inc., Straight Up Brands Inc., UDS Group Inc., Uptrend Corp. and WW Energy Inc.

Other defendants

Unlike Mr. Boock and Mr. DeFreitas, two of the other defendants have responded to the case. Mr. Wong unsuccessfully sought to have the charges dismissed on the grounds that he was simply a software developer at Select American Transfer. The SEC argued that he had a far greater role, which included submitting false documents to the Cusip Bureau in Manhattan. The judge agreed that there were sufficient grounds to see the case against him through to trial. Ms. Loisel is also trying to have the charges dropped. The others have yet to respond to the suit.

For Mr. Boock, the hijacking case is not the first regulatory action he has faced. In September, 2000, the SEC sued him for falsely claiming that PricewaterhouseCoopers had audited a company's financial results. He settled that case in November, 2002, agreeing to pay $429,619 in disgorgement and penalties. He did not admit to any wrongdoing.

Whatever happened to Art? Is he OK? Hasn't posted in ages.

OSC Reasons & Decision on Disclosure

OSC NOTICE (Feb 17, 2010)

TORONTO – The Commission issued its Reasons and Decision on Disclosure in the above named matter.

A copy of the Reasons and Decision dated February 9, 2010 is available at www.osc.gov.on.ca

http://www.osc.gov.on.ca/en/Proceedings_enr_20100217_boocki.htm


OSC REASONS & DECISION ON DISCLOSURE (Feb 9, 2010)

The issue in this matter is whether compelled testimony and evidence obtained from a person who is a respondent in an Ontario Securities Commission (the “Commission”) administrative proceeding, which evidence was obtained for purposes of an investigation by the U.S. Securities and Exchange Commission (the “SEC”), should be disclosed to Co-Respondents (as defined below) in the Commission proceeding notwithstanding an undertaking given by Staff of the Commission (“Staff”) to the respondent.

We have concluded that the compelled testimony and evidence must be disclosed to the Co-Respondents. These are our reasons (See PDF file):

http://www.osc.gov.on.ca/documents/en/Proceedings-RAD/rad_20100209_boocki.pdf

SEC Target Wong Loses Motion to Dismiss

2010-02-10 14:34 ET - Street Wire

by Mike Caswell

Jason Wong, the Ontario man facing civil charges for helping to hijack the identities of several public companies, has lost his motion to have the case dismissed on jurisdictional grounds. At a Jan. 29, 2010, appearance before Judge Denise Cote, lawyers for the U.S. Securities and Exchange Commission successfully argued that the New York courts have jurisdiction over Mr. Wong. Judge Cote rejected Mr. Wong's argument that there was no evidence that any U.S. investors were harmed.

With the decision, Mr. Wong, 32, will either have to negotiate a settlement or see the case through to trial. The SEC claims that he and four others filed false paperwork that allowed to them to take control of 43 inactive public companies, which they then sold as shells. One of those shells became Toronto Stock Exchange listing Paramount Gold and Silver Corp., and another became Ricky Smith's former pink sheets company, World Hockey Association Corp.

Wong's motion to dismiss

On Oct. 26, 2009, Mr. Wong filed a motion to dismiss the charges, claiming that the New York federal court did not have jurisdiction over him, as all of the companies that he and the others allegedly hijacked were incorporated in states other than New York. He also claimed that there was no evidence that any U.S. residents held shares in the companies or were harmed by his actions.

He described his role in the scheme as a minor one. He said he was just a computer programmer at Select American Transfer Company (a transfer agent that the SEC claimed was central to the scheme). "My involvement ... consisted entirely of building a software system to process securities transfers. I did not ... participate in any other corporate activities for any of its clients at any time," he argued.

Mr. Wong explained that his name appeared as an officer or director of several of the shell companies named in the SEC's complaint by mistake. He said he reached that conclusion in 2006, long before the SEC's lawsuit, after he received a call from somebody who asked him if he was an officer or director of one of the hijacked companies, LeaseSmart Inc. He told the caller that he did not have any roles with that company. "Because of that phone call, I concluded that my name was being misused by someone or that someone with my same name was out there," he said. Mr. Wong claimed that he subsequently received phone calls from shareholders of companies that he knew nothing about.

SEC's response

The SEC filed a reply to Mr. Wong's motion on Nov. 10, 2009. In it, the regulator said that Mr. Wong had a far greater role that a simple computer programmer at Select American Transfer. He organized and operated the transfer agency, which was incorporated in Delaware and was registered with the SEC, the reply stated.

The reply described how Mr. Wong and the others used Select American Transfer to operate a "complex, secretive, interconnected international securities fraud ring" for at least four years. They found defunct publicly traded companies and stole their identities by making misrepresentations to government agencies and regulators, and illegally issuing new shares in unregistered offerings.

Among other things, Mr. Wong submitted false documents to the Cusip Bureau, located in Manhattan, and he submitted false transfer agent verification forms to the Nasdaq, the SEC claimed. These New York contacts are more than sufficient to support the court's jurisdiction over Mr. Wong, the reply stated.

The reply also listed Mr. Wong's actions in support of the scheme. Among other things, he and the others used aliases as well as false mailbox addresses and telephone numbers to hide their roles in hijacking the companies. These actions, combined with the misrepresentations to the Cusip Bureau and to the Nasdaq, are a "badge of fraud," the reply stated.

The SEC also responded to Mr. Wong's argument that the lawsuit mostly detailed the actions of others, and simply lumped him in with them in a "group pleading." The SEC said this is simply untrue, as the complaint identified at least 22 companies that Mr. Wong and the others hijacked together, complete with a time frame. The complaint also identified him as the recipient and seller of billions of unregistered shares illegally offered by the hijacked companies.

The SEC acknowledged that there are places in the complaint where it does not specify who did what, but this is not surprising, given that the men actively attempted to conceal their roles in the scheme. "Wong cannot now benefit from the concealment and confusion that he caused and created, particularly with respect to information that is within his knowledge and control," the reply read.

SEC's complaint

The SEC filed a complaint against Mr. Wong and four others on Sept. 29, 2009, in the Southern District of New York. The other defendants were Irwin Boock, 52, of Toronto; Stanton B.J. DeFreitas, 33, also of Toronto; Roger L. Shoss, 64, of Houston; and Nicolette D. Loisel, 52, also of Houston. In its complaint, the SEC claimed that Mr. Wong and Mr. Boock filed the paperwork to hijack the shells, while Mr. Shoss and Ms. Loisel, both lawyers, prepared bogus opinion letters that allowed the men to acquire free-trading shares in those companies.

The scheme, as described by the SEC, ran from November, 2003, through June, 2007. During that time, Mr. Wong and Mr. Boock identified suitable hijacking candidates by scanning the pink sheets website for inactive companies that were still quoted, but did not have current contact information or a transfer agent. Once they identified a suitable target, they paid the fees to bring the company up to date in its state of incorporation and represented that they were authorized to revive it, the SEC said. If the company's registration had lapsed, they would incorporate a new company with the same name, and that company would assume the identity of the defunct one.

The two Houston lawyers, Mr. Shoss and Ms. Loisel, then prepared opinion letters authorizing the issuance of hundreds of millions of free-trading shares in the companies, the complaint stated. The letters relied on Rule 504 exemptions, which are normally only available to accredited investors who do not plan to sell the stock. Once the men controlled a company's shares and its corporate identity, they then sold the stock as a shell.

The SEC sought appropriate civil penalties, disgorgement of ill-gotten gains and penny stock bans. It also sought officer and director bans against Mr. Boock and Mr. Wong.

Mr. Wong is the only one of the defendants to have answered the suit. The judge has not yet set a trial date.

Source: http://www.stockwatch.com/newsit/newsit_newsit.aspx?bid=Z-C:*SEC-1687533&symbol=*SEC&news_region=C

SEC v Boock et al (Feb 8 Update)

U.S. District Court
Southern District of New York
Civil Case 1:09-cv-08261-DLC

PACER Update 08 Feb 2010

02/08/2010: Document 23 - ANSWER to Complaint with JURY DEMAND. Document filed by Jason C. Wong.(Weigel, Russell) (Entered: 02/08/2010)

02/05/2010: Document 22 - MOTION for Justin Chretien to Appear Pro Hac Vice. Document filed by Securities and Exchange Commission.(mbe) (Entered: 02/08/2010)

02/02/2010: Document 21 - PRETRIAL SCHEDULING ORDER: The parties shall comply with their Rule 26(a)(1), F.R.C.P., initial disclosure obligations by 2/26/2010. The parties are to contact the chambers of Magistrate Judge Freeman prior to 7/2/2010 in order to pursue settlement discussions under his supervision. All fact discovery due by 10/29/2010. Expert reports and disclosure of expert testimony conforming to the requirements of Rule 26(a)(2)(B), F.R.C.P., by the party bearing the burden on an issue must be served by 12/3/2010. Identification of rebuttal experts and disclosure of their expert testimony must occur by 12/17/2010. All expert discovery due by 1/21/2011. Any motion for summary judgment shall be served by 2/25/2011; Opposition served by 2/18/2011; and Reply served by 4/1/2011. In the event no motion is filed, the Joint Pretrial Order must be filed by 2/25/2011. (Signed by Judge Denise L. Cote on 2/2/2010) (tro) Modified on 2/3/2010 (tro). (Entered: 02/03/2010)

02/02/2010: Document 20 - ORDER REFERRING CASE TO MAGISTRATE JUDGE. Order that case be referred to the Clerk of Court for assignment to a Magistrate Judge for Settlement. Referred to Magistrate Judge Debra C. Freeman. (Signed by Judge Denise L. Cote on 2/2/2010) (tro) (Entered: 02/03/2010)

01/29/2010: Document 19 - ORDER: For the reasons stated on the record at the conference on January 29, 2010, defendant Jason C. Wong's October 26 motion to dismiss the complaint is denied. (Signed by Judge Denise L. Cote on 1/29/2010) (jfe) (Entered: 02/01/2010)

Doc 19 PDF file: http://www.viewer.zoho.com/docs/lP6ce/


01/27/2010: Document 18 - MOTION TO QUASH SERVICE AND MOTION TO DISMISS THE COMPLAINT. Document filed by Nicolette D. Loisel.(mro) (Entered: 01/29/2010)

01/14/2010: Document 17 - AFFIDAVIT OF SERVICE. Nicolette D. Loisel served on 10/12/2009, answer due 11/2/2009. Service was accepted by Leticia (security officer). Document filed by Securities and Exchange Commission. (Kisslinger, Paul) (Entered: 01/14/2010)

Defendant Irwin Boock

Defendant Stanton B.J. Defreitas

Defendant Nicolette D. Loisel

Defendant Roger L. Shoss

Defendant Jason C. Wong

Relief Defendant Birte Boock

Relief Defendant 1621566 Ontario, Inc.

https://ecf.nysd.uscourts.gov/cgi-bin/iquery.pl


U.S. District Court
Southern District of New York

SEC v Irwin Boock, Stanton B.J. DeFreitas, Ncoletted D. Loisel, Roger L. Shoss and Jason C. wong (Defendants) and Birte Boock and 1621533 Ontario, Inc. (Relief Defendants)

Civil Case: 09 CV 8261 (DLC)

U.S. District Judge: Denise Cote

Counsel for Plaintiff

Justin Chretien
Paul W. Kisslinger (PK0764)

U.S. Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549-4010
(202) 551-4953 (Justin Chretian)
(202) 772-9245 (Fax)

Any person with information relating to this matter should contact John Polise, Assistant Director, Division of Enforcement of the Securities and Exchange Commission.

Phone: 202-551-4600
Email: ENF-17suspensions@sec.gov

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21243 / October 8, 2009
SEC v. Irwin Boock, Stanton B. J. DeFreitas, Nicolette D. Loisel, Roger L. Shoss, and Jason C. Wong, Birte Boock, and 1621566 Ontario, Inc., Civil Action No. 09 CV 8261 (S.D.N.Y) (DLC)
SEC Charges Five With Dozens of Fraudulent Corporate Hijackings and Unregistered Offerings of Securities and Names Two Relief Defendants
On September 29, 2009, the United States Securities and Exchange Commission filed a civil injunctive action against Irwin Boock, Stanton B. J. DeFreitas, and Jason C. Wong, all of Ontario, Canada, and two Houston-based attorneys, Roger L. Shoss and Nicolette D. Loisel, charging them with having violated the antifraud and registration provisions of the federal securities laws by effecting dozens of corporate hijackings and making unregistered offerings and sales of shares. The complaint also names as relief defendants Boock's wife, Birte Boock, and a company of which she allegedly was the sole officer and director during the relevant period, 1621566 Ontario, Inc.

The Commission's complaint alleges that the hijackings were effected by identifying inactive or defunct publicly-traded corporations which were no longer operating and either illicitly revivifying the corporations by falsely representing that the defendants were duly authorized officers, directors, or agents of the corporations or by incorporating new corporations using the names of the void corporation. Once an inactive corporation was revivified or a new corporation formed, the complaint alleges that the defendants immediately effected a name change in the corporation and requested from third parties responsible for assigning unique identifiers to each class of securities issued by a publicly-traded corporation a new identifying number known as a CUSIP number and ticker symbol. According to the complaint, these identifiers were obtained by falsely representing that the companies seeking new CUSIPs and ticker symbols were the same companies to which CUSIP numbers and ticker symbols had previously been issued and that the name changes triggering the need for new identifiers were duly authorized corporate actions.

The complaint alleges that Boock recruited Shoss and Loisel in late 2003 to handle the paperwork required to effect hijackings, including submitting false documentation to Secretaries of State, the Standard & Poor's CUSIP Service Bureau, transfer agents, and Nasdaq Corporate Data Operations which, during the relevant period, processed requests for ticker symbols. The complaint further alleges that from November 2003 through March 2006, Boock, Shoss, and Loisel effected at least 22 corporate hijackings. From November 2003 through June 2007, Boock, Wong, and DeFreitas allegedly effected at least another 21 corporate hijackings.

With respect to at least 19 of those corporations hijacked with Shoss and Loisel's involvement, the complaint alleges that Shoss and Loisel were tasked to provide 28 opinion letters falsely representing that offerings of approximately 223 million shares were exempt from the registration requirements of the federal securities laws. The complaint alleges that Boock dispensed with the need for obtaining legal opinion letters concerning the issuance of shares by the 21 hijacking corporations involving Wong and DeFreitas by incorporating his own transfer agency, Select American Transfer Company, which Wong and DeFreitas operated. With respect to these 21 companies, the complaint further alleges that the three men effected the unregistered offerings of up to seven billion shares.

The complaint also alleges that DeFreitas effected unregistered sales in the securities of at least 30 of the hijacked or hijacking entities, generating at least $2.2 million in illicit proceeds. Boock allegedly effected unregistered sales of securities in at least five of the hijacked or hijacking entities, generating at least $267,625 in illicit proceeds. Wong allegedly effected unregistered sales of securities in at least 11 of the hijacked or hijacking entities.

The complaint alleges that each of the defendant received illicit proceeds in the form of remuneration for services, proceeds from the sale of the shell companies to buyers, and/or from the sale of shares in purported private placements or into the secondary market.

Based on the foregoing, the Commission's complaint alleges that the five defendants violated Sections 5(a) and (c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint further alleges that Boock violated a penny stock bar instituted against him in 2002 in a settled administrative proceeding (see In the Matter of Birte Boock and Irwin Boock, Admin. Proc. File No. 3-10960 (Ex. Act Rel. No. 46952)), thereby violating Exchange Act Section 15(b)(6)(B)(i). With respect to each of the five defendants, the Commission is seeking a permanent injunction, a judicial penny stock bar, disgorgement with prejudgment interest, and civil penalties. The Commission is also seeking officer and director bars against Boock and Wong.

On September 23, 2009, the Commission issued an order suspending trading in the securities of 17 of the above-mentioned issuers pursuant to Exchange Act Section 12(k). See Ex. Act Rel. No. 60707. The Commission previously instituted a trading suspension on March 13, 2008 with respect 26 issuers, 11 of which are identified in the Commission's complaint as having been newly incorporated by Boock, Shoss and Loisel and used in the scheme. See Release No. 57486 (March 13, 2008).

Any person with information relating to this matter should contact John Polise, Assistant Director, Division of Enforcement of the Securities and Exchange Commission by calling 202-551-4600 or by sending an email to ENF-17suspensions@sec.gov.

The Commission acknowledges the assistance and cooperation of the Royal Canadian Mounted Police, the Ontario Securities Commission, the U.S. Attorney's Office for the Middle District of Florida in Tampa, the U.S. Attorney's Office for the District of New Jersey in Newark, the Newark and Tampa Field Offices of the U.S. Secret Service, U.S. Immigration and Customs Enforcement (ICE), and the Financial Industry Regulatory Authority (FINRA).

SEC Complaint



http://www.sec.gov/litigation/litreleases/2009/lr21243.htm



--------------------------------------------------------------------------------
Home | Previous Page Modified: 10/08/2009

SEC Contact for this case

Any person with information relating to this matter should contact John Polise, Assistant Director, Division of Enforcement of the Securities and Exchange Commission by calling 202-551-4600 or by sending an email to:

ENF-17suspensions@sec.gov

The Commission acknowledges the assistance and cooperation of the Royal Canadian Mounted Police, the Ontario Securities Commission, the U.S. Attorney's Office for the Middle District of Florida in Tampa, the U.S. Attorney's Office for the District of New Jersey in Newark, the Newark and Tampa Field Offices of the U.S. Secret Service, U.S. Immigration and Customs Enforcement (ICE), and the Financial Industry Regulatory Authority (FINRA).

http://www.sec.gov/litigation/litreleases/2009/lr21243.htm

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=46130725

Pacer update 01 Feb 10 1:09-cv-08261-DLC Securities and Exchange Commission v. Boock et al

Date Filed # Docket Text

01/29/2010 19 ORDER: For the reasons stated on the record at the conference on January 29, 2010, defendant Jason C. Wong's October 26 motion to dismiss the complaint is denied. (Signed by Judge Denise L. Cote on 1/29/2010) (jfe) (Entered: 02/01/2010)

Doc 19 PDF file
http://viewer.zoho.com/docs/lP6ce


01/27/2010 18 MOTION TO QUASH SERVICE AND MOTION TO DISMISS THE COMPLAINT. Document filed by Nicolette D. Loisel.(mro) (Entered: 01/29/2010)

01/14/2010 17 AFFIDAVIT OF SERVICE. Nicolette D. Loisel served on 10/12/2009, answer due 11/2/2009. Service was accepted by Leticia (security officer). Document filed by Securities and Exchange Commission. (Kisslinger, Paul) (Entered: 01/14/2010)


Defendant Irwin Boock

Defendant Stanton B.J. Defreitas

Defendant Nicolette D. Loisel

Defendant Roger L. Shoss

Defendant Jason C. Wong

Relief Defendant Birte Boock

Relief Defendant 1621566 Ontario, Inc.
a Corporation


https://ecf.nysd.uscourts.gov/cgi-bin/iquery.pl

a David Watson was a name out of that adress. Cyberhand may have used that adress as well. Check the list in the SEC litigation to see if its there.

its called a ( Disgorgement Fund) sorry

GLTY

If you have info regarding the 'hijacking'/financing/players ect and SAT..call the SEC and ask for their lead investigator on this case imo

Thank you for sharing. I'm trying to play catch up with what has been going on. So, I'm guessing that the Florida address was once held by Select American Transfer Company, which then conducted the alleged activities that various agencies from both the US and Canada are claiming? I've tried conducting research on that address and have not located a Select American Transfer Company there at the present time. The reason I'm interested in this is because I located another publicly traded company with the same address, and fits into the timeline when the allegedly activities took place.

funmaxus

I'll see if I can get someone to post the documents for us. Scion did it last time

OSC didn't release any details to explain why the hearing are adjourned indefinitely.

My guess is that the SEC will be the lead prosecutor in this case and OSC will provide support.

If anyone has access to the PACER database, please check to see if there are any new pdf documents filed in the civil case against the crooks. I can set up a database on 4shared.com where we can store the pdf files.

Yes and Yes

I believe ILGY/ILGL and MGGL/ MGLG at one time had the same adress.

Its a very long story. Bets summed up by SEC litigation

http://viewer.zoho.com/docs/x8Ocy

thats the OSC. The SEC also has litigation against them

SEC v Boock, DeFreitas, Loisel, Shoss & Wong

Complaint: http://www.sec.gov/litigation/complaints/2009/comp21243.pdf

SEC Litigation Release No. 21243 / October 8, 2009

SEC v. Irwin Boock, Stanton B. J. DeFreitas, Nicolette D. Loisel, Roger L. Shoss, and Jason C. Wong, Birte Boock, and 1621566 Ontario, Inc., Civil Action No. 09 CV 8261 (S.D.N.Y) (DLC)

SEC Charges Five With Dozens of Fraudulent Corporate Hijackings and Unregistered Offerings of Securities and Names Two Relief Defendants

On September 29, 2009, the United States Securities and Exchange Commission filed a civil injunctive action against Irwin Boock, Stanton B. J. DeFreitas, and Jason C. Wong, all of Ontario, Canada, and two Houston-based attorneys, Roger L. Shoss and Nicolette D. Loisel, charging them with having violated the antifraud and registration provisions of the federal securities laws by effecting dozens of corporate hijackings and making unregistered offerings and sales of shares. The complaint also names as relief defendants Boock's wife, Birte Boock, and a company of which she allegedly was the sole officer and director during the relevant period, 1621566 Ontario, Inc.

The Commission's complaint alleges that the hijackings were effected by identifying inactive or defunct publicly-traded corporations which were no longer operating and either illicitly revivifying the corporations by falsely representing that the defendants were duly authorized officers, directors, or agents of the corporations or by incorporating new corporations using the names of the void corporation. Once an inactive corporation was revivified or a new corporation formed, the complaint alleges that the defendants immediately effected a name change in the corporation and requested from third parties responsible for assigning unique identifiers to each class of securities issued by a publicly-traded corporation a new identifying number known as a CUSIP number and ticker symbol. According to the complaint, these identifiers were obtained by falsely representing that the companies seeking new CUSIPs and ticker symbols were the same companies to which CUSIP numbers and ticker symbols had previously been issued and that the name changes triggering the need for new identifiers were duly authorized corporate actions.

The complaint alleges that Boock recruited Shoss and Loisel in late 2003 to handle the paperwork required to effect hijackings, including submitting false documentation to Secretaries of State, the Standard & Poor's CUSIP Service Bureau, transfer agents, and Nasdaq Corporate Data Operations which, during the relevant period, processed requests for ticker symbols. The complaint further alleges that from November 2003 through March 2006, Boock, Shoss, and Loisel effected at least 22 corporate hijackings. From November 2003 through June 2007, Boock, Wong, and DeFreitas allegedly effected at least another 21 corporate hijackings.

With respect to at least 19 of those corporations hijacked with Shoss and Loisel's involvement, the complaint alleges that Shoss and Loisel were tasked to provide 28 opinion letters falsely representing that offerings of approximately 223 million shares were exempt from the registration requirements of the federal securities laws. The complaint alleges that Boock dispensed with the need for obtaining legal opinion letters concerning the issuance of shares by the 21 hijacking corporations involving Wong and DeFreitas by incorporating his own transfer agency, Select American Transfer Company, which Wong and DeFreitas operated. With respect to these 21 companies, the complaint further alleges that the three men effected the unregistered offerings of up to seven billion shares.

The complaint also alleges that DeFreitas effected unregistered sales in the securities of at least 30 of the hijacked or hijacking entities, generating at least $2.2 million in illicit proceeds. Boock allegedly effected unregistered sales of securities in at least five of the hijacked or hijacking entities, generating at least $267,625 in illicit proceeds. Wong allegedly effected unregistered sales of securities in at least 11 of the hijacked or hijacking entities.

The complaint alleges that each of the defendant received illicit proceeds in the form of remuneration for services, proceeds from the sale of the shell companies to buyers, and/or from the sale of shares in purported private placements or into the secondary market.

Based on the foregoing, the Commission's complaint alleges that the five defendants violated Sections 5(a) and (c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint further alleges that Boock violated a penny stock bar instituted against him in 2002 in a settled administrative proceeding (see In the Matter of Birte Boock and Irwin Boock, Admin. Proc. File No. 3-10960 (Ex. Act Rel. No. 46952)), thereby violating Exchange Act Section 15(b)(6)(B)(i). With respect to each of the five defendants, the Commission is seeking a permanent injunction, a judicial penny stock bar, disgorgement with prejudgment interest, and civil penalties. The Commission is also seeking officer and director bars against Boock and Wong.

On September 23, 2009, the Commission issued an order suspending trading in the securities of 17 of the above-mentioned issuers pursuant to Exchange Act Section 12(k). See Ex. Act Rel. No. 60707. The Commission previously instituted a trading suspension on March 13, 2008 with respect 26 issuers, 11 of which are identified in the Commission's complaint as having been newly incorporated by Boock, Shoss and Loisel and used in the scheme. See Release No. 57486 (March 13, 2008).

Any person with information relating to this matter should contact John Polise, Assistant Director, Division of Enforcement of the Securities and Exchange Commission by calling 202-551-4600 or by sending an email to ENF-17suspensions@sec.gov.

The Commission acknowledges the assistance and cooperation of the Royal Canadian Mounted Police, the Ontario Securities Commission, the U.S. Attorney's Office for the Middle District of Florida in Tampa, the U.S. Attorney's Office for the District of New Jersey in Newark, the Newark and Tampa Field Offices of the U.S. Secret Service, U.S. Immigration and Customs Enforcement (ICE), and the Financial Industry Regulatory Authority (FINRA).

http://www.sec.gov/litigation/litreleases/2009/lr21243.htm

To: Moderator: Art2Gecko Assistants: pennypusher1 and all visitors that can assist:

From I-box....

This is Now MGGL/ MGLG
Full Name
Magellan Energy Ltd
Address
#404, 4250 Alafaya Trail, Suite 212, Oviedo FL 32765 USA magellanenergy@mail.ru (Russian)

Questions:
1. Is the above physical address used in connection with the Select American Transfer Company?
2. I haven't had the opportunity to review everything that has transpired on this discussion bulletin board, but perhaps could sometime provide a summary? It would appear that Select American Transfer Company is alledgely involved with multiple companies facing serious acusations by both Canada and The United States?

Thank you in advance.

funmaxus

Where have you determined they were found guilty. The order states they adjourned indefinitely. This was before the hearing that was suppose to start Feb 1. Any other info? glty


====================================================
TORONTO – The Commission issued an Order which provides that the hearing on the merits is adjourned sine die in the above named matter.

A copy of the Order dated January 29, 2010 is available at www.osc.gov.on.ca


OFFICE OF THE SECRETARY
JOHN P. STEVENSON
SECRETARY

is there a recovery fund?

I know most of you have spoken to the SEC? about the (Recovery funds) if any from the SAT gang? The were found guilty

yeah my ALCX is in the same boat and still trading though

There's nothing to do. The crooks got away with the loot. It's doubtful that OSC or the SEC will be able to recover much. I'm just following the case since I took over as admin for the PMCL board after the paid pumpers left.

Philly, does this mean anything to the bagholders like me? Is there anything we should do?

OSC Releases - Feb 1, 2010 Hearing

December 11, 2009 Notice

TORONTO – The Commission issued an Order in the above named matter which provides that the dates for the hearing of this matter on the merits shall commence on February 1, 2010 at 10:00 a.m. and shall continue for four weeks excluding the dates of February 2, 15 and 16 or such other dates as may be determined by the parties and the Office of the Secretary.


December 11, 2009 Notice

http://www.osc.gov.on.ca/en/Proceedings_enr_20091211_boocki.htm


December 10, 2009 Order

http://www.osc.gov.on.ca/en/Proceedings_rad_20091210_boocki.htm


November 30, 2009 Notice

http://www.osc.gov.on.ca/en/Proceedings_enr_20091130_boocki.htm


November 30, 2009 Order

http://www.osc.gov.on.ca/en/Proceedings_rad_20091130_boocki.htm


October 22, 2009 Settlement Agreement

http://www.osc.gov.on.ca/documents/en/Proceedings-SET/Proceedings_set_20091021_booki.pdf


October 21, 2009 Order

http://www.osc.gov.on.ca/en/Proceedings_enr_20091016_boocki.htm


October 22, 2009 Notice

http://www.osc.gov.on.ca/en/Proceedings_enr_20091022_boocki.htm


October 19, 2009 Notice

http://www.osc.gov.on.ca/en/Proceedings_enr_20091019_boocki.htm


October 19, 2009 Notice of Hearing

http://www.osc.gov.on.ca/en/Proceedings_noh_20091019_boocki.htm


October 15, 2009 Order

http://www.osc.gov.on.ca/en/Proceedings_rad_20091015_boocki.htm


October 16, 2009 Notice

http://www.osc.gov.on.ca/en/Proceedings_enr_20091016_boocki.htm

jimmenknee...It's good to see you posting again. ;)






"Be kinder than necessary, for everyone you meet is fighting some kind of battle."

Thank you KarinCA-- the SEC "company hijacking" allegations are quite extensive and correlate a lot to what a few of us had been posting and opining since BHUB 1st got halted.

pennypusher1 specifically did a lot of research and built a pretty accurate "web" over time.

Don't know if many heeded the warnings-- sure like to think so...

It is interesting reading in any case and should give a little insight into how deep "corruption" is down here.

As to Clarity, yes he is-- and will be -- sorely missed. There were very few posters that I knew would "fight the good fight" and Clarity was a warrior... as a matter of fact-- we started out our relationship "fighting" each other given to opposing views...

I am glad to have crossed his path-- one of the few "true friends" I had come to know and trust here...

Thank you again for the kind words to both of us & sincere best wishes to you and yours-- today, tomorrow, for the Holidays & beyond :)

Good post jimmenknee. Don't know what went on with this company, but, judging by your topic, it must not have been good. Found this while looking to see when you last posted since I hadn't seen you post for awhile.

Sorry for the loss of your friend Clarity789. Clarity789 will be missed by many.


In Reply To 'jimmenknee'

pennypusher the new 'Sheriffs at the SEC has interest in SAT
there maybe a Disgorgement Fund. email me
ind_now@yahoo.com

What are you posting?? HQ has been diluting for years to run the company.. The freebies May come due and will be worth CHIT!

There is lots of interest in the possible players, maybe we came recover some lost money? there was a lot of 'illegal gotten' money involved ..email me.

SEC Charges Five With Dozens of Fraudulent Corporate Hijackings and Unregistered Offerings of Securities and Names Two Relief Defendants

Litigation Release No. 21243 / October 8, 2009

SEC v. Irwin Boock, Stanton B. J. DeFreitas, Nicolette D. Loisel, Roger L. Shoss, and Jason C. Wong, Birte Boock, and 1621566 Ontario, Inc., Civil Action No. 09 CV 8261 (S.D.N.Y) (DLC)

SEC Charges Five With Dozens of Fraudulent Corporate Hijackings and Unregistered Offerings of Securities and Names Two Relief Defendants

On September 29, 2009, the United States Securities and Exchange Commission filed a civil injunctive action against Irwin Boock, Stanton B. J. DeFreitas, and Jason C. Wong, all of Ontario, Canada, and two Houston-based attorneys, Roger L. Shoss and Nicolette D. Loisel, charging them with having violated the antifraud and registration provisions of the federal securities laws by effecting dozens of corporate hijackings and making unregistered offerings and sales of shares. The complaint also names as relief defendants Boock's wife, Birte Boock, and a company of which she allegedly was the sole officer and director during the relevant period, 1621566 Ontario, Inc.

The Commission's complaint alleges that the hijackings were effected by identifying inactive or defunct publicly-traded corporations which were no longer operating and either illicitly revivifying the corporations by falsely representing that the defendants were duly authorized officers, directors, or agents of the corporations or by incorporating new corporations using the names of the void corporation. Once an inactive corporation was revivified or a new corporation formed, the complaint alleges that the defendants immediately effected a name change in the corporation and requested from third parties responsible for assigning unique identifiers to each class of securities issued by a publicly-traded corporation a new identifying number known as a CUSIP number and ticker symbol. According to the complaint, these identifiers were obtained by falsely representing that the companies seeking new CUSIPs and ticker symbols were the same companies to which CUSIP numbers and ticker symbols had previously been issued and that the name changes triggering the need for new identifiers were duly authorized corporate actions.

The complaint alleges that Boock recruited Shoss and Loisel in late 2003 to handle the paperwork required to effect hijackings, including submitting false documentation to Secretaries of State, the Standard & Poor's CUSIP Service Bureau, transfer agents, and Nasdaq Corporate Data Operations which, during the relevant period, processed requests for ticker symbols. The complaint further alleges that from November 2003 through March 2006, Boock, Shoss, and Loisel effected at least 22 corporate hijackings. From November 2003 through June 2007, Boock, Wong, and DeFreitas allegedly effected at least another 21 corporate hijackings.

With respect to at least 19 of those corporations hijacked with Shoss and Loisel's involvement, the complaint alleges that Shoss and Loisel were tasked to provide 28 opinion letters falsely representing that offerings of approximately 223 million shares were exempt from the registration requirements of the federal securities laws. The complaint alleges that Boock dispensed with the need for obtaining legal opinion letters concerning the issuance of shares by the 21 hijacking corporations involving Wong and DeFreitas by incorporating his own transfer agency, Select American Transfer Company, which Wong and DeFreitas operated. With respect to these 21 companies, the complaint further alleges that the three men effected the unregistered offerings of up to seven billion shares.

The complaint also alleges that DeFreitas effected unregistered sales in the securities of at least 30 of the hijacked or hijacking entities, generating at least $2.2 million in illicit proceeds. Boock allegedly effected unregistered sales of securities in at least five of the hijacked or hijacking entities, generating at least $267,625 in illicit proceeds. Wong allegedly effected unregistered sales of securities in at least 11 of the hijacked or hijacking entities.

The complaint alleges that each of the defendant received illicit proceeds in the form of remuneration for services, proceeds from the sale of the shell companies to buyers, and/or from the sale of shares in purported private placements or into the secondary market.

Based on the foregoing, the Commission's complaint alleges that the five defendants violated Sections 5(a) and (c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint further alleges that Boock violated a penny stock bar instituted against him in 2002 in a settled administrative proceeding (see In the Matter of Birte Boock and Irwin Boock, Admin. Proc. File No. 3-10960 (Ex. Act Rel. No. 46952)), thereby violating Exchange Act Section 15(b)(6)(B)(i). With respect to each of the five defendants, the Commission is seeking a permanent injunction, a judicial penny stock bar, disgorgement with prejudgment interest, and civil penalties. The Commission is also seeking officer and director bars against Boock and Wong.

On September 23, 2009, the Commission issued an order suspending trading in the securities of 17 of the above-mentioned issuers pursuant to Exchange Act Section 12(k). See Ex. Act Rel. No. 60707. The Commission previously instituted a trading suspension on March 13, 2008 with respect 26 issuers, 11 of which are identified in the Commission's complaint as having been newly incorporated by Boock, Shoss and Loisel and used in the scheme. See Release No. 57486 (March 13, 2008).

Any person with information relating to this matter should contact John Polise, Assistant Director, Division of Enforcement of the Securities and Exchange Commission by calling 202-551-4600 or by sending an email to ENF-17suspensions@sec.gov.

The Commission acknowledges the assistance and cooperation of the Royal Canadian Mounted Police, the Ontario Securities Commission, the U.S. Attorney's Office for the Middle District of Florida in Tampa, the U.S. Attorney's Office for the District of New Jersey in Newark, the Newark and Tampa Field Offices of the U.S. Secret Service, U.S. Immigration and Customs Enforcement (ICE), and the Financial Industry Regulatory Authority (FINRA).


http://www.sec.gov/litigation/litreleases/2009/lr21243.htm

Thanks! Good find.

The SEC will be posting the announcement soon:

http://www.sec.gov/litigation/litreleases.shtml

The crooks will go to trial in about 2 years if they don't settle.

We'll see what happens with the OSC complaint on October 25th.

Doc 1 OCR extract

COMPLAINT

Plaintiff Securities and Exchange Commission ("Commission") alleges:

SUMMARY OF ALLEGATIONS

1. This case involves a scheme effected between November 2003 through at least mid-2007 by Irwin Boock ("Boock"), Stanton B.J. DeFreitas ("DeFreitas"), Nicolette D. Loisel ("Loisel"), Roger L. Shoss ("Shoss"), and Jason C. Wong ("Wong") to hijack dozens of defunct publicly-traded corporations, or their identities, for use by private corporations passing themselves off as the defunct publicly-traded corporations, and to offer and sell their securities in violation of the antifraud and registration requirements of the federal securities laws.

2. Boock conceived of the scheme in late 2003.

3. Beginning in November 2003, Boock recruited Shoss and Loisel, two Houston-based attorneys, to handle the paperwork required to effect corporate hijackings, including submitting false documentation to Secretaries of State, the Standard & Poor's CUSIP Service Bureau, transfer agents, and Nasdaq Corporate Data Operations (commonly known as "Nasdaq Reorganization"), as detailed further herein; and to provide opinion letters falsely representing that offerings of securities by the hijacked or hijacking corporations qualified for exemption under Regulation D, Rule 504 [17 C.F.R. § 230.504] from the registration requirements of Section 5 of the Securities Act of 1933 ("Securities Act") [15 U.S.C. § 77e]. Shoss also acted as middleman for Boock in arranging the sale of the hijacked shell companies to buyers. Boock subsequently decided to incorporate his own transfer agency and turned to Wong, a computer software expert, and DeFreitas, a financial consultant pnd associated person of a now-defunct registered broker-dealer in the United States, to incorporate and operate the Toronto transfer agency, Select American Transfer Company ("SAT'), and facilitate other corporate hijackings.

4. From November 2003 through March 2006, Shoss and Loisel effected at least 22 corporate hijackings on behalf of Boock and issued at least 28 bogus Rule 504 opinion letters resulting in the issuance of approximately 223 million shares. The opinion letters contain deliberately misleading factual statements and conclusions of law.

5. From November 2003 through June 2007, Boock, Wong, and DeFreitas, using a variety of aliases, mailbox addresses, and telephone numbers to hide their roles, effected at least another 23 corporate hijackings through SAT and issued and sold more than seven billion shares. Boock, Wong, and DeFreitas also sold shares into the secondary market.

6. By engaging in the transactions, acts, practices, and courses of business alleged herein, defendants Boock, Wong, DeFreitas, Shoss and Loisel (referred to herein individually and collectively as Defendants) knowingly violated the antifraud and registration provisions of the federal securities laws. Boock also violated an existing penny stock bar imposed against him under Section 15(b)(6) of the Exchange Act [15 U.S.C. §78o] in a prior settled administrative proceeding instituted by the Commission in 2002.

JURISDICTION

7. This Court has jurisdiction of this action pursuant to Sections 20 and 22(a) of the Securities Act [15 U.S.C. §§ 77t, 77v(a)], and Sections 21(d) and 27 of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. §§ 78u(d) and 78aa].

8. The hijackers made use of the means and instrumentalities of interstate commerce or of the mails in connection with the acts, practices, and courses of business alleged herein.

DEFENDANTS

9. Irwin Boock, age 55, born Irwin Lawrence Krakowsky, is a Canadian citizen and resides in Toronto, Ontario, Canada. Boock used the identity of a living person, Alex Kaplun, as well as aliases, including John Sparrow, John Carson; and David Watson, in the scheme. The Commission previously sued Boock in SEC v. Leah Industries, Inc., et al., No. 00-B-1921 (D. Colo. filed September 28, 2000) ("Leah Industries"). On November 22, 2002, a consent judgment was entered against Boock in that action pursuant to which he was permanently enjoined from violating Section 17 of the Securities Act [15 U.S.C. § 77q] and Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder and ordered to disgorge $379,619 and pay a civil penalty under Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act of $50,000. Boock has never paid the monetary relief. On December 6, 2002, shortly after the judgment in Leah Industries, the Commission instituted a settled administrative proceeding against Boock under Exchange Act Section 15(b)(6) pursuant to which he was barred from participating in any offering of a penny stock.

10. Jason C. Wong, age 32, is a Canadian citizen and resides in Markham, Ontario. Wong used the aliases George Anderson and John Sparrow in the scheme. During the relevant period, Wong was the chief executive officer, president, and a director of a software and business solutions company in Toronto, Online Database Solutions, Inc., that was quoted in the pink sheets.

11. Stanton B.J. DeFreitas, age 33, is a dual citizen of Canada and St. Vincent and the Grenadines and resides in Toronto, Ontario. He used the aliases John Sparrow and Derek Mason and the identities of two living persons, Nathan Rogers and Amy Giles, in the scheme. During the relevant period, he held a Masters of Business Administration, was a Canadian Certified Financial Consultant, and provided accounting and business consulting services, admittedly specializing in the formation of offshore entities. In late 2006, DeFreitas became an associated person of a now defunct broker dealer in the United States, Franklin Ross, Inc.

12. Roger L. Shoss, age 64, is a citizen of the United States and resides in Houston, Texas. He has been a licensed attorney in Texas for approximately 30 years. During the relevant period, he operated as a solo practitioner specializing in corporate and securities law.

13. Nicolette D. Loisel, age 52, is a citizen of the United States and resides in Houston, Texas. She has been a licensed attorney in Texas for approximately 27 years. She has specialized in corporate and securities law. Beginning in or around 2003, Shoss contracted Loisel to perform services in connection with the scheme.

RELIEF DEFENDANTS

14. Birte Boock ("Birte"), age 62, is a citizen of Canada and resides in Toronto, Ontario. She is Boock's wife. The Commission previously sued Birte in Leah Industries. On November 22, 2002, a consent judgment was entered against Birte in that action pursuant to which she was permanently enjoined from violating Section 17 of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and ordered to pay a civil penalty of $50,000 under Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act. Birte has never paid the monetary relief.

15. 1621566 Ontario, Inc. is a company incorporated in Ontario. Throughout the relevant period up to the present, the company has listed Birte as its president, secretary, and director.

HIJACKED OR HIJACKING COMPANIES

16. Advanced Growing Systems, Inc. [FL] is a Florida corporation formerly known as The BigHub.com, Inc., which the hijackers incorporated on. July 8, 2005 under the same name as an inactive, publicly traded company also incorporated in Florida. The newly-incorporated corporation usurped the ticker symbol of the inactive corporation ("BHUB"), and issued purportedly publicly traded shares under that ticker symbol. On discovering the fraud, management of the inactive corporation publicly challenged the hijacking and ultimately restored to it the use of its BHUB ticker symbol. The hijacking entity then changed its name to Advanced Growing Systems. Its shares are not currently publicly traded.

17. Advanced Growing Systems, Inc. [NV] is a Nevada corporation. It resulted from the reverse merger of a Nevada corporation into a California corporation effective June 20, 2006. The California entity had been incorporated under the name PCC Group, Inc. on July 6, 2005 by the hijackers using the same name as a then-defunct publicly traded company also incorporated in California. The merged entity changed its name to Advanced Growing Systems, Inc., and changed the state of domicile from California to Nevada. The CUSIP number and trading symbol associated with the California corporation transferred to the Nevada corporation. The company registered its common stock under Exchange Act Section 12(g) [15 U.S.C. § 781] in 2007. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets and OTCBB (symbol "AGWS").

18. AEI Transportation Holdings, Inc. is a Nevada corporation formerly known as XO Logic Inc., which the hijackers reinstated on June 6, 2005 without authority. The name was changed to Doll Technology Group, Inc. and then to AEI Transportation Holdings, Inc. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets under the former name of Doll Technology Group, Inc. (symbol "DTGP"), had market makers, and was eligible for the piggyback exemption of Exchange Act Rule 15c2-11(f)(3) [17 C.F.R. § 240.15c2-11(f)(3)].

19. Aerofoam Metals, Inc. is a Delaware corporation formerly known as TAM Restaurants, Inc., which the hijackers incorporated on March
20, 2006 under the same name as a then-defunct, publicly traded company also incorporated in Delaware. The fact of the hijacking became publicly known during a revocation proceeding instituted by the Commission under Exchange Act Section 12(j) in 2007 against the originally incorporated TAM Restaurants for failure to file periodic and annual reports. As of September 1, 2009, the company's common stock traded in the grey markets (symbol "AFML").

20. Andros Island Development Corporation is a Nevada corporation formerly known as KIMG Management Group, Inc., which the hijackers incorporated on July 15, 2004 under the same name as a then-defunct, publicly traded company also incorporated in Nevada. On March 13, 2008, the Commission suspended trading in the securities of Andros Island.. As of September 1, 2009, the company's common stock traded in the grey market (symbol "AVPJ").

21. The Alcar Chemicals Group, Inc. is a Delaware corporation formerly known as Birman Managed Care, Inc., which the hijackers incorporated on July 6, 2005 under the same name as a then-defunct, publicly traded company also incorporated in Delaware. As of September 1, 2009, the company's common stock traded in the grey market (symbol "ACMG").

22. Asia Telecom Ltd. is a California corporation formerly known as Jalate Ltd., which the hijackers incorporated on February 14, 2006 under the same name as a then-defunct, publicly traded company also incorporated in California. As of September 1, 2009, the company's common stock was quoted on the Pink OTC.Markets (symbol "ATLJ").

23. Asante Networks, Inc. is a Delaware corporation formerly known as Pacific Chemical, Inc., which the hijackers incorporated on February 10, 2005 under the same name as a then-defunct, publicly traded company also incorporated in Delaware. On March 13, 2008, the Commission suspended trading in the securities of Asante Networks. As of September 1, 2009, the company's common stock traded in the grey market (symbol "ASTN").

24. Bicoastal Communications, Inc. is a Delaware corporation formerly known as The Pathways Group, Inc., which the hijackers incorporated on April 6, 2005 under the same name as a then-defunct company also incorporated in Delaware. During the relevant period, the company's common stock was quoted on the Pink OTC Markets (symbol "BCLC").

25. Brekkford International Corp. is a Delaware corporation formerly known as California Cyber Design, Inc., which the hijackers reinstated on August 8, 2004 without authorization. The company registered its common stock under Exchange Act Section 12(g) in 2007. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets and OTCBB (symbol "BFDI").

26. Cavico Corp. is a Delaware corporation formerly known as Laminaire Corporation, which the hijackers incorporated on September 13, 2004 under the same name as a then-defunct, publicly traded company also incorporated in Delaware. As of September 1, 2009, 2009, the company's common stock was quoted on the Pink OTC Markets and the OTCBB (symbol "CVIC").

27. China Adnet Enterprises Inc. is a California corporation formerly known as Baker Communications Inc., which the hijackers incorporated on July 14, 2005 under the same name as a then-defunct publicly traded company also incorporated in California. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets (symbol "CAEJ"),
had market makers, and was eligible for the piggyback exemption of Exchange Act Rule 15c2- 11(f)(3).

28. Complete Care Medical, Inc. is a Delaware corporation formerly known as PacificAmerica Money Center, Inc., which the hijackers incorporated on February 10, 2005 under the same name as a then-defunct, publicly traded company also incorporated in Delaware. On March 13, 2008, the Commission suspended trading in the securities of Complete Care Medical. As of September 1, 2009, the company's common stock traded in the grey market (symbol "CCMI").

29. El Alacran Gold Mine Corp. is a Delaware corporation formerly known as Pawnbroker.com, which the hijackers incorporated on April 6, 2005 under the same name as a then-defunct, publicly traded company also incorporated in Delaware. On March 13, 2008, the Commission suspended trading in the securities of El Alacran. As of September 1, 2009, the company's common stock traded in the grey market (symbol "EAGM").

30. Extreme Fitness, Inc. is a Nevada corporation formerly known as Long Lake Energy Corp., which the hijackers incorporated on September 14, 2004 under the same name as a then-defunct, publicly traded company also incorporated in Delaware. On March 13, 2008, the Commission suspended trading in the securities of Extreme Fitness. As of September 1, 2009, the company's common stock traded in the grey market (symbol "EXTF").

31. Gaming Transactions, Inc. is a Delaware corporation formerly known as Advanced Voice Technologies, Inc., which the hijackers incorporated on May 17, 2004 under the same name as a then-defunct, publicly traded company also incorporated in Delaware. On March 13, 2008, the Commission suspended trading in the securities of Gaming Transactions. As of September 1, 2009, the company's common stock traded in the grey market (symbol "GGTS").

32. Innolife Pharma, Inc. is a Delaware corporation formerly known as Balfour Maclaine Corp., which the hijackers incorporated on November 21, 2005 under the same name ,as a then-defunct, publicly traded company also incorporated in Delaware. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets (symbol "INNP"), had market makers, and was eligible for the piggyback exemption of Exchange Act Rule 15c2- 11(f)(3).

33. Interage Ltd. is a Delaware corporation formerly known as Ambassador Eyewear Group, Inc., which the hijackers incorporated on March 11, 2004 under the same name as a then- defunct, publicly traded company also incorporated in Delaware. During the relevant period, the company's stock was quoted on the Pink OTC Markets (symbol "ITGJ").

34. International Energy Ltd. is a California corporation formerly known as Pacific Coast Apparel, which the hijackers incorporated on April 7, 2005 under the same name as a then- defunct company also incorporated in California. During the relevant period, the company's common stock was quoted on the Pink OTC Markets (symbol "ILGL").

35. KSW Industries, Inc. is a Nevada corporation formerly known as Kay Merchandising International Ltd., which the hijackers incorporated on July 15, 2004 under the same name as a then-defunct company incorporated in Delaware. The Commission suspended trading in the securities of KSW on April 6, 2006. As of September 1, 2009, KSW Industries' securities traded in the grey market (symbol "KSWJ").

36. LeaseSmart, Inc. is a California corporation formerly known as Xxsys Technologies, Inc., which the hijackers incorporated on_July 6, 2005 under the same name as a then-defunct company also incorporated in California. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets (symbol "LSMJ").

37. Level Vision Electronics Ltd. is a Delaware corporation formerly known as EcoTyre Technologies, Inc., which the hijackers incorporated on October 25, 2005 under the same name as a then-defunct company also incorporated in Delaware. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets (symbol "LVLV"), had market makers, and was eligible for the piggyback exemption of Exchange Act Rule 15c2- 11(f)(3).

38. Life Exchange Inc. is a Nevada corporation formerly known as Technology Enterprises, Inc., which the hijackers reinstated on September 3, 2004 without authorization. The company registered its common stock under Exchange Act Section 12(g) in 2007. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets and OTC Bulletin Board ("OTCBB") (symbol "LFXG"), had market makers, and was eligible for the piggyback exemption of Exchange Act Rule 15c2-11(0(3).

39. Lotta Energy Acquisition Corp. is a Florida corporation formerly known as Ensec International, Inc., which the hijackers incorporated on March 3, 2006 under the same name as a then-defunct company also incorporated in Florida. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets (symbol "LCOL"), had market makers, and was eligible for the piggyback exemption of Exchange Act Rule 15c2-11(0(3).

40. Magellan Energy Ltd. is a Delaware corporation formerly known as The Eastwind Group, Inc., which the hijackers incorporated on November 8, 2005 under the same name as a then-defunct company also incorporated in Delaware. As of September 1, 2009, the company's common stock was quoted on the Pink .OTC Markets (symbol "MGLG"), had market makers, and was eligible for the piggyback exemption of Exchange Act Rule 15c2-11(0(3).

41. Marinas International Inc. is a Delaware corporation formerly known as Brazos Sportswear Inc., which the hijackers incorporated on 'July 8, 2005 under the same name as a then-defunct company _ also incorporated in Delaware. As of September 1, 2009, Marinas International's securities traded in the grey market (symbol "MNSI").

42. Microlink Solutions Inc. is a Delaware corporation formerly known as Universal Seismic Associates, Inc., which the hijackers incorporated on June 22, 2006 under the same name as a then-defunct, publicly traded company also incorporated in Delaware. State records show that the current corporate name is Microlink Solutions, but, as of September 1, 2009, the stock traded in the grey market under a prior name, Pocketop Corp. (symbol "PKTO").

43. The Motion Picture Group is a Florida corporation formerly known as ABS Group, Inc., which the hijackers reinstated on May 17, 2004 without authorization. As of September 1, 2009, The Motion Picture Group's securities trade in the grey market under the symbol "MPRG."

44. Mvive Inc. is a Nevada corporation. It resulted from the reverse merger of a Florida corporation into a Nevada corporation effective December 14, 2004. The Florida entity had been incorporated under the name Channel American Broadcasting, Inc. on November 6, 2003 by the hijackers; Channel American Broadcasting, Inc. was the same name as a then- defunct, publicly traded company also incorporated in Florida. Since the merger was effected for the sole purpose of changing the corporate domicile from Florida to Nevada, the CUSIP number and trading symbol associated with the Florida corporation incorporated by the hijackers transferred automatically to the Nevada corporation. The merged entity then changed its name to Mvive, Inc. Mvive registered a class of securities under Section 12(g) of the Exchange Act in late 2005, and then filed a Form 15 in March 2006 terminating the registration. On March 13, 2008, the Commission suspended trading in the securities of Mvive. As of September 1, 2009, the company's common stock traded in the grey market (symbol "MVIV").

45. Natural Medicines Ltd. is a Delaware corporation formerly known as Imark Technologies, Inc., which the hijackers incorporated on August 16, 2006 under the same name as a then-defunct company also incorporated in Delaware. Although its name was later changed to Pharm Control Ltd. and then Natural Medicines Ltd., as of September 1, 2009, its common stock was still quoted on the Pink OTC Markets under the name Pharm Control (symbol "PMCL").

46. NutriOne Corp. is a Florida corporation formerly known as Biscayne Apparel, Inc., which the hijackers incorporated on July 7, 2005 under the same name as a then-defunct company also incorporated in Florida. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets (symbol "NNCP").

47. Packaged Home Solutions is a Florida corporation formerly known as TCPI Inc., which the hijackers incorporated on March 22, 2006 under the same name as a then-defunct company also incorporated in Florida. On September 26, 2006, the hijacking company filed a Form 15 with the Commission terminating the registration of the hijacked issuer's securities under Exchange Act Section 12(g). During the relevant period, the hijacking company's securities were quoted on the Pink OTC Markets (symbol "PKGH").

48. Paramount Gold and Silver Corporation is a Delaware corporation formerly known as PanelMaster Corporation, which the hijackers incorporated on March 31, 2005 under the same name as a then-defunct, publicly traded company also incorporated in Delaware. The company registered its common stock with the Commission under Exchange Act Section 12(g) in 2006. The stock is now registered under Exchange Act Section 12(b) [15 U.S.C. § 781]. On March 13, 2008, the Commission suspended trading in the securities of Paramount Gold and Silver. As of September 1, 2009, Paramount Gold and Silver's securities were listed on the NYSE Euronext (symbol “PZG”)

49. Reality Racing, Inc. is a Nevada corporation formerly known as Yellowbubble.com, Inc., which the hijackers reinstated on June 6, 2005 without authorization. As of September 1, 2009, Reality Racing's securities traded in the grey —Market (symbol "RRGI").

50. Regal Technologies, Inc. is a Utah corporation formerly known as C&S Research International, Inc., which the hijackers incorporated on September 3, 2004 under the same name as a then-klefunct, publicly traded company also incorporated in Utah. On March 13, 2008, the Commission suspended trading in the securities of Regal Technologies. As of September 1, 2009, the company's common stock traded in the grey markets (symbol "RGTN").

51. Remington Ventures, Inc. is a Nevada corporation formerly known as Medical Home Supplies, Inc., which the hijackers incorporated on March 12, 2004 under the same name as a then-defunct, publicly traded company incorporated in Utah. On March 13, 2008, the Commission suspended trading in the securities of Remington Ventures. As of September 1, 2009, the company's common stock traded in the grey market (symbol "REMV").

52. Straight Up Brands, Inc. is a Delaware corporation formerly known as Pacific Engineering Systems, Inc., which the hijackers incorporated on February 10, 2005 under the same name as a then-defunct, publicly traded company also incorporated in Delaware. On March 13, 2008, the Commission suspended trading in the securities of Straight Up Brands. As of September 1, 2009, the company's common stock traded in the grey market (symbol "STRU").

53. UDS Group, Inc. is a Nevada corporation formerly known as Blini Hut, Inc., which the hijackers reinstated on January 26, 2005 without authorization. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets (symbol "UDSG"), had market makers, and was eligible for the piggyback exemption of Exchange Act Rule 15a-11(f)(3).

54. United Environmental Energy Corp. is a Delaware corporation forinerly known as Eagle Finance Corp., which the hijackers incorporated on November 8, 2005 under the same name as a then-defunct company also incorporated in Delaware. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets (symbol "UTEM").

55. Uptrend Corp. is a Delaware corporation formerly known as Massimo da Milano, Inc., which the hijackers reinstated on November 25, 2003 without authorization. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets (symbol "UPCP"), had market makers, and was eligible for the piggyback exemption of Exchange Act Rule 15c2-11(f)(3).

56. VShield Software Corp. is a Delaware corporation formerly known as All for a Dollar, Inc., which the hijackers incorporated on July 16, 2004 under the same name as a then- inactive publicly traded company also incorporated in Delaware. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets (symbol "VSHE"), had market makers, and was eligible for the piggyback exemption of Exchange Act Rule 15c2-11(f)(3).

57. World Hockey Association is a Florida corporation formerly known as Kaplan Industries, Inc., which the hijackers incorporated on September 9, 2003 under the same name as a then-defunct company also incorporated in Florida. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets (symbol "WHKA").

58. WW Energy, Inc. is a Delaware corporation formerly known as Alya International Inc., which the hijackers incorporated on March 12, 2004 under the same name as a then- defunct, publicly traded company also incorporated in Delaware. As of September 1, 2009, the company's common stock was quoted on the Pink OTC Markets (symbol "WWNG"), had market makers, and was eligible for the piggyback exemption of Exchange Act Rule 15c2-
11(f)(3).

OTHER RELEVANT ENTITY

59. Select American Transfer Company, formerly located in Toronto, was incorporated by Boock in Delaware and registered as a transfer agent under Section 17(a) of the Exchange Act [15 U.S.C. §78q] with the Commission in April 2005. A transfer agency is an agency (usually a bank) that is appointed by a corporation to keep records of its stock and bond owners and to resolve problems about certificates. Non-bank transfer agencies must register with the SEC and are subject to SEC rules and regulations that establish minimum performance standards regarding the issuance of share certificates and related recordkeeping and reporting requirements.

60. Wong and DeFreitas operated SAT jointly at least until September 2005, when Wong purportedly resigned. DeFreitas continued operating SAT through at least June 2007, using the identities of Amy Giles and Nathan Rogers and the alias Derek Mason in his dealings with third parties, including the Commission. SAT's office was first located in a condominium owned by DeFreitas and then a townhouse owned by DeFreitas's mother. SAT's last filing with the Commission was September 5, 2006. SAT ceased operations in April 2007.

A. PROCESS BY WHICH HIJACKERS HIJACKED DEFUNCT PUBLICLY-TRADED CORPORATIONS

61. Each hijacking followed the same pattern. The hijackers first identified publicly-traded corporations whose corporate charters had been suspended or revoked for several years. The hijackers identified suitable candidates by scanning the Pink OTC Markets website for inactive corporations Whose securities were still quoted but which lacked current contact, personnel, and transfer agent information. The point was to identify publicly-traded comorations whose former management was unlikely to surface and challenge its hijacking, and with respect to whose liabilities the applicable statutory period of limitations either had or was about to run.

62. The hijackers then confirmed the corporations' status with the applicable Secretaries of State. If an inactive corporation was still listed but delinquent in some respect, such as for non-payment of fees or taxes or failure to make annual filings, the hijackers filed paperwork with the state falsely representing that the shareholder, officer, or director identified therein, e.g., Boock (using an alias) or Wong, was duly authorized to revivify the corporation.

63. More frequently, the hijackers found inactive corporations that were void in the state of incorporation — and thus could not be revivified — but whose names were now available for use by others. The hijackers simply incorporated a new corporation using the name of the void corporation.

64. Under either method, Boock and his cohorts did the following in rapid succession:

(a) Immediately changed the name of the company by filing with the applicable Secretary of State a Certificate of Amendment of Articles of Incorporation along with a corporate board consent and shareholder consent;

(b) Generally effected a reverse stock split to reduce the number of outstanding shares. Reverse stock splits typically called for the exchange of 1,000 old shares for 1 new share, thereby greatly reducing the number of outstanding shares. Coupled with the subsequent issuance of additional new shares, the split greatly diluted the value of old shares relative to new shares and substantially diluted the existing shareholders' ownership interest;

(c) Improperly obtained a new CUSIP number from the Standard & Poor's CUSIP Service Bureau to reflect the name change, attaching in support the Certificate of Amendment by which the company changed its name. A CUSIP number is a 9-character identifier that uniquely identifies the type of security and its issuer using a common numbering system designed to facilitate the accurate and efficient clearance and settlement of securities;

(d) Prepared a fraudulent Transfer Agent Verification form ("TAVF") for signature by the transfer agent for each purportedly revivified or newly incorporated company, identifying the name, CUSIP number, and ticker symbol of the defunct or void company and the purported new name and new CUSIP symbol, and representing, if applicable, that the company's shares had undergone a reverse stock split;

(e) Improperly obtained a new ticker symbol from Nasdaq Reorganization, falsely representing that the originally incorporated, publicly-traded company had changed its name, effected a stock split (if applicable) and obtained a new CUSIP number; attaching the signed TAVF and certifications from the Secretary of State for the relevant actions. Upon application, Nasdaq Reorganization assigns a ticker symbol for identification purposes to each class of an issuer's publicly-traded securities. A ticker symbol is a short abbreviation used to uniquely identify publicly traded shares of a particular stock on -a particular stock market. A stock symbol may consist of letters, numbers or a combination of both.

65. During the relevant period, Nasdaq Reorganization posted newly issued ticker symbols on its website daily. The Depository Trust Company (which provides clearing and settlement services) and broker dealers monitored the daily postings and noted changes in their internal records. The ticker symbol changes had the effect of changing to the new ticker symbol and corporate name all outstanding shares in the defunct or void corporations.

66. As discussed below, the corporations would then offer or issue new, unrestricted and unregistered shares into the market place in violation of Section 5 of the Securities Act.

67. The Financial Industry Regulatory Authority ("FINRA") (which regulates all securities firms doing business in the U.S.) prohibits a member from initiating or resuming the quotation of certain non-NASDAQ over-the-counter securities in a quotation medium unless the member has demonstrated compliance with the requirements of Exchange Act Rule 15c2- 11(f)(3) [17 C.F.R. § 240.15c2-1 1 (f)(3)]. FINRA Rule 6740 [now Rule 6440] requires that the broker-dealer review and maintain in its records the information set forth by Exchange Act Rule 15c2-11 regarding the security and issuer. For example, when a new issuer wants its securities to be quoted on the pink sheets, the broker-dealer files a Form 211 with FINRA together with the information required under Exchange Act Rule 15c2-110) at least three business days before the quotation is published or displayed. But once the broker-dealer has filed a Form 211 and it is cleared by FINRA, the security may become "piggyback eligible" if its quoting activity meets the continuity requirements of Exchange Act Rule 15c2-11(f)(3), which sets forth frequency-of¬quotation requirements_ that, if met, allow broker-dealers to continue to quote the security without further filings from the issuer.

68. Defendants improperly relied upon, the so-called piggyback exception under Rule 15c2-11(f)(3) based on FINRA's prior clearance of a Form 211 filed with respect to a now defunct or void corporation so that quotation on the pink sheets could resume immediately without providing any of the information normally required under Exchange Act Rule 15c2- 11(f)(3) for a new corporation. The consistent failure to file Form 211s by the hijacked corporations is further evidence that the hijackers intentionally assumed the identity of defunct corporations.

69. In many cases the hijackers changed the hijacked company's name again, and sometimes two or three more times, resulting in additional changes to CUSIP numbers and trading symbols that further complicated investigation.

B. HIJACKINGS INVOLVING BOOCK, SHOSS, AND LOISEL

70. Boock informed Shoss in 2003 of the steps outlined above for creating shell companies that could then be sold to third parties interested in reverse merging with publicly- traded companies.

71. Shoss then approached Loisel to subcontract her to perform the above-described work. Shoss explained the process to Loisel and provided her with a packet of documents obtained from Boock which served as templates for effecting illegal hijackings. Wong further assisted Loisel in understanding the process.

72. On an ongoing basis, Boock supplied Shoss with ticker symbols of corporations which he had spotted on the Pink OTC Markets as suitable candidates for the processes outlined above.

73. After confirming that a company was either defunct or void, and that it had been non-operational for years, Loisel drafted and processed all the necessary paperwork, including the deceptive TAVF which she submitted to the transfer agent for signature aid forwarded to Nasdaq Reorganization. Loisel knew that the TAVFs were fraudulent.

73. Each of the corporate documents submitted to the relevant Secretary of State via Loisel were signed in the name of aliases of Boock, Wong or DeFreitas. Boock, with the involvement of Shoss and Loisel, hijacked at least 22 defunct publicly traded companies. The current and original names of the hijacked or hijacking corporations are listed below:

Current Name Name Usurped in Hijacking

AEI Transportation Holdings ---- XO Logic Inc.
Aerofoam Metals, Inc.--- TAM Restaurants, Inc.
Andros Island Development Corp.--- KIMG Management Group, Inc.
Asante Networks, Inc.--- Pacific Chemical, Inc.
Brekford Communications, Inc.--- California Cyber Design, Inc.
Cavico Corp.---Laminaire Corp.
Complete Care Medical, Inc.---PacifcAmerica Money Center, Inc.
El Alacran Gold Mining Corp.---Pawnbroker.corn
Extreme Fitness, Inc.---Long Lake Energy Corp.
Gaming Transactions, Inc.--- Advanced Voice Technologies, Inc.
Interage, Ltd.--- Ambassador Eyewear Group, Inc.
Life Exchange, Inc.--- Technology Enterprises, Inc.
The Motion Picture Group --- ABS Group, Inc.
Mvive, Inc. --- Amazing Technologies Corp.
Paramount Gold and Silver Corp. ---PanelMaster Corp.
Reality Racing, Inc.--- Yellowbubble.com
Regal Technologies, Inc. --- C&S Research International, Inc.
Remington Ventures, Inc. --- Medical Home Supplies, Inc.
Straight Up Brands, Inc. --- Pacific Engineering Systems, Inc.
UDS Group, Inc. --- Blini Hut, Inc.
Uptrend Corp. --- Massimo da Milano, Inc.
WW Energy, Inc. --- Alya International, Inc.

76. Loisel submitted detailed invoices to Shoss for work performed by her in issuing bogus Rule 504 opinion letters and effecting the hijackings, invoicing him at least $455,000 for services rend6red, which he paid.

77. Once the hijackings were effected, Shoss acted as middleman for Boock in selling each hijacked or hijacking corporation, keeping a portion of the illicit sales proceeds and wiring or transferring the balance directly or indirectly to Boock.

78. For example, Shoss generated $175,000 from the sale of Brekford
Communications, Inc (f/k/a American Financial Holdings, Inc.) and $90,000 from the sale of WW Energy (f/k/a Alya International, Inc.).

79. Shoss transferred at least $480,000 to an HSBC Bank account in Toronto held by 1621566 Ontario, Inc., for which relief defendant Birte is the sole officer and director.

C. HIJACKINGS INVOLVING BOOCK, WONG, AND DEFREITAS

80. Independent of those companies hijacked with the involvement of Shoss and Loisel, Boock hijacked at least another 21 companies with the involvement of Wong and DeFreitas.

81. Boock, Wong, and DeFreitas incorporated new private corporations using the names of void publicly-traded corporations. They immediately changed the name of each newly- incorporated private entity, and then contacted the CUSIP Bureau falsely representing that an issuer to which a CUSIP number had previously been issued (i.e., the void corporation) had changed its name and required a new CUSIP number.

82. Once a new CUSIP number was obtained, SAT, Wong, and/or DeFreitas submitted false TAVFs to Nasdaq Reorganization to obtain a new ticker symbol. The false TAVFs referenced the defunct entity's former CUSIP number and ticker symbol, leading Nasdaq Reorganization to believe that the request pertained to a corporation to which it had already issued a ticker symbol and for which a Form 211 had already been submitted and cleared by F1NRA. As a result of this deception, Nasdaq Reorganization assigned a new trading symbol for the entity as if it were the defunct company that had simply changed its name, and posted the ticker symbol, change.

83. The current and original names of the private companies that were hijacked by Boock, Wong, and DeFreitas using the names of void publicly-traded corporations are as follows:

Current Name Nanw Usurped. in Hijacking

Advanced Growing Systems, Inc.[FL] --- The BigHub.com, Inc.
Advanced Growing Systems, Inc.[NV]--- PCC Group, Inc.
AEI Transportation Holdings [1] --- XO Logic Inc.
Alcar Chemicals Group, Inc. --- Birman Managed Care, Inc.
Asia Telecom Ltd. --- Jalate Ltd.
Bicoastal Communications, Inc. --- The Pathways Group, Inc.
China Adnet Enterprises Inc. --- Baker Communications, Inc.
Innolife Pharma, Inc. ---- Balfour Maclaine Corp.
International Energy Ltd. --- Pacific Coast Apparel, Inc.
KSW Industries, Inc. --- Kay Merchandising International Ltd.
LeaseSmart, Inc. --- Xxsys Technologies, Inc.
Level Vision Electronics Ltd. --- EcoTyre Technologies, Inc.
Loita Energy Acquisition Corp. --- Ensec International, Inc.
Magellan Energy Ltd. --- The Eastwind Group, Inc.
Marinas International Inc. --- Brazos Sportswear Inc.
Microlink Solutions Inc. --- Universal Seismic Associates, Inc.
NutriOne Corp. --- Biscayne Apparel, Inc.
Packaged Home Solutions --- TGPI, Inc.
Natural Medicines Ltd. --- Imark Technologies, Inc.
United Environmental Energy Corp. --- Eagle Finance Corp.
VShield Software Corp. --- All for a Dollar; Inc.
World Hockey Association --- Kaplan Industries, Inc.

[1] This is the one issuer hijacked with Shoss and Loisel's involvement that used SAT as its transfer agent. It therefore appears on both lists.

85. Boock, Wong, and DeFreitas sought to conceal their, individual involvement by using aliases and paying for services in cash.
86. For example, nine hijacking issuers provided contact telephone numbers in the above-mentioned documents or on their websites a voice mail service with a Brooklyn, New. York area code that were traceable to Boock. This service was paid for in cash by someone purporting to be Alex Kaplan, an alias used by Boock. Further, over 2,000 telephone calls were placed from Boock's Toronto phone numbers to the voice mail numbers from mid 2004 through mid 2006, indicating that Boock had the voicemail access codes to hijacked corporations. Other hijacking issuers listed addresses or phone numbers linked to Boock, Wong, or DeFreitas.

D. UNREGISTERED AND FRAUDULENT OFFERINGS AND SALES OF SECURITIES

87. With respect to at least 19 of the issuers with which they were involved in hijacking, Shoss and Loisel drafted at least 28 bogus opinion letters opining that offerings of those issuers were exempt under Regulation D, Rule 504 from the registration requirements of Securities Act Section 5. Each letter generally represented that the issuer was not a reporting company under the Exchange Act and intended "to make an offering to a limited number of `accredited investors' as defined in Regulation D, Rule 501(a), who reside or are domiciled in Texas and who purchase for investment in accounts . Each letter further stated, "it is our opinion that the shares are being issued in a transaction in accordance with the provisions of Rule 504 (Regulation D) and pursuant to Rules 139.16 and 139.19 of the Texas Administrative Code," that the offer and sale of the shares were not required to be registered under the Securities Act, and the share certificates could be issued without a restrictive legend. These letters contained deliberately misleading statements and conclusions of law because they were part of a scheme to defraud; Shoss and Loisel knew all the investors did not reside in Texas; and-they knew the issuers had not complied with state law requirements as required by Regulation D.

88. The letters resulted in the issuance of approximately 223 million purportedly unrestricted shares.

89. Boock tasked Shoss and Loisel with preparing the opinion letters. Shoss provided Loisel with a template letter. The finished letters included an appendix which listed the purported accredited investors' names and addresses.

90. Boock supplied the lists of subscribers.. The lists included corporations whose listed addresses were not in Texas. The lists also included Texas corporations incorporated by Loisel at the request of Boock, Wong, and DeFreitas for the sole purpose of acting as conduits for the distribution of shares. Loisel then drafted the corporate documents authorizing the liquidating distributions of shares to the Texas corporations' shareholders. Loisel acknowledged knowing at the time that Boock (using the Kaplun alias), Wong and DeFreitas were the controlling shareholders of certain corporate subscribers.

91. Loisel claims to have faxed each draft letter to Shoss, who would purportedly call her to approve her issuing the letter under his signature. Loisel's invoices to Shoss referenced the fact that she was drafting opinion letters. After signing Shoss's name, Loisel transmitted each letter to the issuer's transfer agent who issued shares per the terms of the legal opinions.

92. Boock, DeFreitas, Wong each sold shares of the hijacked and hijacking corporations into the secondary market.

93. DeFreitas directed Chudney DeFreitas, his cousin and a resident of Florida, to incorporate a company named For Better Living, Inc. and to open a trading account in the name of the corporation at a Scottrade branch in Florida. DeFreitas then sent her stock certificates which she deposited into the account. The staff traced trades in that account, using the ISP address, to Boock's e-mail address. Boock admits he traded in the account.

94. Through the Scottrade account, Boock received and liquidated unregistered securities in at least five hijacked and hijacking corporations, including Grand Lux Inc. (predecessor to World Hockey Association Corp.); Asia Telecom; International Energy; Pocketop Corp. (predecessor to Microlink Solutions Inc.); and Pharm Control (predecessor to Natural Medicines Ltd.). The accounts show initial deposits of certificates followed by complete liquidations effected through repeated incremental sales. Account records indicate Boock received at least $267,625 in 2007 alone from these liquidations.

95. DeFreitas, through more than 50 trading accounts he controlled, received and liquidated unregistered securities in numerous hijacked or hijacking companies. The accounts show initial deposits of certificates followed by complete liquidations effected through repeated incremental sales. DeFreitas liquidated stock in Asia Telecom, BDW Holdings (predecessor to International Energy), Bighub.com (predecessor to Advanced Growing Systems), International Energy, LeaseSmart, Magellan Energy, Marinas International, Midland Baring (predecessor to Level Vision Electronics), NutriOne Corp., Pocketop Corp. (predecessor to Microlink Solutions), Pharm Control (predecessor to Natural Medicines), KSW Industries, El Apparel (predecessor to NutriOne Corp.), United Environmental Energy, and VShield Software.

96. Most of DeFreitas's accounts were with the now-defunct New Jersey-based broker dealer Franklin Ross, in the names of 48 offshore corporations which DeFreitas controlled. DeFreitas duped Franklin Ross into entering into an employment contract with him pursuant to which he was designated an associated person of the firm and eligible to receive a commission on each trade in an account of any offshore investor which he referred to Franklin Ross. Thus, he duped Franklin Ross into paying him commissions on his own trades effected through accounts held in the names of corporations he controlled. Shares issued pursuant to the bogus legal opinions authored by Shoss and Loisel were deposited into the accounts, as were shares in hijacking issuers issued by SAT. DeFreitas liquidated shares in over 30 such issuers. He then directed the transfer of more than $2.2 million in proceeds from the sales to bank accounts in Toronto which he controlled.

97. Wong received and liquidated unregistered securities of hijacked corporations through three accounts at RBC Bank in Toronto, to include shares in Asia Telecom, Baker Communications (predecessor to China Adnet), BDW Holdings (predecessor to International Energy), BigHub.com (predecessor to Advanced Growing Systems), Caribbean Developments (predecessor to VShield Software), China Adnet, Grand Lux (predecessor to World Hockey Association), International Energy, KDW Telecom (predecessor to KSW Industries), LeaseSmart, and Universal Seismic (predecessor to Microlink Solutions). The quantum of proceeds received by Wong remains to be determined.

FIRST CLAIM FOR RELIEF

Securities Fraud
Violations of Section 10(b) of the
Exchange Act and Rule 10b-5 Thereunder

Plaintiff Commission repeats and incorporates paragraphs 1 through 97 of this Complaint by reference as if set forth verbatim.

Boock, DeFreitas, Wong, Shoss, and Loisel, by engaging in the conduct described above, directly and indirectly, in connection with the purchase and sale of "securities, and by the use of means or instrumentalities of interstate commerce or of the mails, or of the facilities of a national securities exchange, have:

(a) employed devices, schemes or artifices to defraud;

(b) made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or

(c) engaged in acts, practices or courses of business that have operated or will operate as a fraud and deceit upon other persons.

Boock, DeFreitas, Wong, Shoss, and Loisel engaged in the conduct described above intentionally, knowingly or with severe recklessness.

By reason of the foregoing acts and practices, Boock, DeFreitas, Wong, Shoss and Loisel violated and, unless enjoined, will continue to violate Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder.

SECOND CLAIM FOR RELIEF

Securities Fraud
Violations of Section 17(a) of the Securities Act

Paragraphs 1 through 97 are realleged and incorporated by reference. As described above, Boock, DeFreitas, Wong, Shoss, and Loisel, acting knowingly, recklessly, or negligently in the offer or sale of securities, by use of means or instruments of transportation or. communication in interstate commerce or by use of the mails, directly or indirectly:

(a) employed devices, schemes, or artifices to defraud;

(b) obtained money or property by means of untrue statements of a material fact; oromitted to state material facts necessary in order to make the statements made, in the light circumstances under which they were made, not misleading; or

(c) engaged in transactions, practices, or courses of business that operated or would operate as a fraud or deceit upon the purchaser.

By reason of the foregoing acts and practices, Boock, DeFreitas, Wong, Shoss and Loisel violated and, unless enjoined, will continue to violate Section 17(a) of the Securities Act [15 U. S. C. § 77q(a)].

THIRD CLAIM FOR RELIEF

Violation of a Commission Order and of Section 15(b)(6)(B)(i) of the Exchange Act, 15 U.S.C. & 78o(6)(B)

Paragraphs 1 through 97 are realleged and incorporated herein by reference. Between November 2003 until at least March 2007, Boock participated in numerous penny stock offerings by acting as a promoter, finder, consultant, agent or other person engaged in activities with respect to several issuers listed above for the purpose of the issuance or trading in a penny stock.

By reason of the foregoing, Boock directly violated, and unless immediately enjoined, will continue to violate the Commission's Administrative Order of December 6, 2002,[2] barring him from participating in any offering of a penny stock, "including as a promoter, finder, consultant, agent or other person who engages in activities . . . for the purposes of the issuance or trading in any penny stock." By so violating the Administrative Order, Boock also violates, and unless immediately enjoined, will continue to violate Section 15(b)(6)(B)(i) of the Exchange Act [15 U.S.C. § 78o(6)(B)].

[2] In the Matter of Birte Boock and Irwin Boock, Securities and Exchange Commission Release No. 46952, Administrative Proceeding File No. 3-10960, "Corrected Order Instituting Administrative Proceedings, Making Findings, and Imposing Remedial Sanctions Pursuant to Section 15(b) of the Securities Exchange Act of 1934" dated Dec. 6, 2002.

FOURTH CLAIM FOR RELIEF

Offer or Sale of Unregistered Securities
Violations of Securities Act Sections 5(a) and 5(c)

Paragraphs 1 through 97 are realleged and incorporated by reference:- As described above, notwithstanding that there was no applicable exemption from the registration requirements of the federal securities laws, Boock, DeFreitas, Wong, Shoss, and Loisel:

(i) made use of means or instruments of transportation or communication in interstate commerce or of the mails to sell, though the use or medium of a prospectus or otherwise, securities as to which no registration statement was in effect;

(ii) for the purpose of sale or delivery after sale, carried and/or caused to be carried through the mails or in interstate commerce, by means or instruments of transportation, securities as to which no registration statement was in effect; or

(iii) made use of means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell, through the use or medium of a prospectus or otherwise, securities as to which no registration statement had been filed.
For the hijacked corporations listed above, no valid registration statement was filed or in effect with the Commission pursuant to the Securities Act and no exemption from registration existed with respect to the securities and transactions described in this complaint.

By engaging in the foregoing conduct, Boock, DeFreitas, Wong, Shoss and Loisel violated Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)].

RELIEF REQUESTED

WHEREFORE, the Commission respectfully requests that this Court enter judgments:

(i) Permanently enjoining l3oock, DeFreitas, Wong, Shoss, and Loisel, pursuant to Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Section 21(d)(1) of the Exchange Act [15 U.S.C. § 78u(d)(1)], from violating, directly or indirectly, Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5;

(ii) issue findings of fact and conclusions of law that Boock violated the Commission
Order and Section 15(b)(6)(B)(i) of the Exchange Act as alleged above;

(iii) permanently enjoining Boock from, direct or indirect, continuing violations of the Commission Orders and Section 15(b)(6)(B)(i) of the Exchange Act; and ordering future compliance with Commission orders;

(iv) permanently enjoining Boock, DeFreitas, Wong, Shoss, and Loisel, pursuant to Section 20(b) of the Securities Act, from violating, directly or indirectly, Sections 5(a) and 5(c) of the Securities Act;

(v) ordering Boock, DeFreitas, Wong, Shoss, and Loisel to pay civil penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)];

(vi) ordering Boock, DeFreitas, Wong, Shoss, and Loisel to disgorge, with prejudgment interest, the total illegal proceeds from the fraud;

(vii) permanently enjoining Boock, Defreitas, Wong, Shoss, and Loisel from directly or indirectly participating in an offering of penny stock, as defined by Rule 3a51-1 under the Exchange Act [17 C.F.R. § 240.3a51-1], pursuant to Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)];

(viii) permanently enjoining Boock and Wong from acting as an officer or director of any issuer pursuant to Section 21(d)(2) of the Exchange. Act [15 U.S.C. § 78u(d)(2)];

(ix)granting such other relief as the Court deems just or appropriate; and

(x) retaining jurisdiction of this action in order to implement and carry out the terms of this order.

Dated this 28th day of September, 2009.

Respectfully submitted,

Justin Chretien
Paul W. Kisslinger (PK0764)
U.S. SECURITIES AND EXCHANGE COMMISSION
100 F Street, NE
Washington, D.C. 20549-4010
(202) 551-4953 (Chretien)
(202) 772-9245 (Fax)

Counsel for Plaintiff

Of Counsel:
John S. Polise
Nina B. Finston
John J. Dempsey

I just can't believe really the scale of this whole thing that they didnt get caught earlier. Can only imagine the amount of money involved as well. I don't see some familiar names in their that I think I will send to the lawyer that the SEC can have a look at.

Also it would be my guess that this kind of stuff happens more often then one thinks in the OTC, where its a game of "shells". Lots of money to be had by scammers

NICE update on this scam.
BTW I got out of BHUB but got stuck with LSMJ.
I did not connect the companies. My bad.

Good for the SEC-- wheels turn slow, but at least they turn…

I always appreciated the time/effort you put into understanding what was going on pennypusher1-- when it was actually going on. Not sure how many took advantage of it; but the iHub community was nonetheless bettered because of it-- thank you

Things I hope traders who frequent/use message boards take away from this:

1. Stop arguing that there is nothing wrong by creating a false negative: "the SEC hasn't shut them down yet-- therefore it must be legitimate"

2. Take the time to look at the "negative" data when posters present it. A lot of this stuff was pretty clear cut. All most had to do was review the data and verify the "dot linking."

3. Stop with the automatic labeling (basher)-- or at least "stay" the label until after attempting to confirm/deny the data.

4. Lobby for knowledge. The important data-- once verified -- shouldn’t get buried; rather it should be included in the "information Box" (iBox) and/or as a "sticky note."

5. "Pay it forward" even when faced with "social isolation" as the message board community has a large silent contingent who is-- by and large -- the intended target audience.

Again, thank you for your work, and this board, and your postings-- continued GLTU

55 shell companies.....

09/29/2009 1 COMPLAINT against 1621566 Ontario, Inc., Irwin Boock, Stanton B.J. Defreitas, Nicolette D. Loisel, Roger L. Shoss, Jason C. Wong, Birte Boock. Document filed by Securities and Exchange Commission.(mro) (ama). (Entered: 09/29/2009)
-----------------

Doc 1 - PDF file
http://viewer.zoho.com/docs/x8Ocy

(thanks to poster SCION for uploading the document)

OSC Hearing: October 19, 2009 ???

OSC RELEASE - April 28, 2009

IN THE MATTER OF THE SECURITIES ACT R.S.O. 1990, C.5, AS AMENDED

- AND -

IN THE MATTER OF IRWIN BOOCK, STANTON DEFREITAS, JASON WONG,SAUDIA ALLIE, ALENA DUBINSKY, ALEX KHODJIAINTS, SELECT AMERICAN TRANSFER CO., LEASESMART, INC., ADVANCED GROWING SYSTEMS, INC., INTERNATIONAL ENERGY LTD., NUTRIONE CORPORATION, POCKETOP CORPORATION, ASIA TELECOM LTD., PHARM CONTROL LTD., CAMBRIDGE RESOURCES CORPORATION, COMPUSHARE TRANSFER CORPORATION, FEDERATED PURCHASER, INC., TCC INDUSTRIES, INC., FIRST NATIONAL ENTERTAINMENT CORPORATION, WGI HOLDINGS, INC. and ENERBRITE TECHNOLOGIES GROUP

TORONTO – The Commission issued an Order which provides that the hearing of this matter on the merits shall be held on Monday, October 19, 2009 through to Friday, November 13, 2009, excluding Wednesday, November 11, 2009, commencing each day at 10:00 a.m. at the offices of the Commission on the 17th floor, 20 Queen Street West in Toronto.

A copy of the Order dated April 22, 2009 is available at:

http://www.osc.gov.on.ca/Enforcement/Proceedings/RAD/rad_20090422_boocki.jsp

http://www.osc.gov.on.ca/Enforcement/Proceedings/RAD/rad_20090422_boocki.pdf

OFFICE OF THE SECRETARY
JOHN P. STEVENSON, SECRETARY

URL: http://www.osc.gov.on.ca/Enforcement/Proceedings/ENR/enr_20090428_boocki.jsp

All OSC releases for PMCL:

http://www.osc.gov.on.ca/Enforcement/Proceedings/AlphaListing/ep_p_index.jsp

For media inquiries:

Wendy Dey
Director, Communications & Public Affairs
416-593-8120

Laurie Gillett
Manager, Public Affairs
416-595-8913

Carolyn Shaw-Rimmington
Assistant Manager, Public Affairs
416-593-2361

For Investor Inquiries:

OSC Contact Centre
416-593-8314
1-877-785-1555 (Toll Free)

Here ya go.. I was just messing around looking at some of the hall of shame. Rember we kept finding links to Homer....

TPAM

Top Air Manufacturing Inc. (PINKSHEETS: TPAM) announced today that it has signed a definitive acquisition agreement and acquires 100% of the outstanding shares of Catalina Resources Inc.

Contact: Top Air Manufacturer Mike Miller Tel. 416-944-2427 Catalina Resources Inc. Homer Pateridis Investor Relations Consultant Tel. 514-952-5251

Here is the filling from Iowa SOS

W00459855 1 4/7/2006 4/7/2006 ARTICLES OF INCORPORATION



http://www.sos.state.ia.us/Search/corp/corp_filings.asp?corpno=B79EB495769F311EA9A1AAFFF2C8A6B4B1A47EC512B37916E67B5972900FBBC4&Corp=CATALINA+RESOURCES+INC%2E

LOL. all you have to do is a google search
here is one from colorado

http://www.sos.state.co.us/biz/ViewImage.do?masterFileId=20041247737&fileId=20051069403

Netcert NCTI

NCTI became ISBL

ISBL haulted by SEC

It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Uncle B's Bakery, Inc. (n/k/a Ise Blu Equity Corp.) because it has not filed any periodic reports since the period ended April 30, 1998.

Seems this hood rd adress could really open a huge can of worms. If the OSC would take a closer look it would add about 10 more shells.

570 Hood Rd, Suite 18
Markham, ON L3R 4G7

http://www.osc.gov.on.ca/Enforcement/Proceedings/RAD/rad_20080515_boocki.pdf

The allegations are pretty long
http://www.osc.gov.on.ca/Enforcement/Proceedings/SOA/soa_20081016_boocki.pdf

And they still arent even going after the shells they highjacked and then handed off to others.
Im hoping some of these guys start singing and we get the shells like ABVG, AURC, SRSR, ACMG, and the rest involved.

But who knows if they want to dig that hole


here is the recent addition of compushare
http://cto-iov.csa-acvm.ca/ArticleFile.asp?Instance=101&ID=84F55BD25C2F4F84A224272253C51619

I'm surprised it takes so long.

Probably the same old crap.
The sad part is even if found guilty, there probably is no money.