BCSC-aided SEC fines Maid Aide rigger $378,000 (U.S.)
by Brent Mudry
October 21, 2002
The United States Securities and Exchange Commission has won $378,000 in combined fines against the supervisor of a notorious New York boiler room brokerage in the Maid Aide case, a 1998-1999 penny stock bribed-broker rig job which featured controversial Vancouver brokerage Pacific International Securities as a stock and money laundering conduit for dubious offshore dealings. (All figures are in U.S. dollars.) The penalties against Michael Boston, 28, of Woodside, N.Y., bring the total Maid Aide fine tally to $11.8-million.
The SEC announced Thursday that it was granted a default judgment against Mr. Boston by Judge William Pauley of United States District Court for the Southern District of New York on Oct. 10, and earlier judgments against two other key defendants: Pacific International client Max C. Tanner and Dennis Evans, both of Las Vegas.
The Maid Aide case has been probed by the SEC, the British Columbia Securities Commission, the Federal Bureau of Investigation, the U.S. Department of Justice, the U.S. Attorney's Office for the Southern District of New York and NASD Regulation Inc., the regulatory arm of the National Association of Securities Dealers. "The BCSC was extremely useful in facilitating getting records from Canadian broker-dealers. They responded so quickly it was almost instantaneous," Caren Pennington, assistant regional director for the SEC's Northeast region, told Stockwatch.
In the Maid Aide criminal case, Mr. Tanner, a Nevada lawyer, was convicted of 37 counts of securities fraud, mail, wire and tax fraud, and money laundering, in November, 2001, while Mr. Evans was convicted of securities fraud. (Mr. Tanner's money laundering conviction relates to his offshore Pacific International dealings.) In the SEC case, Mr. Tanner and Mr. Evans were given lifetime bans from serving as an officer or director of a public company. The other three defendants in the criminal case were all convicted as well.
Mr. Boston, who ran one of two New York branches of Baxter Banks & Smith flogging Maid Aide shares, with co-defendant Kevin J. Ruggiero, was ordered to pay the SEC $150,000 in disgorgement, $53,745 in prejudgment interest and a $175,000 civil penalty. Baxter Banks, which used unregistered boiler room salesmen to sell Maid Aide shares, was shut down in April, 2000, when its licence was permanently revoked by the State of Florida's Department of Banking and Finance.
The Boston judgment comes just after the start of a prosecution of Pacific International Securities in Vancouver by the BCSC. The Canadian regulator claims P.I. attracted, serviced and catered to much more than its Howe Street share of U.S. stock crooks, including such notable securities violators and felons as Shalom Weiss, recently extradited from Austria to Florida after fleeing an 845-year prison sentence, Mafia associates Phil Abramo and Phil Gurian, serial stock manipulator Barclay Davis and a cast of other rogues. Although Pacific International has not yet fully unveiled its defence, it blames the BCSC for failing to stem or reverse the constant stream of dirty clients to the brokerage.
While the criminal indictment detailed Mr. Tanner's use of a Pacific International account in the name of Delta Financial Resources Inc., his offshore Cayman Islands company, the SEC complaint reveals two other Maid Aide riggers used offshore accounts at a Canadian brokerage. Mr. Taylor controlled a Canadian brokerage account in the name of Gold Coast Investments S.A., in the exclusive offshore enclave of Alofi, Niue, while Mr. Ruggiero controlled a Canadian account in the name of Chios Investments Ltd., registered in the exotic offshore enclave of Gibraltar. While both accounts were believed to have used brokerages in Vancouver, it is not known whether P.I., or another local house, was used.
In an unrelated action, the Investment Dealers Association of Canada broke good news to its Canadian brokerage members on Wednesday, announcing that Niue is no longer deemed to be a serious money laundering destination by the international Financial Action Task Force. The folks at FATF have recently removed Niue, Russia, Dominica and the Marshall Islands from their blacklist of non-co-operating laundering countries.
Mr. Tanner is the third Las Vegas-linked penny stock attorney in the past year to suffer career setbacks related to dubious penny stock dealings on Howe Street, the centre of dealings for the former Vancouver Stock Exchange. Herbert Jacobi of New York, who helped notorious Canadian fraudster Michael Mitton wire illicit proceeds to Panama in the H & R Enterprises rig job, pleaded guilty a year ago to buying stolen FBI records for Mafia-linked client Robert Potter, while Shawn Hackman of Las Vegas, who provided bogus H & R share opinion letters, was suspended in December amid allegations of misappropriating more than $700,000 from a client. (Although based in New York, Mr. Jacobi operated with Las Vegas penny stock law firm Chapman & Flanagan.)
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