Category: Article – Media

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Article: Offshore Banking – The Secret Threat To America (Hound-Dogs)

Article - Media

Offshore Banking: The Secret Threat To America

Lucy Komisar

Hound-Dogs, 1 March 2004

This is a story about a massive money-laundering operation run by the world’s biggest banks. It hides behind the “eyes-glazing over” technicalities of the international financial system. But it could be one of the biggest illicit money-moving operations anyone has ever seen. And it’s allowed to exist by the financial regulators who answer to Western governments.

In these days of global markets, individuals and companies may be buying stocks, bonds or derivatives from a seller who is Clearstreamhalfway across the world. Clearstream, based in Luxembourg, is one of two international clearinghouses that keep track of the “paperwork” for the transactions.

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Article: Ex-CIBC executive arrested

Article - Media, Publications

Ex-CIBC executive arrested

SINCLAIR STEWART, 04 February 2004

A former executive at Canadian Imperial Bank of Commerce was arrested yesterday and slapped with criminal charges for allegedly bankrolling clients who participated in an illegal mutual fund trading scheme. Paul Flynn, who served as a managing director in CIBC’s U.S. arbitrage business before leaving the bank in December, was charged with five felonies by New York State Attorney-General Eliot Spitzer. If convicted on two counts of grand larceny, he could face up to 25 years in state prison.

Mr. Flynn arranged financing for a pair of hedge funds — Canary Capital Partners LLC and Samaritan Asset Management — that engaged in late-trading and “deceptive” market-timing practices, according to regulatory allegations. Mr. Spitzer’s office accused Mr. Flynn of “stealing” more than $1-million (U.S.) from mutual fund investors by providing the financial backing for these trades.
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Article: COURTS WIELD HARSH PENALTIES FOR ABUSING THE DISCOVERY PROCESS

Article - Media, Publications

COURTS WIELD HARSH PENALTIES FOR ABUSING THE DISCOVERY PROCESS

Evelyn Alfonso , 30 January 2004

A federal district court last summer issued the ultimate sanction of dismissal due to plaintiffs= abuse of the discovery process and persistent refusal to abide by the court=s discovery orders. Internet Law Library, Inc. v. Southridge Capital Management, 2003 WL 21537782 (S.D.N.Y. July 8, 2003). ITIS, Inc., formerly known as Internet Law Library, Inc., and its CEO, along with several of its shareholders, brought an action against defendant investors alleging their involvement in a scheme to defraud plaintiffs and to manipulate downward the price of ITIS stock in
violation of federal and state laws. Internet Law Library, Inc. v. Southridge Capital Management, 223 F. Supp. 2d 474, 477-78 (S.D.N.Y. 2002).

Judge Robert L. Carter of the United States District Court for the Southern District of New York dismissed the suit with prejudice as to all defendants due to plaintiffs= repeated attempts to expand and misconstrue the court=s orders on the ground that Federal Rule of Civil Procedure 37(b)(2)(C) authorizes dismissal of a plaintiff=s complaint along with other sanctions if a party Afails to obey an order to provide or permit discovery.@ Internet Law Library, 2003 WL 21537782 at *3. While dismissal is indeed the harshest sanction available to a court, it is appropriate where a party who has disobeyed an order has done so willfully, in bad faith, or is in some way at fault. Id. The court held that plaintiffs= failure to respect the court and its orders justifies dismissal of the complaint as both a remedy and a deterrent to future misconduct. Id. at *4. Continue reading “Article: COURTS WIELD HARSH PENALTIES FOR ABUSING THE DISCOVERY PROCESS”

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Article: Don’t Force The Shorts To Get Dressed

Article - Media

Don’t Force The Shorts To Get Dressed

Gary Weiss

Business Week cited by RGM Communications via Wayback, 8 December 2003

At a time when the stock market is in a state of chronic schizophrenia, with a year’s worth of gains being chipped away, one corner of the market has withstood the recent travails far better than any other: small-cap stocks. The Russell 2000 Index of such stocks is up 37% so far this year — double the gain in the Standard & Poor’s 500-stock index.

And in October, trading volume in the very smallest stocks, which are listed on the OTC Bulletin Board, climbed 400% over a year ago. Good news — but only up to a point. Regulators have long warned that such stocks are notoriously prone to manipulation and hype.

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Article: Knoxville-area firm seeks to expose naked short-sellers

Article - Media

Knoxville-area firm seeks to expose naked short-sellers

Lauren Drapala

Nashville Post, 1 November 2003

Green Dolphin Systems Corporation (GDLS.OB), a small company outside of Knoxville that produces environmentally-friendly specialty chemical products, has announced a plan it believes will lift its share price. The Powell, Tenn. company plans to fight the short-selling of the company’s shares in schemes to run stock prices to the ground, otherwise known as naked short-selling. In a letter to existing shareholders, Nick Plessas, president of Green Dolphin, has asked those with shares to demand physical delivery of Green Dolphin certificates from their brokers.

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Article: Wall Street’s Next Nightmare?

Article - Media

Wall Street’s Next Nightmare?

Rob Wherry

Forbes, 5 October 2003

From his 23rd-floor suite of offices in Houston’s Lyric Centre, John M. O’Quinn is plotting what he hopes will be his next multibillion-dollar jackpot. Not that the 62-year-old senior partner of O’Quinn, Laminack & Pirtle needs the dough; FORBES estimates his law firm has won $1.5 billion in fees from the makers of silicon breast implants and cigarettes. This time he’s aiming at Wall Street.

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Article: Offshore Banking: The Secret Threat to America (Dissent Magazine)

Article - Media

Offshore Banking: The Secret Threat to America

Lucy Komisar

Dissent Magazine, Spring 2003

In November 1932, deputy Fabien Albertin took the floor of the National Assembly in Paris to denounce tax evasion by eminent French personalities-politicians, judges, industrialists, church dignitaries, and directors of newspapers-who were hiding their money in Switzerland.

“The minister of finance knows very well that for ten years, the concern of all his predecessors has been to track down this fraud . . . ” he declared. “However, till now, the information one has gotten has been extremely vague. When documents arrive, they are formless notebooks in which holders of accounts are represented only as numbers. Employees of the banks don’t know the names of account holders. These names are known only to the director of the bank, who the clients forbid to correspond with them, so anxious are they to preserve anonymity.”

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Article: SEC’s IPO probe expands to include Morgan Stanley

Article - Media

SEC’s IPO probe expands to include Morgan Stanley

Investment Executive, 26 February 2003

“The Securities and Exchange Commission, expanding a probe into alleged IPO abuses, has signaled to Morgan Stanley that it may file civil charges alleging the securities firm doled out shares to investors based partly on their commitments to buy additional stock after trading began, people familiar with the matter say,” writes Randall Smith in today’s Wall Street Journal.

“The SEC staff has informally indicated to Morgan Stanley that it plans to send a so-called Wells notice notifying the firm of the planned charges, the people said. The development suggests the SEC’s investigation into such “laddering” of stock sold in initial public offerings could be heating up. The probe is one of the last major regulatory crackdowns on Wall Street excesses that characterized the 1990s stock-market bubble.”

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Article: Mighty Merrill Lynch bogs down in legal troubles

Article - Media

Mighty Merrill Lynch bogs down in legal troubles

Thor Valdmanis

Securities Arbitration, 10 October 2002

Douglas and Deborah Millar are about to become $7.7 million richer. The Pennsylvania couple didn’t buy a state lottery ticket. Instead, they played another popular game of chance: Sue Your Broker.

In granting one of the largest awards on record six weeks ago, a private arbitration panel ruled that Merrill Lynch failed to advise the Millars on how to protect the value of a stake in former Internet high-flier FreeMarkets that in better times was worth $48 million. Merrill has appealed, but legal scholars say arbitration awards are rarely overturned.

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Article: Foul Play Among the UAL Shorts?

Article - Media

Foul Play Among the UAL Shorts?

Gene Marcial

Bloomberg, 8 October 2002

The shorts have crowded in on UAL in a big way, helping to push the parent of financially troubled United Airlines much closer to bankruptcy. The stock has nosedived from $20 a year ago to $2 on Oct. 8. Right after US Airways filed for bankruptcy protection on Aug. 11, UAL (UAL ) announced that it, too, might have to resort to Chapter 11 bankruptcy protection. UAL shares were then trading at $4.

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Article: Manulife lawsuit certified a class action

Article - Media, Publications

Manulife lawsuit certified a class action

JOHN PARTRIDGE, 02 October 2002

A lawsuit alleging that a key unit of Manulife Financial Corp. wrongly excluded thousands of former policy holders in Barbados from payouts worth about $100-million when the company went public in 1999 has been certified as a class action by an Ontario judge.

In a ruling released Monday, Mr. Justice Ian Nordheimer of the Ontario Superior Court said the case “raises an issue” as to whether Manufacturers Life Insurance Co. “actively misled a regulator” about its plans to demutualize or go public when it won approval to sell its Barbadian business in 1996. The action, launched last December on behalf of four representative plaintiffs by Windsor, Ont., lawyer Harvey Strosberg, also raises questions about “the degree, if any, to which a corporation has a duty to protect individuals who have a financial interest” in it “regarding future plans of the corporation,” Judge Nordheimer said.
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Article: Endovasc Ltd., Inc. v. J. P. Turner Co., LLC

Article - Media, Publications

Endovasc Ltd., Inc. v. J. P. Turner Co., LLC

OffshoreAlert, 11 September 2002

Plaintiff, Endovasc Ltd., Inc. (“Endovasc” or “Plaintiff”, brings this action asserting in their Second Amended Complaint (the “Complaint” or “Compl.”) that they were injured by the fraudulent acts of defendants J.P. Turner Co., LLC (“JP Turner”), KCM Group LLC (“KCM”), The Keshet Fund, L.P. “Keshet Fund”), Keshet, LP (“Keshet”), Nesher, Ltd. (“Nesher”), Talbiya B. Investments, Ltd. (“Talbiya”), Balmore Funds S.A. (“Balmore”), David Grin (“Grin”), LH Financial Services Corp. “LH”), Laurus Master Fund, Ltd. (“Laurus Master Fund”), Laurus Capital Management, LLC (“Laurus Capital”), Celeste Trust Reg.”Celeste’, Patrick Power; “Power”), and John Clark (“Clark”) (collectively, “Defendants”), in violation of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) (“Section 10(b)”) and Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission (“SEC”), 17 C.F.R. § 240.10b-5 (“Rule 10b-5”) and Section 20(a) of the Securities Exchange Act (“Section 20(a)”), 15 U.S.C. § 78t(a).

Endovasc also asserts claims for common law fraud and deceit, civil conspiracy to defraud, breach of contract, and restitution under the Securities Exchange Act of 1934. Defendants move to dismiss the Complaint in its entirety on various grounds and for sanctions under Rule 11 of the Federal Rules of Civil Procedure. For the reasons stated below, Defendants’ motions to dismiss are granted, and their motions for sanctions denied.

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Article: $300M Stock Manipulation Suit Goes Forward

Article - Media, Publications

$300M Stock Manipulation Suit Goes Forward

Mark Hamblett, 30 July 2002

Internet Law Library Inc.’s allegation that it was the victim of “death spiral financing” by defendants who have a long history of stock manipulation states a claim under federal securities laws and will not be dismissed, a federal judge in New York has ruled.

Judge Robert L. Carter for the Southern District of New York rejected motions to dismiss brought by Southridge Capital Management and Cootes Drive LLC, which deny their agents violated a promise to refrain from short-selling shares of Internet Law Library immediately after agreeing to provide $28 million in financing.

Internet Law Library, now known as ITIS Inc. (OTC BB:ITII.OB – News), owns Internet sites specializing in legal research and litigation support services.

The company claims that, in spring 2000, it negotiated with Southridge for capital of up to $28 million, consisting of a $25 million equity line agreement and a $3 million convertible preferred stock purchase that ultimately triggered the lawsuit, Internet Law Library v. Southridge Capital Management, 01 Civ. 6600.

The company alleged that Southridge and its agents, Steve Hicks, Dan Pickett and Christy Constabile, promised to refrain from selling ITIS stock for one year after the closing, and also promised not to manipulate the stock to depress its price.

ITIS Chief Executive Hunter M.A. Carr repeatedly asked Southridge and its agents about his concern on short-selling, and was told several times that Southridge would not engage in the practice. Carr claimed he relied on these representations when he signed the stock purchase agreement on May 11, 2000, with Cootes Drive, a company that replaced Southridge as a signatory at the last minute.
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Article: Money laundering in Russia: legislative highlights

Article - Media, Publications

Money laundering in Russia: legislative highlights

CMS Legal, 17 April 2002

Money laundering as it is understood in most countries within the European Union, and in particular, in the United Kingdom, is a relatively new concept for Russian economic regulation. While the laundering of proceeds from crime undoubtedly went on during the Soviet and Perestroika eras, its prevention has only recently become part of the official policy of the Russian Government. Continue reading “Article: Money laundering in Russia: legislative highlights”

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Article: Internet Law Library, Inc. v. Southridge Capital Management, LLC

Article - Media, Publications

Internet Law Library, Inc. v. Southridge Capital Management, LLC

Smarter Legal Research, 02 February 2002

On January 12, 2001, Internet Law brought suit against Cootes Drive in the Southern District of Texas (the ” Internet Law action” ), the subject of which is a series of agreements including a Stock Purchase Agreement entered into by Cootes Drive with Internet Law and in which Cootes Drive agreed to provide capital to Internet Law through two vehicles, a $3 million convertible preferred stock purchase and a $25 million equity line agreement. The Stock Purchase Agreement specified New York as the exclusive forum for all litigation between the parties.

The gravamen of the complaint, later amended on February 12, 2001, was that Cootes Drive engaged in short-selling and market manipulation of Internet Law’s stock, artificially depressing the price of the stock to a level at which Cootes Drive would no longer be required to provide funding under the equity line pursuant to a provision in the Stock Purchase Agreement that conditioned funding on Internet Law’s stock trading above a specific price. As such, Internet Law alleges that Cootes Drive committed, inter alia, violations of securities laws, both federal and state, common law fraud and fraud in the inducement, and unlawful conspiracy. Continue reading “Article: Internet Law Library, Inc. v. Southridge Capital Management, LLC”

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