The individual who hijacked this shell.
SEC target Boock files appeal
2015-06-30 12:11 ET - Street Wire
Also Street Wire (U-*SEC) U S Securities and Exchange Commission
by Mike Caswell
Irwin Boock, the Toronto man who incurred judgments totalling $16.8-million in the United States for a corporate hijacking scheme that dates back to 2003, has appealed his fines. (All figures are in U.S. dollars.) He has not yet stated his grounds of appeal, but he previously claimed that he made a videotaped confession under duress. He also said he was under the effects of heart medication when he made the confession.
The penalties stem from a scheme in which the U.S. Securities and Exchange Commission claimed that Mr. Boock and others took over the identities of several inactive pink sheets companies. The group filed false paperwork that gave them control over the companies, and then sold them as shells, grossing millions, according to the SEC. The stocks produced from the scheme included a shell that became Paramount Gold and Silver Corp., a Toronto Stock Exchange listing. The case resulted in an initial $11.2-million judgment against Mr. Boock, followed by a $5.6-million order.
Throughout the case, Mr. Boock mostly denied any wrongdoing and complained about a videotaped confession the SEC obtained from him. He said that he provided the confession during an interview that he attended in Toronto with an SEC lawyer. He went to the meeting alone, without a lawyer. He also claimed that his wife had been in the hospital around the time of the interview and that he had slept very little. He further said that he was suffering from the effects of medication he was taking for heart problems. He claimed that the SEC's lawyer "could have had me admitting to murders in countries I had never been to if he so wanted."
Unfortunately for Mr. Boock, the judge was far from sympathetic to his situation. She found there was no doubt that he violated securities laws in a "knowing and intentional way." She also described his conduct as an egregious violation. In addition to the substantial financial penalties, the judge permanently banned him from penny stocks and from serving as an officer or director of a public company.
Mr. Boock is now seeking to have those penalties overturned. On March 26, 2015, he filed a notice of appeal. The notice only states his intention to appeal, and does not contain any details. Despite the lack of information, the SEC has already asked that the appeal be dismissed. In a motion filed on June 23, 2015, the regulator says the appeal came too late. The initial $11.2-million fine was handed down in 2012, and Mr. Boock had 60 days to appeal. His filing came well after that deadline, the SEC says.
The case against Mr. Boock dates back to Sept. 29, 2009, when the SEC filed a civil complaint against him and others in the Southern District of New York. The other defendants were Stanton DeFreitas of Toronto, Jason Wong of Markham, and two Houston lawyers, Roger Shoss and Nicolette Loisel. The regulator complained about a four-year scheme the men ran, starting in November, 2003, in which they hijacked the identities of inactive pink sheets companies. They typically sought stocks that still traded, but lacked a current transfer agent or contact person. Once they located a suitable target, they reactivated the company through the appropriate secretary of state, providing false names and addresses for contact information, the complaint stated.
With some of the companies, the men discovered that the secretary of state had declared a company void, the SEC said. When this happened, they incorporated a new entity with the same name and used it to assume the identity of the old company. They would then roll back the stock, change the company's name and obtain a new Cusip number, the SEC claimed. Once the men had control of the companies, they sold them off as shells, fetching prices between $80,000 and $200,000 each, according to the complaint.
The case never went to a trial, and the SEC won the initial $11.2-million decision on Aug. 2, 2012, followed by a later $5.6-million decision on Jan. 16, 2015. (The case had to be completed in two parts because of a separate criminal trial against Mr. Shoss. In 2011 prosecutors in Florida charged him for an investment fraud and money laundering scheme. He ultimately received 18 months in jail. The part of the SEC case that included Mr. Shoss, involving nearly half of the companies, was on hold until the completion of that criminal case.)
The SEC also won judgments against the two other Toronto-area defendants, Mr. DeFreitas and Mr. Wong. The judge found them jointly liable with Mr. Boock for disgorgement of $8.2-million in gains. She also permanently banned them from penny stocks. (Mr. Wong has since appealed as well.)
The hijacking case was not the first time the SEC pursued Mr. Boock. On Nov. 22, 2002, he agreed to pay $429,619 in disgorgement and penalties for the Leah Industries Inc. fraud. The SEC claimed that he disseminated news releases falsely claiming that PricewaterhouseCoopers had audited Leah's financial results, when it had not. He subsequently sold 540,000 shares, generating proceeds of $323,443.
