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David Baines SAEI Article (both parts)

Vancouver-linked firm halted after Russian billionaire denies bid

Supatcha shares now trade at two cents, but the damage has been done, and someone had the opportunity to make millions in illicit profits

http://www.vancouversun.com/business/Vancouver+linked+firm+halted+after+Russian+billionaire+denies/4061051/story.html#ixzz1AGkpa0uw

By David Baines, Vancouver
January 5, 2011

On Dec. 17, the U.S. Securities and Exchange Commission announced a temporary trading halt against Supatcha Resources Inc., a Denver-based company whose stock had soared on the basis of what appeared to be a hot gold play in the Ukraine.

The SEC said it halted trading due to questions about the accuracy of a geological report on the company's mineral properties in the Ukraine, and a purported tender offer for Supatcha's outstanding shares.

The announcements had propelled the stock, which trades on the OTC Bulletin Board in the United States, from a low of one cent in October, to a high of 93 cents on Dec. 10.

Since then, both the geological report and the takeover offer have been exposed as bogus, and the stock has crashed to two cents.

What has all this got to do with Vancouver? Lots, as you will soon see.

As a prelude to going public, Supatcha filed a registration statement with the SEC in September 2008. Its president was said to be Don Axent, owner of the Auto-One Car Care & Service Centre in Thunder Bay, Ont.

Although neither Axent nor his two co-directors (also from Thunder Bay) had any professional training or technical credentials in exploration, the company's stated intention was to explore a single mineral claim in B.C.

The claim was said to have been acquired from Kimberley Sinclair of North Vancouver for $6,500.

Vancouver consulting geologist Laurence Sookochoff, who regularly lends his name to such moose pasture, recommended a three-phase work program. The first phase, which would determine whether to proceed to the next phase, would cost a mere $6,500.

To fund the business, Axent and his fellow directors bought 6.5 million shares for one tenth of a cent each, then sold 5.7 million more shares for one cent each to 40 different shareholders, for a grand total of $63,500. The registration statement sought to clear the 5.7 million shares for resale.

We have seen this sort of set up many times before.

Once the shares are cleared for trading, the promoters gather them up, so they end up with a tightly controlled shell company that is perfect for some future promotion.

In December 2009, after conducting nominal research on its mineral claim, Axent and his fellow directors resigned and were replaced with Steve Talley of Denver, whose biography is so vague as to be meaningless, and two Ukrainian mining promoters, Nikolae Yagodka and Andrei Yasinskij.

Control passed to two private companies, Massey Asset Management Ltd. and Anthera West Capital Inc., both located in Panama. The beneficial owners of these companies have not been disclosed.

Several months later, the company moved its office to Denver and announced it would acquire some gold mining claims in Ukraine.

To tout the stock, the company and various third parties (whose beneficial owners were not disclosed) paid hundreds of thousands of dollars and shares to various Internet-based promotional services.

In November, for example, the company issued four million restricted shares to Wall St Bulls Consultant Group Inc. to provide "market awareness." This helped prime the market for two blockbuster announcements.

On Dec. 9, the company announced that Graig Parham of NEOSC Geomin Ltd., a mining consulting firm based in Jakarta, had issued a report stating there was "potential to discover an important gold and/or polymetallic occurrence" at the company's Ukrainian properties. He concluded that "an aggressive exploration program is warranted."

The report was said to be fully compliant with National Instrument 43-101, which sets rules for proper mineral disclosure. This presumably set apart Parham's report from the vacuous promotional patter that is dished out by most bulletin board companies.

The next day, Dec. 10, the company's share price soared to 93 cents on massive trading volume.

Then Supatcha issued a release "acknowledging" that OXM Group, controlled by "Mikhail Prokorov", said to be the fifth-richest person in Russian, had made an unsolicited bid for all the outstanding shares of Supatcha at $1.75 per share -- nearly double the peak trading price.

The following business day, Dec. 13, trading volume ballooned to 43.4 million shares, but a curious thing happened: Instead of edging up to the proposed tender offer, the share price plunged to 19 cents.

The next day, Bloomberg writer Christopher Donville reported that he had received an email from a spokesman from Onexim Group denying that the company or Mikhail Prokhorov had anything to do with the alleged takeover bid.

It is interesting to note that Supatcha spelled Prokhorov's name without an "h" and identified his company as OXM rather than Onexim. These sorts of small variations, which can confuse investors who are trying to confirm the legitimacy of these sorts of announcements, also showed up in the geological report.

Google searches for Graig Parham at NEOSC Geomin in Jakarta come back blank, but there is a Greg Parham listed at a company called PT Geomin International at the same Jakarta address, although the phone and fax numbers are off by one digit.

On Dec. 13, the same day that Onexim denied it had made a takeover bid, Geomin posted a release on its website denying any dealings with Supatcha.

"Geomin has notified several offices of the SEC on Saturday and Sunday (11 and 12 December) of the fraudulent use of its name and its consultant, Greg Parham," the release stated.

Four days later, the SEC issued its temporary trading halt, which expired at midnight on Dec. 31. The stock is now trading at two cents, but the damage has been done. Whoever was behind this apparent fraud had ample opportunity to sell millions of shares, and make millions of dollars in illicit profits.

NEXT: Axent, who purportedly created Supatcha, admits he was acting under the direction of controversial Vancouver promoter Mario Aiello. Aiello's former associate, William Scott Marshall, who fled Vancouver in 2007 after somebody pumped six bullets into his Shaughnessy home, reappears as a director of Supatcha.


http://www.vancouversun.com/business/Vancouver+linked+firm+halted+after+Russian+billionaire+denies/4061051/story.html#ixzz1AGl1O1MY



Gun-shy promoter pops up in sketchy bulletin board company

By David Baines, Vancouver
January 6, 2011

http://www.vancouversun.com/technology/promoter+pops+sketchy+bulletin+board+company/4067989/story.html#ixzz1AGkdLvNr

Second of two parts

In Wednesday's column, I reported that Don Axent, an auto mechanic in Thunder Bay, served as president of an exploration company called Supatcha Resources Inc. during its formative stages in 2008 and 2009.

Supatcha had all the signs of a stock market sham. First of all, neither Axent nor his two co-directors had any credentials or technical expertise in exploration.

Secondly, the company's property had been acquired from Kimberley Sinclair of North Vancouver for a mere $6,500, which puts it firmly in the moose-pasture category. (Sinclair is a close associate of Larry Sostad, a prolific vendor of dubious properties to bulletin board companies.)

Thirdly, a nominal work program had been recommended by Vancouver geologist Laurence Sookochoff, who routinely lends his name and credentials to these sorts of questionable ventures.

Sure enough, after distributing 5.7 million shares at a penny apiece to 40 seed shareholders, and registering those shares for resale on the OTC Bulletin Board in the United States, Axent resigned and two Ukrainian mining promoters, Nikolae Yagodka and Andrei Yasinskij, became directors.

At the same time, control passed to two Panamanian companies, whose beneficial shareholders have never been disclosed.

In December, the company made two big announcements: First, it released a boosterish geological report on some gold prospects the company had acquired in Ukraine. The report was reportedly done by Jakarta-based geologist Graig Parham and was said to comply with Canadian mineral disclosure standards.

Second, the company announced that a private company owned by Mikhail Prokorov, said to be the fifth-richest person in Russia, had made an unsolicited bid for all the outstanding shares of Supatcha at $1.75 per share -nearly double the peak-trading price.

Alas, a Jakarta geologist with a similar name and the same address, Greg Parham, denied any dealings with Supatcha, and a Russian billionaire with an almost identical name, Mikhail Prokhorov, denied he had made any takeover bid.

The company has not officially responded to either of these denials, but the SEC has. On Dec. 17, it expressed concern about the accuracy of the company's disclosure and issued a temporary trading halt. That halt expired at midnight on Dec. 31. The stock, meanwhile, has slumped to two cents.

Rumours began floating around that Axent was not really the driving force behind Supatcha during its formative stages, rather it was controversial Vancouver promoter Mario Aiello, best known for his involvement in a bulletin board pile-up called Silver Star Energy Inc.

In February 2004, the RCMP Integrated Market Enforcement Team raided Silver Star's office on West 2nd Ave. in Vancouver. RCMP alleged in search warrant information that five men, including Mario Aiello and William Scott Marshall, had set up Silver Star as a pump-and-dump scheme.

In particular, it alleged that Aiello had distributed Silver Star's seed shares to people who simply acted as nominees. It further alleged that, after the shares were registered for resale, the insiders gathered them up, pumped up the stock price, then blew them off to the "unsuspecting public."

Alas, the RCMP investigation became bogged down and no charges were ever laid.

Marshall, meanwhile, ran into a bit of a rough patch in July 2007 when somebody fired six bullets at his Shaughnessy home. He quickly left town and has kept a low profile since then.

Curious as to whether Aiello had been involved in setting up Supatcha, I called Axent this week at his auto shop in Thunder Bay.

To my surprise, he readily admitted that Aiello "advised me on all sorts of things. He definitely has the expertise in that field."

Pressed further, Axent said that, although he was president of the company, "it was pretty much his [Aiello's] idea to put together Supatcha. He came up with a plan."

Axent was vague about certain key details, which made me think his role was minimal. For example, he couldn't recall Kimberley Sinclair, who had originally sold Supatcha the property that became the company's principal asset.

He also said Aiello dealt with the company's lawyers, Anslow & Jaclin in New York, and Aiello signed up "a fair number" of the seed shareholders.

When I asked whether he was simply acting as a nominee for Aiello, he provided a rather unconvincing response: "Not necessarily," he said.

Axent, who used to live in Vancouver, said he has known Aiello since the early 1980s and has been involved in several other stock market deals with him, including a bulletin board company called Tao Minerals Ltd.

Like Supatcha, Tao went public on the basis of a piece of moose pasture acquired from Sostad; it was facilitated by the same New York law firm; and it quickly morphed into something else after the seed shares were registered with the SEC.

As in the case of Supatcha, Axent was listed as Tao's president but Aiello's name did not appear on any disclosure documents.

Just before the SEC's trading halt expired on Dec. 31, Supatcha updated its list of directors in Nevada, where the company is registered, and lo and behold, Marshall suddenly appeared as a director.

His name also popped up as a director on the company's website this week.

All this begs the question: What role -if any -did Aiello and Marshall play in Supatcha's Ukrainian promotion, which provided insiders with the opportunity to make millions, but made mincemeat out of public investors?

I was unable to contact Aiello or Marshall, but hopefully the SEC and B.C. Securities Commission will get to the bottom of this.

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Read more: http://www.vancouversun.com/technology/promoter+pops+sketchy+bulletin+board+company/4067989/story.html#ixzz1AGkInt9k