Genmed's Harris pleads not guilty in L.A.
2013-03-07 12:48 ET - Street Wire
Also Street Wire (U-EMPM) Empire Post Media Inc
Also Street Wire (U-FROG) FrogAds Inc
Also Street Wire (U-HAIR) Biostem US Corp
Also Street Wire (U-SENZ) Sport Endurance Inc
by Mike Caswell
Mark Harris, the former Vancouver promoter facing criminal charges in the United States for several pump-and-dumps, has pleaded not guilty. He entered the plea in a brief appearance before a judge in Los Angeles on Feb. 27, 2013. The judge then allowed his release on a $700,000 bond, with the conditions to include house arrest. (All figures are in U.S. dollars.)
Prosecutors claim that Mr. Harris, 56, was part of a group of serial market manipulators that generated $30-million in illegal profits from a number of pump-and-dumps. The group secretly took control of OTC Bulletin Board companies and promoted the stocks with false or misleading information. The men then allegedly dumped millions of shares and moved the proceeds from the scheme offshore.
Mr. Harris was initially arrested in Arizona on Feb. 13, 2013, when a pair of indictments against him and 13 others were unsealed in California. The U.S. Marshals Service transported him to Los Angeles, where he remained in custody until he pleaded not guilty last week. After he entered the plea, the judge fixed his bond at $700,000, of which $100,000 his wife Jonni would satisfy and the remainder he and his wife would jointly provide.
ARIZONA REAL ESTATE
Mark Harris's House
The judge also ordered him to remain under house arrest at his home in Arizona, to be enforced by electronic monitoring. He may only leave to drive his son to and from school. Other terms of his release include travel restrictions, avoiding contact with his co-defendants, and submitting to drug and alcohol testing.
The move from jail to home will be a substantial upgrade in accommodations for Mr. Harris. The address listed in his release documents is for a 4,407-square-foot home in Scottsdale, Ariz. According to an old real estate advertisement, the house has five bathrooms, a pool and parking for three cars. The average list price of homes in his ZIP code is $1.55-million.
Fraud charges
The charges against Mr. Harris are detailed in a pair of indictments unsealed in the Central District of California on Feb. 13, 2013. The charges included securities fraud, wire fraud and international promotional money laundering. Prosecutors claimed that Mr. Harris and others ran a pump-and-dump scheme that began around 2009 and continued until at least December, 2012. The promotions, as described in the indictments, all followed a similar pattern: the men took control of an OTC-BB company, promoted it with false or misleading news, and then dumped their shares.
One of the examples prosecutors provided was Genmed Holding Corp., a Dutch company that claimed to be developing generic drugs. The Genmed scheme, as described in the indictment, began in early 2011, when then stock was thinly traded and was around 30 cents. According to prosecutors, the men took control of the company and then arranged a touting campaign that included paid promoters, a celebrity video and mass mailings that overstated the company's revenues.
(The recipients of that promotional money, as listed in the indictment, included a West Vancouver company called Raincity Marketing Group. The indictment did not accuse Raincity of any wrongdoing, but said that it received $165,000 through wire transfers to HSBC Bank Canada.)
As the promotion began, the stock became far more active, trading hundreds of thousands of shares per day, and reaching a 52-cent high. The company issued a news release in which it claimed to have an agreement with a pharmaceutical distributor in Ireland that would see its products sold in several countries.
Part of the promotion, according to prosecutors, was a video news release with a known actor. (Prosecutors did not identify the actor, but one of the other companies in the indictment claimed to have Pamela Anderson pitching its products.) The video shoot was the subject of a string of text messages that Mr. Harris received on March 20, 2011, prosecutors claimed. One text said the video would be distributed on "CNN Bloomberg, msnbc, local tv as well as cable across the nation ... I believe it will [be] a great tool for [the third party stock promotion groups]."
One of Mr. Harris's co-defendants, Grover Nix, had high expectations for the promotion, according to the indictment. In an intercepted conversation he said, "I'm fucking truly excited like a kid at Christmas." In all, prosecutors claim that the men made $2.1-million from the Genmed promotion.
The defendants, in addition to Mr. Harris, are Sherman Mazur, Ari Kaplan, Grover "Colin" Nix, Regis Possino, Edon Moyal, Joseph Davis, Curtis Platt, Dwight Brunoehler, Tarun Mendiratta, Ivano Angelastri, Joseph Scarpello, Julian Spitari, Peter Dunn and William Mackey. Most of the men are from California.
The stocks, in addition to Genmed, were Sport Endurance Inc., Empire Post Media Inc., FrogAds Inc. and Biostem U.S. Corp. None of the companies are named as defendants.
The case is scheduled for a trial by jury starting April 23, 2013.
Prior to Arizona, Mr. Harris lived in Vancouver on and off for many years, holding himself out as an investor relations man. He ran a private firm called Skylla Capital Corp., which operated from an office on Burrard Street. The Vancouver Sun's David Baines reported in 2006 that he had a child with former Northern Securities Inc. broker Jonni-Colleen Sissons.
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