Ontario Securities Commission
des P.O. Box 55, 19th Floor CP 55, 19e étage
valeurs mobilières 20 Queen Street West 20, rue queen ouest
Commission de l’Ontario Toronto ON M5H 3S8 Toronto ON M5H 3S8
IN THE MATTER OF THE SECURITIES ACT,
R.S.O. 1990, c. S.5, AS AMENDED
- AND -
IN THE MATTER OF
IRWIN BOOCK, STANTON DEFREITAS, JASON WONG,
SAUDIA ALLIE, ALENA DUBINSKY, ALEX KHODJIAINTS
SELECT AMERICAN TRANSFER CO.,
LEASESMART, INC., ADVANCED GROWING SYSTEMS, INC.,
INTERNATIONAL ENERGY LTD., NUTRIONE CORPORATION,
POCKETOP CORPORATION, ASIA TELECOM LTD.,
PHARM CONTROL LTD., CAMBRIDGE RESOURCES CORPORATION,
COMPUSHARE TRANSFER CORPORATION,
FEDERATED PURCHASER, INC., TCC INDUSTRIES, INC., FIRST NATIONAL
ENTERTAINMENT CORPORATION, WGI HOLDINGS, INC.
and ENERBRITE TECHNOLOGIES GROUP
STATEMENT OF ALLEGATIONS
Staff of the Ontario Securities Commission allege the following in respect of the Respondents:
I. THE RESPONDENTS
1. Irwin Boock, Stanton DeFreitas, Jason Wong, Saudia Allie, Alena Dubinsky and Alex
Khodjiaints (the “Individual Respondents”) are all residents of Ontario and are
connected to each other through a complex scheme of securities fraud involving: a) the
creation of fraudulent shell corporations by way of “corporate hijackings” as described
herein; and b) the issuance of fraudulent or false securities in those corporations; and c)
the trading of the fraudulent or false securities by the Respondents in Ontario and
2. Select American Transfer Co. (“Select American”) is a Delaware corporation that was
established by Boock, DeFreitas and Wong in April 2005. Select American was operated
as a transfer agent, primarily by DeFreitas, using aliases and nominees until May 2007,
when it ceased operations due to cease trade orders issued by the Commission.
3. Compushare Transfer Corporation (“Compushare”) is also a Delaware corporation that
operated out of Toronto as a transfer agent. Compushare was incorporated by Boock in
September 2006 and was operated by him using aliases and nominees until May 2008,
when it ceased operations due to cease trade orders and other regulatory action by the
4. By virtue of the corporate hijacking scheme described herein, the following entities are
fraudulently created U.S. corporations, the securities of which were quoted for trading on
the Pink Sheets LLC in the over-the-counter securities market in the U.S.:
(a) LeaseSmart, Inc. (“LeaseSmart”);
(b) Advanced Growing Systems, Inc. (formerly, The Bighub.com, Inc.) (“Bighub”);
(c) NutriOne Corporation (“NutriOne”);
(d) International Energy Ltd. (“International Energy”);
(e) Pocketop Corporation (formerly, Universal Seismic, Inc.) (“Pocketop”);
(f) Asia Telecom Ltd. (“Asia Telecom”);
(g) Pharm Control Ltd. (“Pharm Control”);
(h) Cambridge Resources Corporation (“Cambridge Resources”);
(i) WGI Holdings, Inc. (“WGI Holdings”);
(j) Federated Purchaser, Inc. (“Federated Purchaser”);
(k) First National Entertainment Corporation (“First National”);
(l) TCC Industries, Inc. (“TCC Industries”);
(m) Enerbrite Technologies Group Inc. (“Enerbrite”)
(collectively, the “Issuer Respondents”).
5. Select American and Compushare acted as the transfer agents to the Issuer Respondents
and were the primary vehicles through which the corporate hijackings and share
issuances were carried out.
6. Dubinsky and Khodjiaints operated trading accounts in Ontario in 2006 and 2007 for the
purpose of receiving and trading fraudulent or false securities in a number of the Issuer
II. THE FRAUDULENT SECURITIES SCHEME
A. Corporate Hijacking
7. The corporate hijacking scheme used to perpetrate securities fraud with respect to the
Issuer Respondents was carried out in the following manner:
(a) Corporate documents were filed with the relevant Secretary of State in the U.S.
(either Delaware, Nevada, California or Florida) to incorporate a company with
the same name as a defunct public issuer. Typically, the directors, officers and
registered agents listed on the corporate documents were either fictitious identities
or nominees and the purported corporate addresses for the newly created entities
would be mailbox locations obtained through UPS or other virtual mailbox
(b) Shortly thereafter, amendment documents were filed with the relevant Secretary
of State to effect a name change of the newly created entity and a consolidation of
the company’s shares in the form of a reverse stock split;
(c) Subsequently, steps were taken to obtain a new CUSIP number for the renamed,
newly created entity as if it was the successor company to the defunct public
(d) Documents containing false representations were then filed by the transfer agent
with NASDAQ to obtain a new trading symbol for the renamed company and to
effect the reverse stock split of the company’s shares on a 1 for 1,000 basis.
B. Select American Transfer Co.
8. DeFreitas, Boock and Wong are the founders of Select American. Between April and
August 2005, DeFreitas and Wong operated Select American jointly and were the
directing minds of Select American.
9. Between April 2005 and July 2005, Boock, DeFreitas and Wong, acting individually or in
concert, usurped the corporate identity of a number of defunct public issuers using the
corporate hijacking scheme described above, including but not limited to LeaseSmart,
Bighub, NutriOne and International Energy.
10. Boock, DeFreitas and Wong, using Select American as the vehicle, caused the companies
to obtain quotations for trading on the Pink Sheets as if they were the legitimate defunct
public issuers whose identities had been hijacked and, further, caused the companies to
issue fraudulent shares as if they were the shares of the defunct public issuers.
11. In or around August 2005, Wong left Select American. Following Wong’s departure,
DeFreitas operated Select American using aliases and nominees. The day-to-day
operations, however, were run with the assistance of Saudia Allie, a friend of DeFreitas’
who was employed as the office manager of Select American.
12. Following Wong’s departure, Boock and DeFreitas, acting individually or in concert,
created additional fraudulent shell companies for which Select American acted as the
transfer agent, including but not limited to Pocketop, Asia Telecom, Pharm Control and
13. Following their incorporation, Boock and DeFreitas used Select American as the transfer
agent to these entities to obtain quotations for trading on the Pink Sheets as if they were
the legitimate defunct public issuers whose identities had been hijacked and, further,
caused the companies to issue fraudulent shares as if they were the shares of the defunct
14. In certain cases, Boock and DeFreitas also caused these companies to set up false web
sites and issue false or promotional press releases as a means of creating a market for the
15. Boock and DeFreitas also sold some of the fraudulently created shell companies to third
parties who were seeking to “go public” by way of a reverse takeover or reverse merger
with an existing privately-held company. More particularly, DeFreitas sold NutriOne and
Cambridge Resources to third parties in Montreal and Boock sold International Energy to
a third party in Florida and Pharm Control to a third party in Ontario. In other cases,
however, the fraudulent shell companies were purely vehicles for DeFreitas and Boock to
issue and trade fraudulent securities.
16. In her role, Allie participated in and facilitated the fraudulent scheme by assisting
DeFreitas in operating Select American, including by preparing the fraudulent share
certificates for the shares of the Issuer Respondents for which Select American was the
transfer agent. In preparing the share certificates, Allie knowingly and fraudulently
signed the share certificates in a manner that purported the shares to be authenticated by
the officers and directors of Select American. Allie knew the officers and directors of
Select American to be either aliases or nominees.
C. Compushare as a Vehicle for Additional Shell Companies
17. Between August 2006 and March 2007, Boock used Compushare as a separate vehicle
through which to perpetrate securities fraud. In that period, Boock created the following
fraudulent entities: WGI Holdings, Federated Purchaser and Enerbrite.
18. Using Compushare as the vehicle, Boock then caused the companies to obtain quotations
for trading on the Pink Sheets as if they were the legitimate defunct public issuers whose
identities had been hijacked and, further, caused the companies to issue fraudulent shares
as if they were the shares of these defunct public issuers.
19. In certain cases, Boock caused these companies to set up false web sites and issue
promotional or false press releases as a means of creating a market for the securities.
20. With respect to Enerbrite, Boock acted together in concert with Wong in incorporating
the initial fraudulent entity in September 2006, which was initially named IDF
International but which was renamed Compliance Resource Group and was merged with
and further renamed Enerbrite following the sale of the entity as a shell company by
21. In addition to selling this predecessor shell to Enerbrite, Boock sold the predecessor shell
of Federated Purchaser to third parties for the purposes of a reverse merger.
D. Cease Trade of Select American and Continued Operation of Compushare
22. In or around April 2007, DeFreitas caused Select American to be sold to a third party in
Montreal. Shortly thereafter, on or around May 18, 2007, the Commission issued
temporary cease trade orders in respect of Select American and others, including
DeFreitas and the fraudulent shell companies identified above for which Select American
was the transfer agent. Following the cease trade orders, Select American ceased
23. Boock, however, continued to perpetrate securities fraud using Compushare as the
vehicle to carry out corporate hijackings and to issue and trade securities of the hijacked
24. In December 2007 and February 2008, respectively, Boock incorporated First National
and TCC Industries. Compushare acted as the transfer agent for both entities and, using
Compushare as the vehicle, Boock caused these entities to obtain quotations on the Pink
Sheets and to issue fraudulent shares for trading in the over-the-counter securities market.
E. Cease Trade of Compushare
[B]25. On May 5, 2008, the Commission issued temporary cease trade orders against Boock,
Compushare and others, including the fraudulently created entities for which
Compushare acted as the transfer agent. Following the cease trade orders issued by the
Commission, Compushare ceased operations.[/B]
F. Trading by Individual Respondents
(i) Trading by Wong
26. For his involvement in the scheme as described above, Wong primarily received
fraudulent shares in lieu of compensation, including shares of LeaseSmart, International
Energy, Asia Telecom and Pocketop.
27. Between February and March 2006, Wong sold the fraudulent shares of LeaseSmart he
had received through a corporate trading account held at RBC Direct Investing Inc.
(“RBC”) and controlled by him.
28. Subsequently, between November 2006 and February 2007, Wong sold the additional
fraudulent shares he had received in International Energy, Asia Telecom and Pocketop.
These trades were made through a separate corporate trading account at RBC controlled
29. In November 2007, Wong received additional compensation from Boock in respect of his
involvement in the scheme as described herein.
(ii) Trading by DeFreitas – The Franklin Ross Accounts
30. Between November 2006 and May 2007, DeFreitas operated approximately 48 nominee
accounts at Franklin Ross, a brokerage firm in the U.S. DeFreitas opened and operated
the accounts purportedly as a “foreign affiliate” to the firm (the “Franklin Ross
Accounts”). DeFreitas was recommended to Franklin Ross by Wong.
31. A number of the Franklin Ross Accounts were opened by DeFreitas solely for the
purpose of trading in fraudulent securities of companies for which Select American was
the transfer agent.
32. In at least 23 of the 48 Franklin Ross Accounts, DeFreitas engaged in a wholesale
liquidation of fraudulent securities in LeaseSmart, Bighub, International Energy,
NutriOne, Pocketop, Asia Telecom, Pharm Control and Cambridge Resources as well as
others for which Select American was the transfer agent and which exhibited the same
pattern of fraudulent corporate history.
33. The proceeds of trading from these 23 accounts totalled over USD $750,000 in 2006 and
over USD $2.3 million in 2007. All of the trading proceeds were transferred to bank
accounts in Ontario that were controlled and owned by DeFreitas.
(iii) Trading by DeFreitas and Boock – The Scottrade Account
34. In January 2007, using fraudulent and deceitful means, DeFreitas and Boock caused a
corporate trading account to be opened at Scottrade, a retail brokerage firm in the U.S.
that offers discount brokerage services online, in order to trade additional fraudulent
securities (the “Scottrade Account”). The Scottrade Account was opened in the name of
For Better Living Inc., a company created by DeFreitas and Boock using aliases and
35. In February and March 2007, DeFreitas and Boock caused share certificates representing
millions of fraudulent shares in International Energy, Asia Telecom, Pharm Control and
Universe Seismic to be issued by the respective entities and to be deposited to the
Scottrade Account. Using the online trading services of Scottrade, Boock sold the
fraudulent shares from Ontario between February and October 2007.
36. In July 2007, using fraudulent and deceitful means, DeFreitas and Boock caused
approximately $120,000 of the proceeds of the trading in the Scottrade Account to be
transferred to them in Ontario.
(iv) Trading by Dubinsky and Khodjiaints
37. Alena Dubinsky and Alex Khodjiaints are residents of Toronto. Dubinsky is the
girlfriend of Khodjiaints. Their involvement in the scheme is described below and
includes: a) fraudulent and manipulative trading of shares of a number of the Issuer
Respondent; and b) participation in an illegal distribution of those shares.
• RBC Account
38. In June 2006, at the instruction of Khodjiaints, Dubinsky opened an account at RBC in
39. The account was operated and maintained by Dubinsky and Khodjiaints between June
2006 and March 2007.
40. Between July and September 2006, millions of fraudulent share certificates were issued
to Khodjiaints in Dubinsky’s name, including shares of: BigHub (42.5 million),
Leasesmart (30 million), El Apparel (the fraudulent predecessor company to NutriOne)
(12 million), Universal Seismic (the fraudulent predecessor company to Pocketop) (1.8
million) and International Energy (.25 million).
41. At the time, Boock and DeFreitas controlled the issuance of shares in these companies
and caused the shares to be issued to Khodjiaints in Dubinsky’s name.
42. At the instruction of Khodjiaints, Dubinsky deposited the shares to the RBC account, a
significant number of which were sold by December 2006. All of the sales were carried
out by or at the instruction of Khodjiaints.
43. Around that time, RBC expressed concerns to Dubinsky regarding the questionable
nature of the securities and the trading in the account.
44. As of December 2006, the only activity in the account at RBC had been: a) the delivery
of over 100 million securities in entities whose securities were quoted for trading on the
Pink Sheets, all of which had Select American as the transfer agent; and b) significant
selling activity with respect to the shares.
45. In March 2007, RBC advised Dubinsky that it was restricting the account due to its
concerns regarding the securities and the transactions in the account.
• HSBC Account
46. In February 2007, as a result of the difficulties in trading in the RBC account, Khodjiaints
instructed Dubinsky to open a trading account at HSBC Securities (Canada) Inc.
47. As with the account at RBC, Dubinsky opened the account at HSBC in her name.
48. In March 2007, at the instruction of Khodjiaints, Dubinsky deposited millions of
fraudulent shares of the Bighub (10 million), LeaseSmart (10 million), International
Energy (289 million) and Universal Seismic (the fraudulent predecessor to Pocketop) (1.5
million), all of which had also been traded in her account at RBC. In addition, Dubinsky
deposited millions of shares of Pharm Control and Asia Telecom to the account.
49. At that time, Boock and DeFreitas controlled the issuance of shares in these companies
and caused the shares identified above to be issued to Khodjiaints in Dubinsky’s name.
50. Once the shares were deposited, Khodjiaints proceeded to engage in manipulative trading
in respect of the securities, and in particular in respect of the shares of Pharm Control and
51. Over a 5 day trading period between March 7 and 13, 2007, Khodjiaints sold
approximately 40 million shares of Pharm Control, which represented virtually all of the
Pharm Control shares issued to him in Dubinsky’s name. Khodjiaints carried out the
selling following an intensive period of promotional press releases by or on behalf of
52. The sales of Pharm Control as identified constituted approximately 40% of the total
volume of trading in Pharm Control on those days.
53. With respect to the securities of Asia Telecom, most of the trading occurred on 4 separate
days within a 6 day period between March 7 and 14, 2007 and consisted of selling large
quantities of shares on days when Asia Telecom had made press releases containing
promotional information regarding its purported business.
54. In that 4 day period, Khodjiaints sold approximately 60 million shares of Asia Telecom,
which represented virtually all of the Asia Telecom shares issued to him in Dubinsky’s
55. The sales of Asia Telecom as identified constituted approximately 25% of the total
volume of trading in Asia Telecom on those days.
56. In addition to the fraudulent and manipulative nature of the trading by Khodjiaints, the trades in the securities of Pharm Control and Asia Telecom were trades in securities not previously issued. Neither a preliminary prospectus nor a prospectus had been filed with the Commission and no receipts had been issued by the Director to qualify the trading ofthese securities in Ontario.
57. On or around March 12, 2007, Dubinsky sought to withdraw $400,000 in trading
proceeds from the account. HSBC did not allow the withdrawal due to its concerns
regarding the questionable nature of the securities and the trading that had been carried
out in the account.
58. As of March 19, 2007, HSBC restricted the account and any remaining securities were
not sold. As of that time, very few securities remained in the account.
59. During the operation of the account at HSBC, the only account activity was: a) the
delivery of hundreds of millions of fraudulent shares in entities quoted for trading on the
Pink Sheets for which Select American acted as the transfer agent; and b) the virtual
wholesale liquidation of those shares on successive or near successive days following the
issuance of promotional press releases by the company.
60. The total proceeds generated from the trading in the account at HSBC (attributable
almost entirely to trading the fraudulent securities of Pharm Control and Asia Telcom)
was approximately $1 million. The trading was the most profitable trading of all the
trading across Canada in these securities.
61. The trading in the account was fraudulent, manipulative and constituted an illegal
distribution in which both Dubinsky and Khodjiaints participated.
BREACHES OF THE ACT
62. With respect to each of the Individual Respondents, by their involvement in the securities
scheme described above, each of them has engaged in acts, practices or courses of
conduct relating to securities that they knew or reasonably ought to have known resulted
in or contributed to a misleading appearance of trading activity in, or an artificial price for, the securities contrary to subsection 126.1(a) of the Securities Act (the “Act”) and,
further, perpetrated a fraud on persons or companies contrary to subsection 126.1(b) of
63. In addition, Dubinsky and Khodjiaints, in trading and carrying out acts in furtherance of
trading in the securities of Pharm Control and Asia Telecom as described above,
participated in an illegal distribution of those securities contrary to section 53 of the Act.
64. With respect to the Issuer Respondents, by virtue of their status as instruments for
securities fraud and by virtue of their fraudulent corporate history, it is contrary to the
public interest that their securities trade in Ontario’s capital markets.
65. With respect to Select American and Compushare, by virtue of their status as vehicles for
securities fraud, it is contrary to the public interest that they be permitted to trade or act as
market participants in Ontario’s capital markets.
66. Such further and other allegations as Staff may advise and the Commission may permit.
DATED this 16th day of October, 2008.
THIRD TRANSFER AGENT SHUT DOWN