Looks like Dan Scammell is selling into the market through his Offshore Trusts. Report this company and Scammell to the SEC. He is hurting investors and running another one of his Ponzi Scheme's.
Seed stock deal crashes
In February 2009, I reported that Coquitlam promoter Dan Scammell was selling seed shares of a private company, VerifySmart Corp., which was developing software to prevent credit card fraud.
BY VANCOUVER SUNDECEMBER 1, 2010
In February 2009, I reported that Coquitlam promoter Dan Scammell was selling seed shares of a private company, VerifySmart Corp., which was developing software to prevent credit card fraud.
As usual, Scammell was talking big numbers. He told investors that a high-volume merchant processor had signed on to the company's technology. He projected revenues would climb to $200 million by the end of fiscal 2009. The company's share of this booty would start at five per cent ($10 million) and increase to 10 per cent ($20 million per year).
I cautioned prospective investors that such deals carry many risks. First, there is the inherent risk of investing in a startup venture. Getting in on the ground floor is beneficial only if the venture gets off the ground, which many don't.
Second, there is the added risk of investing in any deal promoted by Scammell. He has touted many flameouts, including Caneco Audio Publishers Inc. (an extended-play tape recorder for novels); Capital Reserve Inc. (an optical device for measuring alcohol and drug impairment); and Axagon Resources Ltd. (a salt-free ice-melting compound).
Two of these deals -Capital Reserve and Axagon, became the subject of regulatory action. Although a player in both, Scammell was never cited for any wrongdoing.
The third risk is that seed stock deals are sold under exemptions from prospectus and registration requirements, which means the company remains private and largely outside the regulatory orbit. This exposes investors to substantially more risk than if they invested in a public company.
These risks often translate into big trouble for investors: "Year in and year out, [seed stock deals] are our leading source of complaints and investigation," B.C. Securities Commission enforcement director Lang Evans said at the time.
As events unfolded, VerifySmart came under BCSC investigation. Late last week, Evans' enforcement staff alleged in a notice of hearing that:
- Casper de Beer, who is one of Scammell's associates, illegally sold $575,000 worth of shares in Verify-Smart to 50 investors in Western Canada and Ontario;
- Scammell and de Beer sold $651,309 worth of shares in a related company, Verified Transactions Corp., to 49 investors in B.C., Alberta and Washington state.
The commission alleged the respondents purported to rely on an exemption that permits companies to sell stock to family, friends and business associates, but the purchasers did not qualify as such.
This might sound like a technical infraction, but it is not. These investors were, in fact, the first casualties in a ruthless pump-and-dump scheme on the OTC Bulletin Board in the United States.
In March 2009, VerifySmart and Verified Transactions entered into a joint-venture licensing deal with a Nevada shell company, Treasure Explorations Inc., which had been set up by Vancouver promoter Howard Gelfand. The shell then changed its name to Verify Smart Corp.
By this time, the B.C. Securities Commission had implemented new rules requiring any OTC company with a substantial connection to B.C. to become a B.C. reporting issuer. However, when commission staff inquired, they were told that Scammell had no connection to the public company, and the public company had relocated to the Philippines, under the leadership of Ralph Santos and Adi Muljo.
Free from BCSC scrutiny, the company embarked on an aggressive promotion.
That included an agreement to pay one million shares to a Californiabased stock tout service, Cohen Independent Research Group Inc., for "certain consulting services."
In September 2009, Cohen issued what purported to be an "independent" research report projecting millions of dollars in net profits and a stock price ranging from $3.21 to $4.64.
It also included a recommendation from another U.S. tout service, Wall Street Grand, dubbing Verify Smart "a MASSIVE opportunity" for investors. In its disclaimer, Wall Street Grand disclosed that it had been paid $563,000 by Cohen and "may be compensated more in the near future." Who provided the money to Cohen was not disclosed.
At the time, the stock was trading at 93 cents on only a few thousand shares a day, but it quickly spiked up to $1.45 and enjoyed robust volume for the next few months.
Alas, the "massive opportunity" never amounted to anything.
As of Sept. 30 this year, Verify Smart hadn't generated a single cent of revenues. That meant there was no money available to distribute to seed shareholders in the two private companies, VerifySmart and Verified Transactions.
The share price of the public company has since slumped to six cents. Shareholders in the private company are even in worse shape: Their shares are subject to severe resale restrictions and can't be sold at any price.
BCSC Panel Sanctions Two Men for Illegally Trading and Distributing Securities
Wed, 16 May, 2012 2:00 PM EDT
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VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 16, 2012) - A British Columbia Securities Commission panel has sanctioned two men and two companies for illegally raising money from Canadian and U.S. investors.
In December 2011, a commission panel found that Daniel Scammell, Casper de Beer (aka Casha de Beer), Verified Transactions Corp. (VTC) and VerifySmart Corp. (formerly known as Verified Capital Corp.) traded in securities without being registered in B.C., and distributed those securities without filing a prospectus.
From September 2006 to December 2008, Scammell and VTC raised $641,309 from 49 investors in B.C., Alberta and Washington State. The panel found that these securities were distributed illegally, as the exemptions from B.C. securities laws relied upon by Scammell and VTC did not apply to any of the distributions. Additionally, neither Scammell nor VTC were registered to trade securities, and VTC has never filed a prospectus in B.C.
From November 2008 to March 2009, de Beer and VerifySmart distributed shares in that company to 50 investors in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario, raising a total of $575,000. The panel also found these securities to have been distributed illegally, as the exemptions from B.C. securities laws relied upon by de Beer and VerifySmart did not apply to any of the distributions. Additionally, neither de Beer nor VerifySmart were registered to trade securities, and VerifySmart has never filed a prospectus in B.C.
For their misconduct, Scammell and deBeer are both prohibited from trading in securities, purchasing securities or exchange contracts (with limited exceptions), and from becoming or acting as a director or officer of any issuer, registrant, or investment fund manager for five years. They are also prohibited, for the same period, from becoming or acting as a registrant, investment fund manager or promoter, from engaging in investor relations activities, and from acting in a management or consultative capacity in connection with the securities market.
The panel also ordered Scammell and deBeer to pay to the commission the $1.2 million they obtained as a result of their illegal activity, as well as administrative penalties of $50,000. The prohibitions remain in place until the later of May 14, 2017 and the date these amounts have been paid.
In addition to the orders against Scammell and deBeer, Verified Transactions Corp. and VerifySmart Corp. were permanently cease-traded by the panel.
The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the decision on our website, www.bcsc.bc.ca, by typing Scammell, deBeer, VerifySmart Corp, Verified Transactions Corp, or 2012 BCSECCOM 176 in the search box. Information regarding disciplinary proceedings can be found in the Enforcement section of the BCSC website.
Please visit the Canadian Securities Administrators' Disciplined Persons List for information relating to persons disciplined by provincial securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).
If you have questions, contact Richard Gilhooley, media relations, 604-899-6713. For public inquiries, call 604 899 6854 or 1 800 373 6393 (toll free).
Learn how to protect yourself and become a more informed investor at www.investright.org.
Contacts
Richard Gilhooley
British Columbia Securities Commission
604-899-6713 or (Canada) 1-800-373-6393
