SEC defendant Panther denies any Biozoom wrongdoing
U S Securities and Exchange Commission (U:*SEC)
Tuesday August 7 2018 - Street Wire
Also Biozoom Inc (U:BIZM) Street Wire
by Mike Caswell
James Panther, one of those charged alongside Vancouver's Faiyaz Dean for the pump-and-dump of Biozoom Inc., denies that he did anything wrong. The U.S. Securities and Exchange Commission claims that Mr. Panther was part of a $34-million scheme to sell improperly issued Biozoom shares. (All figures are in U.S. dollars.) Among other things, he helped with manipulative trades and helped organize a paid promotional campaign, the SEC says.
The denials from Mr. Panther are contained in an answer filed on Monday, Aug. 6, in New York. The document is 17 pages long, but consists mostly of generic statements. Mr. Panther does admit to some routine things, such as being a 45-year-old resident of Carlsbad, Calif., but in response to most of the charges against him he simply says that he does not have "knowledge or information" about the specific allegation and denies that he did anything wrong. He asks for a trial by jury.
Mr. Panther is one of four individuals that the SEC charged on May 15, 2018, for Biozoom. In a civil complaint filed in the Southern District of New York, the SEC named him along with Mr. Dean, a Vancouver-Seattle lawyer. The SEC claimed that the group ran a 2013 campaign that boosted Biozoom, a purported skin health company, to a $4.50 high on the OTC Bulletin Board. The SEC said that the group sold 14 million shares from nominee accounts before the regulator ended the scheme by halting the stock.
The scheme, as set out by the SEC, began in December, 2010, when Mr. Dean located a shell that became Biozoom. The company's purported business was to develop a device that would provide biometric readings from a non-invasive skin scan. (The SEC did not speculate what such a device would be used for, but during the scheme Biozoom claimed that the scanner "non-invasively measures antioxidant levels, vitamin absorption, stress responses, oxygen consumption, and other factors important to good health and looking and feeling younger.")
As part of the transaction, Mr. Panther and Mr. Dean arranged for a large block of Biozoom shares to be deposited in U.S. brokerages in the names of several Argentine nominees, hiding the control that Mr. Panther and his associates had over the stock, the SEC said. Starting on May 16, 2013, Mr. Panther and others quickly "laddered" the stock upward through trading amongst those nominee accounts, the complaint stated. Mr. Panther's actions, as set out in the complaint, included controlling and monitoring e-mail accounts in the names of the nominees to communicate with banks and brokers.
(One of the brokerages that served Mr. Panther was Scottsdale Capital Advisors, an Arizona firm that is also a regulatory target. On March 31, 2017, the Financial Industry Regulatory Authority fined Scottsdale $1.5-million for facilitating the sales of tens of millions of shares while ignoring indications that insiders were behind the sales. The stocks FINRA cited did not include Biozoom, but the SEC separately sanctioned a Scottsdale broker, Timothy Scarpino, for aiding the scheme. In an order dated May 15, 2018, the SEC barred Mr. Scarpino from the industry, specifically citing his work with Mr. Panther. The ban came as part of an administrative settlement in which Mr. Scarpino did not admit any wrongdoing.)
As part of the Biozoom scheme, Mr. Panther and his co-accused arranged what the SEC described as an elaborate on-line, print and radio promotional campaign. The campaign included full-page ads in USA Today and The New York Times, as well as a two-page spread in Forbes. According to the SEC, Mr. Panther paid for the ads by sending hundreds of thousands of dollars to a Toronto ad agency that one of his friends controlled.
This advertising had the intended effect on the stock, according to the complaint. By June 11, 2013, Biozoom's volume reached 11.7 million shares per day. During the same period the share price doubled, closing at $3.45 on June 7, 2013. It reached a $4.50 high on June 19.
The scheme ended on June 25, 2013, when the SEC halted the stock. After the suspension, the SEC was able to freeze $16-million in proceeds from share sales before the money left the U.S. The remainder, about $17-million, went offshore, according to the SEC.
Mr. Panther is the only defendant to respond to the case so far. Besides Mr. Dean, the other defendants are Guillermo Ciupiak, 35, and Francisco Abellan Villena, 47, both of Spain.
The case against the group comes in addition to an outstanding matter against another Canadian, Myron Gushlak. Prosecutors in Florida claim that Mr. Gushlak sold the shell that became Biozoom, preparing much of the transaction while he was in prison awaiting release for a prior fraud. U.S. authorities have yet to arrest Mr. Gushlak on the Biozoom charges, and he remains a fugitive.
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