OT OT OT As for Teletek itself its former president, Michael G. Swan, pleaded guilty in November 1999 to over 70 counts including racketeering, conspiracy, securities fraud, wire fraud, and money laundering. Another Teletek executive, Keith Shwayder, was also convicted of racketeering, conspiracy, money laundering, securities fraud, and mail fraud.
Among the individual brokers who were indicted and sued by the SEC over Teletek bribery were:
Thomas Anthony Calise of Vallejo, California, a broker at Mathews, Holmquest & Associates, who sold thousands of shares of Teletek to customers. Calise was sanctioned by SEC and indicted in 1998 federal case in Las Vegas.
Charles Stember of Denver, a broker at RAF Financial Corporation, received about $3,000 of undisclosed compensation from Teletek affiliates. He was barred by the SEC from associating with broker-dealers and was indicted in the same Las Vegas federal case as Calise.
Gerard W. King of Metuchen, New Jersey, a broker at Sunpoint Securities, was barred by SEC from association with broker-dealers and penny stock offerings in March 1999, and also indicted with Stember and Calise in the Las Vegas case known as US v Cozzolino. In addition to the securities charges, King pleaded guilty to money laundering.
Three brokers at RB Webster Investments Inc., a Lauderhill, Florida securities dealer which opened 1986 and ceased operations in 1993:
1. Steven Ira Wertman of Delray Beach, Florida, barred from associating with NASD members in 1988, pleaded guilty to racketeering in the federal case against Swan in Las Vegas in 1996, sentenced to 21 months prison.
2. Robert Bruce Orkin of Coconut Creek, Florida, the principal officer of RB Webster between 1986 and 1993, barred in 1993 by NASD for a 1989 market manipulation, convicted of securities fraud, wire fraud, and conspiracy in the Las Vegas case US v Cozzolino, sentenced to 65 months in prison and a fine.
3. Edward Charles William Donner III of Palm Beach, Florida, vice president and compliance director for RB Webster, pleaded guilty to one count of conspiracy and sentenced to five months in prison.
Teletek's Friends at Cohig & Associates in Solana Beach
Some of Teletek's most aggressive and most highly-rewarded promoters were brokers at the Solana Beach office of Cohig & Associates, where manager John B. Morris was also the general partner of a secret partnership called Carmel Equity Partners, an entity he created to receive bribes paid by Teletek to Morris and other Cohig brokers in Solana Beach. In January 2000 Morris was convicted in a Nevada case on conspiracy to commit securites fraud, and in December 2001 he was barred by the SEC from association with broker-dealers.
Other Cohig brokers joining Morris in receiving secret payments from Teletek and other companies for pushing stocks included:
1. Edward Bracken: pleaded guilty to conspiracy to commit securities fraud in 1997 Teletek case in Las Vegas, barred by SEC from association with broker-dealers.
2. Douglas Diggins: pleaded guilty to conspiracy to commit securities fraud in Las Vegas Teletek case
3. Kelsey Vandeventer: convicted of conspiracy to commit securities fraud and money laundering in Las Vegas Teletek case. Banned from the securities industry by SEC
4. Richard L. Goodrich: convicted of conspiracy to commit wire fraud and securities fraud in Las Vegas Teletek case. Banned from the securities industry by SEC.
5. Bruce E. Masnekoff: convicted of conspiracy to commit securities fraud in Las Vegas Teletek case.
6. Lawrence D. Isen: convicted November 2000 of conspiracy to commit securities fraud and wire fraud for receipt of secret payments to promote and sell stock of Eagle Holdings in New York criminal case
7. Peter P. Kim: convicted November 2000 of conspiracy to commit securities fraud and wire fraud in New York criminal case over Eagle Holdings payments
8. Thomas A. Carey: pleaded guilty to conspiracy to commit securities fraud and wire fraud September 1999 in San Diego case over Eagle Holdings payments
9. Frank Marsella: convicted in same San Diego criminal case as Carey September 1999 over Eagle Holdings payments
The Eagle Holdings Scheme
Some of the Cohig brokers were convicted or pleaded guilty to accepting bribes to promote a penny stock called Eagle Holdings. Two principals of Eagle Holdings--Gordon L. Hall and R.L. Porter-- were sued by the SEC in September 1996 for allegedly scheming to inflate the value of assets reported on Eagle's financial statements between 1992 and 1994. For example, Eagle bought a $367,000 note secured by real estate from a company controlled by Hall and valued it at $2.5 million on the company's financial statements. A $200,000 interest in undeveloped land in Oklahoma acquired by Eagle from a company controlled by Porter was valued on Eagle's financial statements at $1.3 million. According to the SEC, Eagle ascribed a value of $10.5 million to a debenture somehow related to an agreement to lease stock to offshore insurance companies. Meanwhile Hall made over $2 million of profit from sales of Eagle stock.
Eagle, Autocorp, Diamond, Chariot
Penny stocks often change their names, but few barrel through as many name changes as quickly as Eagle Holdings, which between 1996 and 1998 converted itself into Autocorp Equities, then into Diamond Entertainment Inc. and finally into Chariot Entertainment Inc. An August 1998 civil case filed in federal court in Salt Lake City by the SEC charged five individuals associated with Diamond/Chariot of inflating the company's assets with a bogus $5 million certificate of deposit supposedly issued by a Russian bank. The SEC alleged that the "CD" was really made by one of the defendants, Hillel Sher, at a Kinko's copy shop in Hollywood, Florida. The case also charged that Diamond/Chariot planned to issue stock to finance the acquisition of the phony certificate of deposit. Charged along with Sher in this scheme were Michael Carnicle, Amotz Frenkel, Nili Frenkel, and Robert Cord Beatty, who had been sued in 1995 along with four different associates for raising $2 million from investors for a phony prime bank scheme which had promised returns of 10% to 25 % per month from the trading of documentary letters of credit, standby letters of credit, prime bank notes and other items.
First American Biltmore Securities
Teletek's network of brokers did not stop with RB Webster and Cohig. There was also First American Biltmore Securities, employer of brokers Terry Lee Lewis, Trent David Gribben, and Steven Gale Trapp, all of whom pleaded guilty in one of the Las Vegas criminal cases over Teletek bribes. Trapp was also cited by the SEC for taking payments from other penny stocks, including Medgroup Inc., and a Canadian company called Enrotek. The SEC's September 2001 case against John Banach, the principal of Enrotek claimed that Banach came into contact with the hungry brokers at First American Biltmore through Dennis Williams, a former broker who had been barred from the securities industry himself, but apparently maintained his lucrative network of contacts. Banach allegedly was put in touch with Williams by California stock promoter Kevin Woodbridge, another key Teletek promoter who also was hired to promote Enrotek and an Idaho company called Aqua Vie Beverage Corporation.
Enrotek's only known asset was undeveloped land in Portugal, but with the help of Woodbridge and Williams, brokers at First American Biltmore Securities and Cruttendon Roth had incentives to promote Enrotek stock to customers. According to the SEC, Woodbridge and Williams had joined up to pay brokers to push stocksbefore, so the secret payments for Teletek, Enrotek, and Aqua Vie were just business as usual. Williams's contact at First American Biltmore was identified as Jay Nance, who achieved the dubious honor of being a lead defendant of one the three Las Vegas Teletek cases (US v Nance et al, CR-S-96-271 D.Nev), was a manager at First American Biltmore.
Aqua Vie Beverage
In February 2004 the SEC filed a civil case against Aqua Vie, based in Ketchcum, Idaho, its CEO Thomas Gillespie and its major shareholder, Joseph Wozniak. The case alleged that the defendants sold about 2.75 million shares of Aqua Vie stock after touting it on millions of spam faxes. Aqua Vie also failed to make timely filings of its financial statements with the SEC, which claimed that the company had no other source of cash than the proceeds of stock sales. In a July 2003 administrative proceeding, the SEC barred broker Robert Thomas Clawson from association with broker-dealers and also from penny stock transactions. Clawson worked with promoter Kevin Woodbridge to promote Aqua Via and Enrotek while working at brokerage firm Cruttenden Roth
Supermail and Franklin-Lord
Another SEC action addressed the role of First American Biltmore Securities in promoting the stock of Supermail International Inc and Scorpion Technologies. These stocks were also the subject of SEC civil actions. In December 1996 the SEC filed a complaint against two former First American Biltmore brokers, Brett L. Bouchy and Richard C. Whelan, who allegedly promoting Supermail stock to clients without disclosing that they owned the stock personally and stood to make a 200% profit on their sales of this stock. Bouchy and Whelan allegedly used nominee accounts to conceal these profits and also allegedly misappropriated funds from a client.
Supermail had other problems. After what a US Department of Justice official described to Congress as "one of the largest money laundering sting operations targeting a check cashing business in US history," the CFO, president, and vice president of check-cashing and money-transmitting company Supermail were arrested in July 1998. They were charged along with six others in a 67-count federal indictment. The investigation had initially focused on a Supermail outlet in Reseda, California where the manager had arranged to launder the proceeds of drug sales for a fee. As the volume of these transactions allegedly grew to over $3 million, Supermail executives allegedly approved the continuation of this activity
