Black Dragon Resource Companies Inc (BDGR)

[LGL8054]

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In 1995 the Arizona Corporations Commission (ACC) imposed a $50,000 fine on Bouchy and Whelan, by then principals of an Arizona brokerage firm called Franklin-Lord, over their alleged involvement in the Supermail manipulation. The ACC also banned Bouchy from the securities industry in that state.

Scorpion Technologies
Scorpion Technologies was a software company based in Los Gatos, California. A 1996 federal criminal case in California alleged that company executives, including former Scorpion president Richard Bauer (sentenced to 41 months in federal prison), executives Terry G. Marsh and James T. "Tracy" Marsh (who entered guilty pleas) schemed to inflate the company's income using offshore shell companies which pretended to be Scorpion customers. Bauer's co-defendant, John T. "Jack" Dawson, was sentenced to 2.5 years. Bauer and Dawson both pleaded guilty to one count of conspiracy to commit securities fraud and one count of money laundering.

The SEC also filed a civil case against the Marsh brothers, Richard Bauer, former Scorpion controller Eric C. Brown, and principals of several brokerage firms who allegedly colluded with the Scorpion executives to distribute the stock. Among these brokerage defendants was Albert Terranova, an alleged control person of First American Biltmore Securities. The case resulted in Terranova's being barred from association with broker-dealers and from participation in penny stock offerings by the SEC in February 2003. A class action lawsuit filed in 1995 over Scorpion's alleged stock manipulation involving transfers of large numbers of shares to offshore entities and individuals using the SEC's Regulation S included additional defendants, some of whom have been involved in other schemes.

For example, Scorpion class action case defendant Barry Witz, a Beverly Hills, California lawyer, pleaded guilty in April 2004 in a federal criminal case in New Jersey to conspracy to commit securities fraud for touting a stock called Global Datatel Inc., along with stock promoter Stuart Bockler and Global executives using press releases, interviews, and "road shows" to disseminate false information about the company's financial situation.

Westfield Financial
Based in New York and named as a defendant in the Scorpion class action lawsuit, Westfield Financial was at the center of a local Manhattan case that called attention to the role of attorneys, even some well-known, prominent attorneys, in facilitating penny stock manipulations. In addition to an SEC case alleging its involvement in manipulation of the stock of an apparel company called Candies and a Delaware corporation called Response USA Inc, Westfield Financial principals George A.Carhart and Salvatore Mazzeo, along with consultant James E. Cohen, pleaded guilty in November 2002 to attempted enterprise corruption in a criminal case brought by the District Attorney of New York County which involved spectacular charges against prominent attorneys in England and Canada for helping US citizens use (or rather, abuse) SEC's Regulation S to manipulate stocks and engage in other fraudulent activity, some of which was carried out by the defunct securities boiler room A.R. Baron.

In November 2002 Stuart Creggy (a senior partner in the London firm of Talbot & Creggy and Queen's Magistrate for Westminster and Kensington) and Harry J.F. Bloomfield (senior partner of the Bloomfield, Bellemare law firm in Montreal, Quebec, a Queen's Counsel and honorary counsel for the African country of Liberia) were both convicted in the New York case for using corporations and bank accounts in secrecy havens such as Belize and Liberia to facilitate securities fraud schemes orchestrated by their New York clients. The attorneys allegedly persuaded a Liberian diplomat to falsify corporate records to conceal the true ownership of the shell companies being used in the securities scheme.