check this out...
I sure hope Calypso did the demo today...check out some of the names...(2 from Calypso)
*SEC Rhonda's former tech venture lands in SEC case
Stockwatch
1,417 words
20 June 2005
Canada Stockwatch
English
(c) 2005 Canjex Publishing Ltd.
U.S. Securities and Exchange Commission (:*SEC)
Monday June 20 2005 - Street Wire
See Rhonda Corp (TSX-V:RDM) Street Wire
by Stockwatch Business Reporter
Carmina Technologies Inc., a high-tech venture once controlled by Rhonda Corp., has landed in hot water with the U.S. Securities and Exchange Commission. The SEC says the former Rhonda subsidiary was taken over by a known fraudster who used it for a $3-million pump-and-dump on the OTC Bulletin Board late last year. (All figures are in U.S. dollars.)
Rhonda itself is not subject to any SEC allegations. (Rhonda divested itself of Carmina in June of last year, when it sold most of its 38-per-cent interest in the company as an OTC-BB shell. Rhonda retained 2.5 million shares, which equates to 3.87 per cent of Carmina.)
The SEC says the man that took the reins of Carmina was Harris Dempsey "Butch" Ballow, a known securities violator and a fugitive from U.S. justice. (Mr. Ballow skipped the country in December, 2004, in an unrelated fraud case.)
Mr. Ballow, when he took over Carmina last June, renamed the company Aimsi Technologies Inc. and moved it south, from its former Calgary, Alta., home to Oak Ridge, Tenn.
Rhonda, for its part, says it sold off Carmina as a shell in the hope of realizing some return for the company's shareholders. Rhonda's chief executive officer, John Alston, says he never dealt with Mr. Ballow directly, but he set up the deal through one of Mr. Ballow's co-defendants, Bruce Pollock.
He says Rhonda had nothing to do with Carmina once it sold its interest to Mr. Ballow's crew. "We have nothing to do with them and we never have," Mr. Alston confirmed.
The hand-held contamination detector
Once Aimsi was established in its new home, the SEC says Mr. Ballow and his associates began their $3-million pump-and-dump. In a 21-page civil complaint the regulator alleges they loaded up on Aimsi shares and began selling them while touting bogus distribution agreements the company had for a hand-held contamination detector.
The company said its hand-held contamination detector, dubbed ALARM, was a scanner for radiological, biological and chemical contaminants. The SEC claims Mr. Ballow and his associates misled investors about ALARM's sales potential through a fax and e-mail campaign, as well as through news releases.
The SEC names four defendants besides Mr. Ballow: Reginald Hall, a 45-year-old from Tennessee involved in developing ALARM; Bruce Pollock, a 40-year-old promoter from Houston; Winfred Fields, a 39-year-old stock tout from Houston; and Everett Bassie, 52, also a resident of Houston.
The SEC says this crew pumped Aimsi over 13 days in late 2004 from $1.85 per share to a $3.60 high with misleading news releases and the tout sheets.
"From November 17 through November 30, 2004, when Aimsi issued nine press releases and the Promoter Defendants were actively disseminating fax tout sheets and internet postings, Aimsi's stock price rose from $1.85 per share to $3.60 per share with daily trading volume reaching as high as 645,163 shares," the SEC claims.
"Guaranteed contract" for ALARM sales
The touts apparently told the investing public there was a "guaranteed contract that will generate close to $225 million" for Aimsi. The purported buyer in this contract was China Global Distribution Corp., a public company Aimsi described as an "international distributor."
The distribution agreement, however, was not quite as rosy as the company made it out to be, as the SEC tells it.
"The purported 'guaranteed sales' contract for $225 million in revenues that Aimsi repeatedly touted to investors did not exist," the SEC claims.
"Rather, Aimsi had executed a four-page document entitled 'Sole & Exclusive Distribution Agreement' that, at most, appointed China Global to be Aimsi's exclusive sales agent for Asia, but did not obligate China Global to purchase any units of the ALARM device, nor did it guarantee any payment or revenue to Aimsi," the SEC alleges.
China Global apparently controlled by Mr. Ballow
Also very questionable, according to the SEC, was China Global itself, the so-called "international distributor." The SEC claims China Global was in fact a shell company secretly controlled by the scheme's mastermind, Mr. Ballow, through an offshore entity named the Wright Family Trust.
The SEC says he set up China Global for the sole purpose of the pump-and-dump. China Global apparently had no Asian distribution network, as represented by Aimsi, nor did it have the money to enter such a business.
"China Global and its principal officer ... have no experience in the distribution of products in foreign markets, have no network of sales agents in Asia, and have done nothing to establish one. China Global lacks the financial resources to guarantee any stream of revenue to Aimsi, much less the $225 million represented in Aimsi's press releases," claims the SEC.
The SEC, in conclusion to its claim, seeks appropriate civil penalties against the Aimsi accused.
China Global's boss weighs in
Luis Pallais, the "principal officer" of China Global the SEC refers to (Mr. Pallais is China Global's chief executive officer), refutes some of the SEC's claims.
First and foremost, he denies that China Global was controlled by Mr. Ballow. In an affidavit dated June 4, 2005, Mr. Pallais says most of China Global's shares are owned by himself and a company named Victory Capital, a company not named as a defendant.
"The majority stock holders of CGDC are Luis Pallais and Victory Capital," asserts Mr. Pallais. He also disputes the SEC's accusation that several entities holding China Global shares are controlled by Mr. Ballow and his co-accused.
"To the best of my knowledge none of these entities are owned or controlled by Defendants Aimsi Technologies, Harris Dempsey 'Butch' Ballow, Everett Bassie, Winifred Fields, or Bruce Charles Pollack," states China Global's boss.
He admits he knew some of the defendants before the Aimsi dealings, but in relation to other matters.
"I met Everett Bassie when I became embroiled in dispute regarding a business deal with a company known as Calypso Wireless, Inc. Mr. Bassie was the auditor for Calypso. I helped Calypso Wireless obtain a multi-million dollar purchase agreement in China with a Chinese phone company (China Telecom). Calypso subsequently defrauded me of my rightful compensation," Mr. Pallais claims.
Mr. Pallais says he met Mr. Ballow, who according to the SEC masterminded the Aimsi pump-and-dump, around the same time. "As I recall, Everett Bassie and possibly Harris Ballow then introduced me to the other individual defendants and suggested that I look at the AIMSI Technology (THE ALARM) and see the possibility to enter into a contract with Aimsi for a Distribution in Asia," Mr. Pallais says.
Reginald Hall's answer
Mr. Pallais is not the only person to immediately dispute some of the SEC's allegations. Mr. Hall, who was involved in developing ALARM, broadly denied the allegations through his Houston lawyer, Nelson Jones.
He did not provide any specifics in his brief answer to the SEC's complaint.
Mr. Ballow skips the country
Unlike Mr. Hall, the SEC may not hear from Mr. Ballow, the alleged mastermind, any time soon. Mr. Ballow has been a fugitive from U.S. justice since he skipped the country last December, avoiding a sentencing hearing on unrelated criminal fraud charges. The SEC says he may be hiding in either Panama or Costa Rica, where he owns real estate.
According to the SEC Mr. Ballow sent the money he made in the Aimsi deal offshore, out of its reach.
In an unrelated case, the SEC won an $880,000 fine against Mr. Ballow for the 1998 market manipulation of OTC-BB listing Evans Systems Inc.
Rhonda's suspension
Rhonda, meanwhile, remains subject to an Alberta Securities Commission suspension. The ASC suspended the company on June 1, 2004, shortly after it divested itself of Carmina. The regulator was apparently unhappy with the way Rhonda accounted for the Carmina divestment.
The suspension happened long prior to the alleged Aimsi monkey business, and does not appear to be related.
Rhonda CEO Mr. Alston says he is working with the ASC and his auditors to resolve the issue, and expects Rhonda will be trading again in July.
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