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More News Coverage of OSC - Boock Settlement

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PhillyPA65   Monday, 02/20/12 12:28:52 AM
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More News Coverage of OSC - Boock Settlement

OSC settles corporate hijacking case against Boock

2012-02-17 14:07 ET - Street Wire

by Mike Caswell

Irwin Boock, the Toronto man accused of hijacking the identities of 43 inactive pink sheets companies and selling them as shells, has agreed to pay $270,300 to settle an Ontario Securities Commission case that arose from the scheme. The settlement, contained in an administrative order dated Friday, Feb. 10, permanently bans Mr. Boock from trading any securities and from acting as a director, officer or promoter of any public company.

The penalties stem from a scheme in which Mr. Boock, 55, and others stole the identities of inactive pink sheets companies by filing false paperwork with the Cusip Bureau and multiple secretaries of state. They then sold the companies as shells to various buyers between 2003 and 2007. One went on to become Toronto Stock Exchange listing Paramount Gold and Silver Corp., and another became Surrey-based pink sheets listing World Hockey Association Corp. (There were no allegations of wrongdoing against the companies themselves.) In settling the case, Mr. Boock agreed to disgorge $145,300 in illegal gains, to pay a $70,000 administrative penalty and to pay hearing costs of $55,000.

While Mr. Boock has now settled with the OSC, he still faces a civil suit from the U.S. Securities and Exchange Commission for the hijackings. He initially ignored that case, and the SEC obtained a default order against him on March 26, 2010, with appropriate penalties to follow. He has since been trying to have the default ruling overturned, arguing that he was unable to cope with the financial burden of defending both the OSC and SEC actions at once. The judge has not yet ruled on his request.

Although Mr. Boock has admitted to the essentials of the hijacking scheme in settling with the OSC, the admission may not have any weight in the SEC case. Part of his settlement agreement states that he entered the deal "without prejudice to Boock in any other proceedings of any kind" and that he does not admit to any civil or criminal liability.

Boock's OSC settlement

The hijacking scheme, as described in Mr. Boock's settlement agreement, was carried out through two transfer agencies that Mr. Boock ran, called Select American Transfer and Compushare Transfer Corp. (both of which the OSC has since shut down). He targeted public companies, all listed on the pink sheets, that had gone dormant. Using false paperwork, he was able to incorporate new companies with the same names as the inactive entities, and obtain new Cusip numbers and symbols for those companies.

One of the keys to the scheme, according to the settlement, was the control that Mr. Boock and others exerted over Select American Transfer. It served as agent for many of the hijacked companies and filed the necessary paperwork for name changes and share issuances. (Its only employee was a 24-year-old student from Guyana, who simply did what she was told, according to documents filed in the SEC case.)

The companies that Mr. Boock and the others typically targeted were those that still traded, but lacked a current transfer agent or contact person. In some instances, they found that the secretary of state had declared a company void. When this occurred, they incorporated a new company with the same name, and used it to assume the identity of the old one. The new company would then roll back at a fairly high ratio, typically 1:1,000, and would change its name and obtain a new Cusip number and trading symbol. The net effect of this would be to remove most previous shareholders.

(Mr. Boock and the others also obtained millions of free-trading shares in the companies using bogus opinion letters, according to the SEC. They paid two Houston lawyers to write letters that they used to obtain 223 million free-trading shares in 19 of the companies, the SEC said. The letters purported to rely on Rule 504, which is normally only available to accredited investors who do not plan to sell the stock.)

It is not clear exactly how much money Mr. Boock made from the scheme. According to the settlement, he sold $150,000 worth of stock in the hijacked companies through the market at some point, but then transferred $120,000 of the money to somebody else.

The hijacking scheme is not the first breach of the Ontario Securities Act by Mr. Boock (who was born Irwin Krakowsky). In January, 1991, he settled an OSC case in which the regulator said he filed forged documents with the commission and a transfer agent. He paid $15,000 and was banned from trading and from serving as an officer or director of a public company for 10 years. Just two years later, in May, 1993, he was convicted on fraud and forgery charges in Ontario, and received three years in jail. He was charged with fraud in Ontario yet again in September, 1998, and received two years of probation.

The SEC has also previously fined Mr. Boock. In November, 2002, he agreed to pay $429,619 to settle a civil suit stemming from reporting violations at Leah Industries Inc., an OTC Bulletin Board listing. The SEC said he had the company report earnings that were purportedly audited by Deloitte & Touche when there had been no such audit. He then sold 537,500 shares, for proceeds of $319,050. He agreed to a consent order to settle the case, but never paid the fine.

http://www.stockwatch.com/News/Item.aspx?bid=Z-C:*OSC-1927884&symbol=*OSC&news_region=C

OSC Settlement with Irwin Boock

http://www.osc.gov.on.ca/en/Proceedings_rad_20120210_boocki.htm

http://www.osc.gov.on.ca/documents/en/Proceedings-RAD/rad_20120210_boocki.pdf

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