Didn't meet these peeps while in Vancouver! LOL
SEC launches suit against Vancouver's Du and Hui
2011-02-02 14:01 ET - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (U-CWTD) China World Trade Corp
Also Street Wire (U-GPPL) Global Peopleline Telecom Inc
by Mike Caswell
The U.S. Securities and Exchange Commission has launched a civil fraud case against eight people, including two Vancouverites, for spam-fuelled pump-and-dumps that generated $33.6-million in illicit gains. (All figures are in U.S. dollars.) In a complaint filed on Tuesday, Feb. 1, the SEC has named Angela Du and John Hui, who are both dual Canadian and Chinese citizens, as participants in a scheme that promoted several OTC Bulletin Board and pink sheets issuers with spam in 2005 and 2006. They and others dumped millions of shares and sent the proceeds offshore, according to the complaint.
The stocks listed include Vancouver-based China Mobility Solutions Inc. (now known as Global Peopleline Telecom Inc.), for which Ms. Du serves as president, and China World Trade Corp., for which Mr. Hui served as chief executive officer. In total the SEC lists eight companies, which have head offices in China, Canada and Israel.
The case comes over one year after a Detroit judge sentenced Mr. Hui to four years in jail for criminal charges that stemmed from the pump-and-dump of China World Trade. In that case, he pleaded guilty to wire fraud, mail fraud and violations of the CAN-SPAM Act. His co-defendants included Alan Ralsky, the self-proclaimed "king of spam," who also received four years in jail.
The SEC case expands the allegations against Mr. Hui and includes several individuals who were not in the criminal case, including Ms. Du. According to the SEC, she played a central role in the China Mobility pump-and-dump by co-ordinating news releases with spam campaigns. She dumped 3.2 million shares during the scheme, generating $1.6-million in proceeds, the complaint states.
The others charged Tuesday are New York broker Gregg Berger, 47; jailed California promoter Francis Tribble, 43; Hong Kong resident Kwong-Chung Chan, 46; Hong Kong resident Chi Ng, 46; Italian citizen Mordechai Broudo, 52; and Isreali citizen Shay Ben-Asulin, 42. The complaint lists Ms. Du's age as 40, her last known address as Vancouver and her proper name as XiaoQing Du.
According to the complaint, the pump-and-dumps took place between December, 2004, and November, 2006, and they all followed the same pattern. They began with Mr. Hui or one of the others locating a private Chinese company that would merge with a thinly traded U.S. public shell. As part of the transaction, the public companies improperly issued large blocks of free-trading shares to nominees controlled by Mr. Hui and other defendants, the SEC claims.
Then, the promoters launched spam campaigns timed to coincide with news releases by the companies. The spam typically contained false and misleading information, as well as baseless price projections, the complaint states. As the spam went out, the defendants dumped millions of shares through nominee accounts they held with Mr. Berger. In most cases, Mr. Berger immediately wired the proceeds to foreign bank accounts, the SEC says.
The role of Mr. Hui, as described by the SEC, was that of a "dealmaker." He located suitable private companies in China, and advised them to access the U.S. markets to raise money. He then directed or arranged for the companies to issue shares to him or nominees.
Ms. Du, as an officer of China Mobility, played a significant part in the pump-and-dump of that company, according to the SEC. Among other things, she helped with the stock issuances by filing fraudulent paperwork. She signed letters to a transfer agent that instructed the agent to issue free-trading shares to nominee accounts controlled by herself and others, the complaint states. In addition, she failed to report control over nominee accounts.
The complaint describes each of the pump-and-dumps in some detail. With China Mobility, the SEC says that the company was the target of fraudulent spam e-mails from June, 2005, to November, 2006. The e-mails were typical stock spam, containing statements such as, "Watch this one early as the price SOARS like a HAWK!!!" They also made baseless price projections, such as one that listed a target price of $1.20 when the company was at 10.5 cents.
During the campaign, the stock had prices ranging from eight cents to 74 cents. After the spam ended, the stock slowly declined, reaching 6.8 cents by the end of 2006.
The SEC says that Ms. Du sold 3.2 million shares during the promotion through nominee accounts. These included one account in the name of a 70-year-old retired Chinese woman. She kept some of the $1.6-million in proceeds for herself and transferred the remainder to the spammers and her husband, according to the complaint.
The other stocks listed in the complaint are Pingchuan Pharmaceuticals Inc., Worldwide Biotech and Pharmaceuticals Inc., China Digital Media Corp., m-Wise Inc. and Score One Inc. The SEC claims that the pump-and-dumps of those stocks follows similar scripts, each with participation from some of the defendants.
The SEC is seeking disgorgement of ill-gotten gains, appropriate civil penalties and penny stock bans. The regulator filed the case in the Eastern District of Michigan.
In addition to the civil suit, prosecutors in Detroit unsealed a criminal case against Mr. Berger on Tuesday for his role in six of the pump-and-dumps
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