David Baines: Bucolic burb is home to host of misbehaving stock promoters and brokers
By David Baines, Vancouver Sun December 22, 2012 8:13 AM
First in a series
VANCOUVER — A German court has sentenced West Vancouver stock promoter Aly Mawji to three years and two months in prison for stock manipulation, adding to the long list of West Vancouver promoters and brokers who have run afoul of the law.
Mawji was the behind-the-scenes promoter of De Beira Goldfields Inc., a sham exploration company that went public on the OTC Bulletin Board in the United States in early 2006.
Immediately after clearing the company’s shares for resale to the public, Mawji handed control to a pair of Australian promoters, Reginald Gillard and Klaus Eckhof.
Gillard and Eckhof announced an option to explore a gold property in Colombia and — before drilling a single hole — the company’s market capitalization jumped from practically nothing to $600 million US.
The stock was co-listed on the Frankfurt Stock Exchange and heavily promoted in Germany. When the stock crashed, shareholders were enraged.
In May 2011, Mawji travelled to Vienna on unrelated business and was promptly arrested by Austrian police at the behest of German authorities.
He spent 17 months in jail before he and two other accomplices were convicted in a Stuttgart court in October. He will be given credit for time served.
It has been a dramatic reversal of events for the 34-year-old promoter. Before his arrest, he leased a Ferrari F430 Spyder and owned a 6,100 square-foot house at 627 Kenwood Road in the British Properties. He has since sold the home for $3.35 million.
West Vancouver is a relatively small municipality, with a population of about 44,000, and very affluent, with an average household income twice the B.C. average. Crime rates are also very low, yet a large number of the people that I tend to write about reside in this precinct.
Earlier this week, I reported that Myron Sullivan II (a.k.a. Fred Sullivan) had been permanently banned from the B.C. securities market for defrauding 97 investors of $1.74 million in a oil-spill technology investment scheme.
His company, Global Response Group Corp., maintained its office in a mailbox at a UPS Store at 1489 Marine Drive in West Vancouver – a popular address for dodgy companies.
Sullivan himself rented a string of expensive homes on Garibaldi Highway and Rabbit Lane, and at 8255 Pasco Road in Horseshoe Bay (assessed value $1.8 million) and 1445 Sandhurst Place in the British Properties (assessed value $2.37 million).
Judging by court records, Sullivan has been a difficult person to deal with: during the past two decades, he has been named as a defendant in more than 30 civil actions.
Adam Keller was another West Vancouver wolf in shepherd’s clothing. In June 2011, the B.C. Securities Commission found he had defrauded four investors of $530,000 in a phoney forex currency-trading scheme and barred him from the securities market for life.
Although only 23 years old, Keller had a taste for the high life. While perpetrating his fraud, he lived at 888 Sentinel Drive in West Vancouver (assessed value $3.23 million), which he claimed he rented for $16,000 per month.
Several months ago, RCMP laid criminal fraud charges against him and issued a Canada-wide warrant for his arrest. He is currently in the United States awaiting trial on unrelated charges.
One of the most colourful West Vancouver promoters has been Sidney B. Fowlds. He runs a Nevada-registered company called ParaFin Corp., which trades on the lowly Pink Sheets in the United States.
Fowlds engaged the company in several silly schemes. In 1999, he secured rights to the 1-900-DEMOCRAT and 1-900-REPUBLICAN phone numbers, which he wanted to licence as a political fundraising tool. In his usual immodest manner, he described the project as “one the greatest fundraising ideas in the history of fundraising.”
When that didn’t pan out, he arranged for ParaFin to acquire $3.63 billion US worth of bearer bonds purportedly issued by ING Bank. To pay for the bonds, ParaFin issued shares of equal deemed value. (In fact, the shares were essentially worthless.)
In April 2008, Fowlds took one of the bonds — which he had claimed as compensation for his services — and tried to cash it at the Lonsdale branch of HSBC Bank in North Vancouver. He asked the bank to use the proceeds to pay off a $1.5-million mortgage loan on his house at 2765 Skilift Place in West Vancouver.
However, when HSBC officials called to confirm the bond’s legitimacy, ING advised it was counterfeit. Instead of cashing the bond, HSBC destroyed it and commenced foreclosure proceedings against Fowlds’s home. The house has since been sold for $1.6 million.
Adding insult to this injury, BCSC officials slapped a cease-trade order against ParaFin. “They’re a bunch of f---ing morons,” Fowlds grumbled during an interview. “You can tell them that for me.”
Another bizarre securities scheme was perpetrated by Alan Hackett, a longtime West Vancouver resident who once served as president of the Conservative Party’s riding association in West Vancouver-Sunshine Coast.
From 2002 to 2006, while working as a broker at Canaccord Capital, he solicited more than $1.5 million from clients, friends, relatives and colleagues and promised they would reap enormous returns from a mysterious offshore investment account.
He claimed that, due to a confidentiality agreement, he couldn’t disclose who ran the account, other than it was connected to Tom Ridge, former head of the U.S. Department of Homeland Security.
He also said he didn’t know where the account was located and he didn’t have a contact number for the people who ran it. To discuss the account, he had to wait for them to call him.
When his bosses at Canaccord learned of his bizarre dealings, they fired him and the Investment Industry Regulatory Organization of Canada (the regulatory body for stockbrokers) began an investigation.
Under questioning, Hackett admitted he didn’t invest the $1.5 million in the offshore account, rather he spent $232,225 on himself and his brother; gave another $981,500 to a Vancouver man who he considered “like a son”; and $278,670 as “support” for a Seattle drug addict.
In January 2010, an IIROC hearing panel suspended his securities licence for 10 years for unauthorized dealings with clients. Considering he was 79 years old at the time, that amounted to a lifetime ban.
Although Hackett had disbursed all the money he had raised, he continued to insist that, any day, a boatload of cash from the offshore account would wash up on his doorstep and he would be able to repay all his creditors.
Alas, he died in July this year, still waiting for the payday that never came.
NEXT: We profile other members of the West Vancouver Hall of Shame, including Terry Alexander, Brian Basset, Luc Castiglioni and Fred Gilliland.
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