The United States Securities and Exchange Commission, North America’s most aggressive securities regulator, has won a lifetime penny stock bar against Norman F. Piatti, the former president and chief executive of Lifekeepers International Inc., a penny stock pump and dump which featured accounts at several Canadian brokerages, including Union Securities in Vancouver and now defunct Rampart Securities in Toronto.
In a parallel criminal case, key Lifekeepers target Jeffrey Senger, a notorious Florida promoter, has recently pled guilty in Operation Bermuda Short, the latest target in the broad FBI-RCMP undercover sting to cut a deal and agree to rat on his colleagues in the penny stock world. Mr. Senger, 36, of West Palm Beach, in jail without bail since his arrest Aug. 13, faces sentencing on May 23. In the Bermuda Short case, Mr. Senger agreed to bribe several undercover agents and federal operatives, posing as corrupt mutual fund officials, to buy worthless penny stocks.
In the SEC case, Mr. Piatti, 48, also of West Palm Beach, has been prohibited from participating in the offer or sale of any penny stock, in a consent settlement recently entered by Judge Daniel Hurley of U.S. District Court for the Southern District of Florida. The court did not order Mr. Piatti to pay a fine or any other civil penalty, based on his demonstrated financial inability to pay. Mr. Senger has not yet settled with the SEC.
Mr. Senger’s dealings through Rampart, the former Bay Street brokerage, are featured in 19 of his 27 counts of masterminding the pump-and-dump rig job of Lifekeepers. Mr. Senger was charged with a total of 22 counts of securities fraud, four counts of conspiracy and four counts of money laundering in connection with two fraudulent stock manipulation schemes. His guilty plea was entered Feb. 19.
In the SEC case, the regulator claims Mr. Senger and civil co-defendant Brad M. Nirenberg sold 150,000 shares of Lifekeepers and reaped $260,000 in illegal profits, aided by a slick campaign of bogus or misleading press releases issued mainly by Mr. Piatti. (All figures are in U.S. dollars.)
“At various times during 1999, Senger and Nirenberg acquired substantial blocks of Lifekeepers stock and placed it in accounts at certain broker-dealers. Together, with the assistance of Piatti, Senger and Nirenberg proceeded to pump-up the demand and price for Lifekeepers’ stock through a series of manipulative activities while dumping their own shares into the market at a substantial profit,” states the SEC in its civil complaint.
Lifekeepers claimed it bought a 20-per-cent stake, worth between $80-million and $500-million, in MyMedic.com, a health care Web site. In reality, MyMedic, which was owned and operated by Mr. Senger and had offices across the hall, had no revenues and was not even fully operational. A corporate resolution signed by Mr. Piatti showed Lifekeepers bought a 7.2-per-cent stake in MyMedic for $50, after loaning $120,000 to the dot-com sham.
Mr. Senger, a user of Canadian brokerages, has been dogged and shadowed by U.S. authorities for years in various deals. He was under active investigation by U.S. authorities since early 1999, during the early stages of his Lifekeepers promotion, for his activities at Baxter Banks, a notorious U.S. boiler room operation. U.S. securities regulators received more than 200 complaints related to the flogging of Lifekeepers shares by Mr. Senger’s boiler room brokers at Baxter Banks.
“He had two accounts in Canada that were at Rampart and Union Securities. Both of those accounts were closed when Canada — they are brokerage accounts, and both of them were closed when Canada changed their law and apparently precluded U.S. citizens from holding brokerage accounts,” stated Miami criminal defence lawyer Samuel Rabin in a detention hearing soon after Mr. Senger’s arrest. (Canada has not changed any laws on foreign clients of brokerages, but the practice has come under increasing scrutiny by Canadian securities regulators, and some brokerage chiefs, in recent years.)
While Rampart collapsed more than a year ago, Mr. Senger continued to fly to Toronto on business, although his recent brokerage contacts or dealings are not identified. On Jan. 30, 2002, in a conversation taped by Bermuda Short agents, Mr. Senger said he had just gotten back from a business trip to Toronto. “He says that, ‘Rick and I,’ Rick being his brother and him, ‘had been making money faster than we can count it,'” Assistant U.S. Attorney Rolando Garcia told the judge. Customs records also show Mr. Senger entered the U.S. from Toronto twice in late July, a few weeks before he was arrested at his home in Florida.
The Miami judge also heard of Mr. Senger’s offshore prowess, including his brokerage and bank dealings in such secretive enclaves as Panama, the Turks and Caicos Islands, Bermuda and the Bahamas. In September, 2001, Mr. Senger spent three days on Margherita Island, just off the coast of Venezuela. On Aug. 6, a week before his Bermuda Short arrest, he told the co-operating witnesses he was thinking of opening a “room,” presumably a boiler room, on Margherita Island, and working the sucker market in Europe.
Several Lifekeepers co-conspirators were charged in a separate grand jury indictment in 2001. A number of these indicted Lifekeepers associates were also fond of Canadian brokerages as stock and money laundering conduits. In July, 1998, South American native Valentin Fernandez, through a nominee, opened an account at controversial Vancouver brokerage Pacific International Securities under the name Kuatro Ltd. In February, 1999, Mr. Valentin, again using a nominee, opened an account in the name of Dominion Investments at the former First Marathon Securities in Toronto. His brother, Juan (John) Fernandez, who controlled a branch of Baxter Banks, and four other Baxter Banks brokers were also indicted.
By Brent Mudry, Streetwire
