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Wednesday, 15 September 2010

Stock market fraudsters include former Mulroney-era staffer, Tony Clement supporter

In this post from June 14th, I discussed a firm called Merger Law Associates Ltd. This international firm with Toronto roots has engaged in what looks to be widespread stock market fraud, promoting several (possibly shoddy) companies via various telemarketing scams. It is no longer authorized to do business in the UK, yet it continues to do so.

This is the warning put out by the Financial Services Authority that I showed in the previous post. Note Merger Law is the first name listed in the title:

You can read the entire FSA posting here.

Note also that Merger Law is the firm that held, for a time, Grunergy Technologies PLC. You can see that earlier post for more about that as well.

Now, so far I've only scratched the surface of Merger Law's activities. I'm going to start in this post by taking a closer look at the two men involved in the firm (plus one of their associates) and how they operate.

Now, Merger Law is a difficult firm to pin down. As I mentioned earlier, this SEC filing delineates the executives in charge of Queen 2 Inc., one of their shell companies. There are only two folks involved in Queen 2: Julius Charles Csurgo and Preston Shea.

In this SEC filing, Mr. Shea appears to be the contact man for Merger Law:

So clearly Mr. Shea is an important player in Merger Law, even though Mr. Csurgo seems to be in charge of the firm (see this Companies House document, which indicates that Mr. Csurgo is the sole director of Companies House UK). This is important for what I'm going to talk about at the very end of this post.

Now, as the Financial Services Authority warning indicates, Merger Law is apparently trying to illicitly sell shares in various UK companies. I briefly looked at Viva Sweet PLC in my previous post about this issue. Here I'll take a closer look at another company on the list: Equity Capital Management PLC.

Now, Equity Capital actually has a website you can look at. What the company actually does remains a bit of a mystery to me. Actually, there's much to look at when it comes to Equity Capital. But I'll save that for a later post.

Here I want to focus on Mr. Csurgo's and Mr. Shea's stakes in the firm. To assist me with this, I've downloaded the company's latest annual return from Companies House, thereby relieving the British deficit by yet another £1 (at the rate I'm doing this I'll be expecting a thank-you call from Queen Elizabeth II herself at some point). Anyway, I've embedded the return below:

Equity Capital_Annual Return

First, let's take a look at the company directors. They can be found on pages 5 and 6. First off we have Mr. Csurgo. Note that he offers a Rotterdam address here. Interesting.

On page 6 we have one Raghu Kalimbi. Who is this Mr. Kilambi? Well, you can read all sorts of great stuff about Mr. Kalimbi here, in the press release from Equity Capital that announced his appointment. But there's some stuff about Mr. Kalimbi that it doesn't talk about that I want to discuss here.

Mr. Kalimbi recently held lofty positions in two tech companies. He was Executive VP and CFO at a firm called MyScreen Mobile Inc. -- you'll see his name in a press release here. He was also Director in a firm called WiseMobi Inc. -- you can check that out here.

Now, both firms trade on the penny stock-rich Pink Sheets board in the U.S. -- MyScreen Mobile under MYSL.PK (see quote here), WiseMobi under WMBI.PK (see quote here).

Both of these firms are also heavily promoted by a website called PennyStockChaser. You can read all of the site's recommendations for MyScreen Mobile here. Here is a sampling from this article:

You can read PennyStockChaser's articles about WiseMobi here. Again, here is a sampling from this article:

Now, such shameless promotion might just seem like a bit of Web nonsense. But it's actually much more insidious than that. The thing is, PennyStockChaser actually gets paid - in shares and in money - to put up these promotional articles. It is actually upfront about this, listing the payments it receives in this "disclaimer". Apparently these payments come from "third parties", though without any more detail than that it's hard to know what that means, exactly. A third party could easily be working for the primary company itself, or profiting off of it.

So how much did MyScreen Mobile and WiseMobi pony up for these promos? Well, take a look at the list at the of the disclaimer linked to above.

  • For MyScreen Mobile it states the following compensation: "MYSL: 300,000 shares free Trading by Third Party"
  • For WiseMobi it states the following compensation: "WMBI: 1,100,000 shares free Trading by Third Party"

If you want to read more about PennyStockChaser, by the way, check out this great article from The Street Sweeper.

Now, the point is that Mr. Kilambi has been involved in some pretty shady business activities. Oh, and did we mention that he was a paid supporter of Tony Clement's 2004 Conservative Party leadership campaign? That's right. Mr. Kilambi donated on behalf of Swiss Medica, a company for which he was then CEO and Chairman. You can check that out on page 12 of this document.

Now, there's much more that we can say about Mr. Kilambi. But I'd like to return to Mr. Csurgo and Mr. Shea for now.

Now, let's look at the shareholders in Equity Capital Management PLC. That lengthy list begins on page 15 of the document, and continues to the end. Note that there are many small-time shareholders on the list. Victims of the telemarketing scams, perhaps?

Now, go to page 16 and you'll find Mr. Csurso. Note there that he is listed under three names -- Guyla Charles Csurgo, Gyula Karloy Csurgo, and plain old Julius Csurgo. Don't be fooled -- these are all one and the same person. The other two versions just use Hungarian versions of his names (do a Google search if you don't believe me). So, all told, Mr. Csurgo owns, after various transactions, 5,001,000 shares in Equity Capital. That's over 5 million shares.

Now, go to page 21, and you'll find Preston Shea's name. Again, he is listed twice, but, all told, he owns 1,025,000 shares of Equity Capital. That's over one million.

Now, go back up to page 20. Here you'll find entries for Merger Law, listed under various names (remember that Merger Law is an international company, with a number of branch offices that go under slightly different names). In sum, Merger Law - which basically means Mr. Csurgo and Mr. Shea - own 5,142,500 shares.

So, in sum, these two men own 11,168,500 shares in Equity Capital. If you go the last page, you'll note that there are 33,790,996 shares outstanding in the company. That means that Mr. Csurgo and Mr. Shea own almost exactly 33% of the company. And this is a firm that they are shilling via telemarketing fraud. And this is a firm that is still active, with Mr. Csurgo and Mr. Kilambi acting as co-directors.

Oh yes, and there's one more thing about Mr. Shea -- he once was an important staffer for the Progressive Conservative party in the Brian Mulroney era. For proof of that, we can go to this page, which lists the fundamentals of a firm called Studio One Media Inc. Mr. Shea is listed here as President, Chief Executive Officer, Secretary, and Director of the company. If you click on his name, you get this expanded description:

The key section here is near the end, where it describes his activities from 1986 to 1990. And yes, this is the same Preston Shea.

And yes, that is Barry Goldwater Jr. listed as Chairman of the Board of this same company. Seriously, you could not make this stuff up.