(updates in italics)
Through business journalist Gary Weiss’s blog, I found this Seattle Times article discussing some interesting events in the world of penny stocks. Attorney Faiyaz A. Dean, based in Seattle and Vancouver, has been the putting together IPOs for several Ukraine-based, small-cap companies with vague and absurd business plans. As the article describes,
Green Bikes Rental Corp. of Ternopil, Ukraine, raised $50,830 in its initial stock offering, only to abandon its business plan months later because “our marketing research showed that in [Kiev, Ukraine’s capital,] roads are not designed to have bicycle traffic.”
The obvious concern with companies like Green Bikes is that they were created and taken public purely so stock promoters and company owners can hype the stock and make a quick profit at the expense of gullible and or uneducated investors—the pump and dump. As it turns out, there was some hyping of Green Bikes after it changed its name to Affinity Mediaworks (ticker symbol AFFW). As further evidence of the nefarious motivation for this company’s IPO, the Vancouver Sun learned that the current president of Affinity, Scott Cramer, once worked at a financial services firm owned by the family that was shut down by the British Columbia Securities Commission (press release here).
From what I currently know, I don’t think Dean’s role with these companies is necessarily criminal. Who is he to decide what companies should be allowed to raise money? But his relationship to them is a good example of how you can look at the connections between people and organizations as a way to monitor and prevent fraud.
Both Dean and his former boss, Penny Green, have a dizzying array of connections with several companies that may not be entirely on the up-and-up.
DEAN’s WORK WITH PENNY “Stock” GREEN
Before starting his own law firm, Dean worked for Bacchus Corporate and Securities Law, which you can see from an archive of the firm’s website. Bacchus’s founder is Penelope Olga Green who usually goes by Penny Green. (I hope she sees the irony in using a shortened version of her first name, given her chosen legal specialty.) Dean both owned stock in and was the filing attorney for Bacchus-related penny stock registrations.
For example, while at Bacchus, Dean worked on an SEC filing for penny stock company Avalon Energy Corporation. Avalon started out as Venture Investments Inc. in 1983, went through several name changes, and then lay dormant for several years. At the time of this 2006 filing, Avalon had “no revenue generating operations” and a debt of $41,000. It even had a tenuous Ukrainian connection. In 2003, the company signed a letter of intent to acquire a mineral property in the Odessa region of the Ukraine. The company changed its name two more times after the IPO and is now called Organa Gardens International Inc. It is now “focused on vertical hydroponic farming.”
David Baines of the Vancouver Sun (and author of many of the articles I’ve linked too) pointed out that Avalon shareholder May Joan Liu (aka May Joan Yee) was previously blackballed from the Vancouver Stock Exchange. See the Vancouver Sun stories here and here and a notice from the exchange about her blackballing here.
Green and Bacchus have a history of registering companies that have been used in stock manipulation. Green was the filing attorney for minerals exploration company Tecton, Inc. In 2009, Jason Jadidian was given probation for three years and fined $10,000 for paying an undercover FBI agent to purchase shares of Tecton Corp. (The criminal complaint is here and the Vancouver Sun article about it is here). The president of Tecton, Norman Meier, is also the CEO of Hemis Corp. Green did the filings for it too.
In 2005, Green helped to take Surrey, B.C., based online retailer Novori Inc. public (the filing is here and the Vancouver Sun articles about it are here, here and here). At the time of the filing, the company had been in business for about a year and had a lost $163,485. Its accountant issued a going concern opinion. In 2008, stock promoters Aarif Jamani, Scott Lower and Bozidar Vukovich allegedly provided secret payments to an undercover FBI agent to purchase Novori shares—presumable to get some upward movement in the stock price. Lower and several of Jamani’s relatives were listed as shareholders in the company prior to the public offering.
PENNY GREEN AND DEAN—MANTRA VENTURE
Green is listed on the 2007 SEC filings for alternative energy company Mantra Venture Group Ltd. Mantra and Novori share at least one investor in common, and Faiyaz Dean owned 10,000 pre-IPO shares.
In 2003, Mantra’s president Larry Kristof was physically present in a minivan when Bellingham, Wash., police seized $29,000 from it. The money was suspected to be the proceeds of drug trafficking. (The civil forfeiture proceeds can be found here and Vancouver Sun article about it is here.) Note that the Vancouver Sun says this is the same guy, even though they spell his name differently.
Additionally, Kristof was previously the president for Lexington Energy Services Inc., whose filing was also done by Green. Green was also an option holder in this company. It too has shareholders in common with Novori, including Scott Lower (who was accused of the Novori stock hype).
Dean and Kristof were also pre-IPO shareholders in Park Place Energy Corp. This company started out as a website “which sold video clips of tennis lessons” and then turned into natural resources exploration company. One of its former directors, Oxana Avdasseva aka Advasseva aka Avdaseva was a pre-IPO shareholder in Mantra, Novori and Lexington. Oxana Avdasseva is believed to be related to Elena Avdasseva who was also a Park Place owner and as Vancouver Sun reported, worked for Scott Lower. (Her recently terminated dealer registration is here.)
Kristof also shows up in a subscription agreement attached to the initial registration for Green Bikes, the Dean-registered company that had to abandon its initial business proposal because it didn’t realize that potholes and bikes don’t mix.
DEAN AND GREEN—BLINK COUTURE
Dean, Green and Norvori, with Lexington investor Robert Jarva, owned pre-IPO shares in Blink Couture Inc. (It was actually Jarva’s company, 689719 B.C. Ltd, that owned the shares in these companies.) Green was the SEC filing attorney, majority shareholder, and director for Blink. Blink had only recently begun business operation when it filed the prospectus and intended to “generate revenues from the sale of clothing, jewelry, and accessories sold on our website.” Eight months after going public, Green was appointed president, CEO, Secretary, CFO, Treasurer, and Chief Accounting Officer of the company. Seven months after that Green left the company and sold her stake for $500,000 cash. Just a week earlier, the company was operating at a loss with total assets of $3,836, which included $1,767 of cash. Around the time Green left, the company abandoned the online jewelry business and, “the company’s business plan now consists of exploring potential targets for a business combination through the purchase of assets, share purchase or exchange, merger or similar type of transaction.”
DEAN, THE UKRAINIANS and MANTRA VENTURE AGAIN
(I know this is getting boring, but just stick with me a little longer. This gets slightly interesting.)
Just this week Dean filed an amended registration for a Ukraine-based company named Loran Connection Corporation. Loran wants to organize group tourism in the Ukraine. It raised around $20,000 from private investors and proposes to raise another $37,800 in the IPO. Its legal, audit and filing fees cost $10,000. If you’re a legitimate firm trying to raise legitimate funds, why would you spend $10,000 to raise $37,800 for a tourist company?
Here are some of the connections:
Loran’s website is registered to a Vancouver resident, Alexander Balykin. (The website has been updated recently and, apart from being vague with some stilted language, it’s pretty impressive.) Alexander Balykin, his wife, daughter, Oxana Avdasseva and Elena Avdasseva were initial shareholders in Vancouver-based party promotion corporation Tag Events Corp. His son, Artiom Balykin, was the president. Artiom Balykin along with Oxana Avdasseva were initial shareholders in Mantra Venture Group Ltd.
Deep breath . . .
- Mantra’s security offering was filed by Penny Green, Faiyaz Dean’s old boss.
- It has common shareholders with Novori, the subject of a stock hyping scam.
- Faiyaz Dean owned pre-IPO shares in the company.
- Its president was caught in a money seizure case (according to the Vancouver Sun)
So we’ve got these two lawyers registering and owning pre-IPO shares in multiple penny stock corporations, some of which have been used stock manipulation scams. There are plenty of connections among and between the owners and directors of the companies, with Dean and Green as the main connections. With a DIY look at a couple of degrees of separation in past corporate filings, it’s easy to find incestuous relationships between potential scammers. I hope the SEC is doing a more sophisticated version of this.
For the continuing series on Dean in the Vancouver Sun, look here.
New Vancouver Sun article here.