Four men have been nabbed in a sting by US federal agents for trying to bribe stock brokers to buy shares in Guyana Gold Corp., a US over-the-counter company.
According to the Vancouver Sun, John Zanic, a stock promoter, was arrested in Las Vegas on September 16. The US Securities and Exchange Commission (SEC) filed a similar civil complaint against Zanic in US District Court in New York. Promoters Glenn Grossman and Lawrence Steven Cohen of New York, and David Schmidt are also named in the action. They were caught by an undercover agent who pretended to represent a group of brokers with trading discretion over the accounts of wealthy clients.
According to the Sun article, the Guyana Gold Corp. is based in Las Vegas and is ostensibly exploring for gold in Guyana. Its shares are listed on the “pink sheets,” an unregulated computerized trading forum in the United States. Since May, when the undercover agent bought shares at 63 cents each, the stock has slumped to two cents. Until recently, The Sun said, the company was controlled by controversial Vancouver promoter Louis Dion and operated under various names, including World Bingo League Co., World Entertainment Corp., and World Mobile Network Corp. In January this year, the company shifted into the exploration business and changed its name to Guyana Gold. The company’s president and principal shareholder is now listed as Eduard Aronov.
According to the SEC complaint, in April the four men offered to pay the agent a 30% kickback for arranging the purchase of US$2M to US$3M worth of shares of Guyana Gold. Zanic allegedly agreed to a “test transaction” in which the undercover agent arranged the purchase of 115,000 shares at a total cost of US$72,350, for an average price of 63 cents per share.
To ensure the purchase orders were matched with the sell orders, Zanic gave detailed instructions to the undercover agent about the size, price and timing of the transactions. He also told him which market makers to use to execute the orders, the complaint alleges. In May, after the transactions were matched and completed, Zanic wired US$7,480 to the undercover agent, allegedly as a kickback. This was just 10% of the gross value, much less than the 30% that had been agreed upon. When the agent complained, Grossman wired another US$6,300, and promised to send the remaining portion separately.
In the criminal action, Zanic was charged with conspiracy to commit securities fraud. After his arrest in Las Vegas, he was sent to New York, where he made an initial court appearance on October 2. His bail was set at US$500,000 and his travel restricted to New York and Las Vegas.
