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Restrictions revised against BridgeMark associates in crypto-cannabis-mining-energy shares scandal

BCSC commissioners strengthen some trade orders but find evidence lacking against several companies in alleged stock scam
BCSC office Chung Chow Business in Vancouver

The BC Securities Commission (BCSC) has extended and expanded temporary trade restrictions against a number of so-called consultants and startup companies under investigation for their role in an alleged widespread stock scheme involving cannabis, cryptocurrency, mining and energy shares on the Canadian Securities Exchange.

Meanwhile, some entities involved in the investigation, including BridgeMark Financial Corp., have had their trade orders (restrictions) lifted, ahead of a BCSC hearing scheduled for April 9.

The investigation centres on 11 CSE-listed companies as well as 25 consultants and 26 financial service firms, dubbed by the BCSC as the BridgeMark Group for their close ties to BridgeMark Financial Corp. and its principal, Anthony Kevin Jackson, a chartered accountant.

The BCSC alleged last November that BridgeMark Group members privately purchased at least $50.9 million worth of free-trading securities at nickels per share but had most of the money returned to them in dubious prepaid consulting contracts, described as cash swaps.

With these private placements, the companies publicly touted investor interest while the so-called consultants quickly sold their shares, at a discount of their original purchase price, to retail investors who were eventually left with depreciating and diluted company stock.

As such, the entities involved are alleged to have engaged in conduct that is contrary to the public interest.

In a ruling announced Wednesday, a BCSC panel of commissioners determined there was insufficient evidence presented by BCSC executive director Peter Brady in November to maintain the existing orders against seven of the 11 companies. Those companies are: Kootenay Zinc Corp., Affinor Growers Ltd., Beleave INc., Liht Cannabis Corp., PreveCeutical Medical Inc., Speakeasy Cannabis Club and Abattis Bioceuticals Corp.  Those companies nevertheless remain respondents to the hearing.

Key to the panel’s assertion is that there was not convincing evidence these seven companies illegally distributed shares via consultant exemptions. Instead, it was determined that while the companies sold shares and signed consulting agreements – some of them deemed “significant” – there is no submitted evidence on the nature of these services and to whom they were paid. Nor was there sufficient evidence that the companies engaged in conduct that raises “significant public interest concerns,” the panel said.

The behaviour “is suspicious and involves elements of the transactions of the other four [CSE-listed companies]. However, this evidence is closer to the ‘unsubstantiated suspicion.’”

One company, Preveceutical, claims it was a victim of a “conspiracy” by consultants. It is now suing BridgeMark Financial Corp. and others.

In Brady’s November notice of hearing to the panel, he outlined banking records for four companies, which have had their orders extended. Those companies are Cryptobloc, New Point, Green 2 and BLOK.

These companies collectively sold $17.9 million worth of shares and returned $15.3 million to members of the group, the BCSC claimed.

The panel found no evidence that shares were distributed illegally by consultant exemptions, which are used by startups to raise funds from vetted and/or trusted sources without filing a prospectus – a detailed financial document aimed at protecting the common retail investor.

However, the panel determined there was evidence that the four companies engaged in conduct that “raises significant public interest concerns.”

The companies are alleged to have committed cash swaps and signed, in a “very unusual” manner, pre-paid consulting fees. Then, the buyers, BridgeMark Group, quickly sold off their newly acquired shares without following through on any meaningful consulting work.

“What was disclosed to the public by the issuers [Cryptobloc, New Point, Green 2 and BLOK] with respect to their private placements and the actual net benefit to the issuers of completing those transactions were two very different things,” the panel noted.

Notably, there was no evidence of BridgeMark Financial Corp. dealing with the four companies whose orders remain in place.

“There was a significant body of evidence linking various [consultants and financial services firms] with BridgeMark, but evidence of those connections does not equate to BridgeMark, in and of itself, having engaged in particular conduct,” the panel said.

Likewise, trade orders were lifted from Jackson & Co., David Schmidt, Tryton Financial Corp., Abeir Haddad, Saiya Capital Corp., Tara Kerry Haddad, Natasha Emami, 10X Capital, Viral Stocks Inc., 727 Capital and David Raymond Duggan.

Those involved in transactions with these four companies have had their trade orders extended and expanded.

Despite his firms not being directly involved with the four companies, there is evidence, according to the panel, of Jackson negotiating certain such agreements with them. The panel also noted evidence shows Jackson and convicted securities fraudster Aly Babu Mawji pitched a similar transaction that was never completed, after investigators made inquiries. Mawji acted as an agent for Northwest Marketing and Management, which is implicated in the extended orders.

“That is prima facie evidence that Jackson engaged in conduct that raises significant public interest concerns,” noted the panel.

Jackson and a host of other hearing respondents are now prohibited from purchasing any securities of a CSE-listed company that is using the consultant exemption. They must also cease all trading in, and are prohibited from purchasing, securities of Cryptobloc, New Point, Green 2 and BLOK.

These respondents, aside from Jackson, include: Lukor  Capital Corp., Justin Liu, Cam Paddock Enterprises, Cameron Roderick Paddock, Simran Singh Gill, JCN Capital Corp., John Bevilacqua, Essos Corporate Services, Sway Capital, Von Rowell Torres, Detona Capital Corp., Danilen Villanueva, Altitude Marketing Corp., Ryan Peter Venier, Platinum Capital Corp., 658111 BC, Jason Christopher Shull, Tavistock Capital Corp., Robert John Lawrence, Jarman Capital Inc., Scott Jarman, Northwest Marketing and Management, Rufiza Babu Husein Mawji-Esmail, Denise Marie Trainor, Aly Mawji, Escher Invest SA, Hunton Advisory Ltd., Randy White, Kendl Capital Ltd., 1153307 BC, Russell Grant Van Skiver, Bertho Holdings Ltd., Robert William Boswell, Haight-Ashbury Media Consultants, Ashkan Shahrokhi, Keir Paul MacPherson, Albert Kenneth Tollstam, and Tollstam & Company.

According to BCSC documents, these are the links to BridgeMark Financial Corp. (800 – 1199 West Hastings Street, Vancouver) and Jackson:

-       Justin Liu (Lukor) is Jackson’s partner and works from BridgeMark’s office.

-       Cameron Paddock performs services for BridgeMark. His company shares an address with BridgeMark

-       Simran Gill is sole director of BridgeMark Management Ltd. He was employed by BridgeMark Financial Corp.

-       JCN, Essos, Detona and Tollstam share an address with BridgeMark. Escher, Hunton and Kendl share contact information with BridgeMark.

-       Von Rowell Torres conducts secretary services for BridgeMark.

-       Villaneuva (Detona) conducts secretary services for BridgeMark.

-       Ryan Venier (Altitude) is Jackson’s brother-in-law.

-       Aly Babu Mawji pitched transactions with Jackson. Denise Trainor is Mawji’s wife.

The Alberta Securities Commission cited BridgeMark and Jackson’s wife, Lisa Jackson, a realtor with Macdonald Realty, for similar alleged actions involving Prize Mining Corp.

 

gwood@glaciermedia.ca