A B.C. man who committed stock fraud in the U.S. via associates in Vancouver is challenging a B.C. Securities Commission application to permanently ban him from Canada’s capital markets.
Counsel for Amar Bahadoorsingh intends to make oral submissions Sept. 18 against a reciprocal order application by the commission’s director of enforcement Doug Muir to bar Bahadoorsingh from securities-related business for what Muir calls “deceitful and unscrupulous” misconduct as uncovered by American regulators.
Bahadoorsingh is already barred from participating in penny stock transactions in the United States after the U.S. Securities and Exchange Commission (SEC) recently obtained two default court judgments against Bahadoorsingh, whose place of residence is unclear.
After not responding to the SEC’s allegations, Bahadoorsingh was ordered by a judge on July 6, 2022 to pay the SEC over $700,00 in a civil default judgment that found he participated in a fraudulent scheme to sell shares of an otherwise “thinly-traded” microcap company named Aureus Inc., in 2016.
Bahadoorsingh was considered by authorities to be the partner of Mexican national Luis Carillo, who the SEC alleged generated trading proceeds of more than $75 million by fraudulently selling the securities of more than 30 companies traded in the U.S., including B.C.-headquartered Garmatex Holdings, Ltd. for which he used a B.C. public relations firm to pump up the firm’s trading price.
Bahadoorsingh and Carrillo secretly sold millions of Aureus shares in violation of securities laws after first concealing their ownership of Aureus in a web of offshore companies while simultaneously organizing promotional campaigns to encourage American investors to buy the stock, the SEC had alleged in its complaint.
The SEC stated “what appeared to be ordinary trading by unaffiliated investors was actually a massive dump of shares orchestrated by” Carillo, Bahadoorsingh and two other associates.
The group used Swiss-based trading platform and so-called asset manager Wintercap SA to orchestrate trades, according to the SEC.
The SEC complaint stated Wintercap SA was in business with West Vancouver resident Fred Sharp, helping to disguise control and ownership of penny stocks for clients, such as Carillo.
The SEC previously claimed Sharp, a former lawyer turned offshore shell facilitator, was the “mastermind” of over $1 billion of illegally traded shares across several “control groups” of over 100 penny stock firms, between 2010 and 2021.
Sharp was found liable for the fraud allegations the SEC lodged against him in August 2021 and has since been barred from the capital markets by the BCSC. Sharp owes the SEC US$52.9 million and is subject to civil forfeiture proceedings in B.C.
On March 31, 2023, a U.S. court issued a second default judgment against Bahadoorsingh, finding he violated securities rules outlined in an SEC complaint.
“The SEC's complaint alleges that, from 2016 through at least October 2020, Bahadoorsingh and Canadian resident Vincenzo Carnovale secretly gained control of thinly traded microcap companies, hired stock promoters to create demand for their stock, and generated substantial illicit profits by selling the stock to unsuspecting investors.”
Bahadoorsingh was ordered to pay the SEC US$466,619.
Carnovale, who was believed by the SEC to be a B.C. resident, is a co-defendant with Sharp in a separate, ongoing case in Quebec. The pair is alleged by Autorité des Marchés Financiers (AMF), Quebec’s equivalent of the BCSC, to have orchestrated a pump-and-dump fraud scheme in 2012. However, these allegations have not been tested in a hearing following a lengthy appeal by the defendants that concluded last year in a landmark Supreme Court of Canada ruling affirming certain rights of provincial commissions.
The BCSC application from Muir noted that at a minimum, Bahadoorsingh was enriched US$806,022, or about $1.1 million, from the two schemes.
“By participating in multiple market manipulations, you have demonstrated your lack of regard for legitimate market participation in the capital markets. The extent of your misconduct shows that you post a significant ongoing risk to investors and a serious threat to the integrity of the B.C. capital markets unless you are permanently banned,” stated Muir in his application.
“You have shown flagrant disregard for U.S. securities laws, and there is no basis to believe that you will abide by securities law in the future. You pose a significant ongoing risk to investors and the capital market of British Columbia and your participation in our markets in any capacity would raise grave concerns for the protection of the investing public,” added Muir, who is specifically seeking to ban Bahadoorsingh from becoming or acting as a company director, officer, consultant, registrant or promoter while limiting his trading to a registered broker who must have Bahadoorsingh’s misconduct record on file.
Bahadoorsingh’s application for oral submissions does not identify his counsel nor does it provide details of the submission.
It remains to be seen if the BCSC will take enforcement action against Carnovale as well as a slew of other B.C. residents who have been barred from the U.S. penny stock markets after recently being found liable for fraud in civil proceedings brought by the SEC and outlining their association to Sharp.
