A sophisticated $7 million stock manipulation scheme that took place between 2007 and 2009 will cost five British Columbians involved in it $28.8 million – if the BC Securities Commission can ever collect on the fines it has levied against them.
The five persons fined by the BCSC are: Thalbinder Poonian ($10 million), Sharon Poonian ($3.5 million), Robert Leyk ($3.5 million), Manjit Sihota ($3.5 million) and Perminder Sihota ($1 million).
Those individual fines are on top of $7.3 million in penalties levied against the five jointly. They have also been banned from securities trading in B.C.
An investigation by the BCSC found that, between September 2007 and March 2009, the five accused were found to have manipulated the stock of a company called OSE Corp., which traded on the TSX Venture exchange.
The allegations have not been proven in court.
According to the BCSC, Thalbinder Poonian was the “mastermind” behind the scheme.
The five were accused of executing a sophisticated stock manipulation scheme in which they bought 12 million OSE shares worth $17 million but sold 17 million shares, grossing $25 million.
Thalbinder Poonian, Manjit Sihota and Leyk had all served as directors in OSE.
The scheme involved using unwitting secondary “victim” investors and brokerage firms.
Worse, those victim investors were already in dire financial straights, as they were clients of a debt management company – Ontario-based Phoenix Credit Risk Management Consulting Inc.
Phoenix would receive commissions of 10% to 28% for every one of their clients whom they convinced to buy OSE stock – clients who were already having problems managing their debts. The company helped clients unlock retirements funds to help pay debts and provided bridge loans.
Phoenix encouraged some of those clients to buy shares in Great Pacific International Inc. and OSE.
In December 2011, Phoenix and some of its officers – Jawad Rathore, Vincenzo Petrozza and Omar Maloney – entered into a settlement agreement with Ontario Securities Commission in relation to Phoenix’s involvement in the OSE stock manipulation scheme.
BCSC spokesperson Richard Gilhooley said the $7.3 million in fines that have been levied collectively against all five participants would be paid to the victims, if the commission ever collects.
He admitted, however, that it can be difficult.
“A lot of the time the money has already been spent or the respondent that has been fined has relinquished any assets that we could go after,” he said.
