03 Jul BIZM litigation – will the SEC follow the bread crumbs?
Today the SEC issued a press release announcing that they had obtained a freeze on proceeds from the unlawful distribution of Biozoom Inc (BIZM) securities. The announcement follows the suspension of trading of BIZM stock on June 25, 2013 because of issues with how certain Biozoom affiliates and shareholders may have unjustifiably relied upon Rule 144 of the Securities Act of 1933 and they, Biozoom, and others may have engaged in an unlawful distribution of securities through the OTCBB. In other words, BIZM insiders were selling BIZM stock that wasn't legally supposed to be free trading.
According to today's SEC Complaint, from March to June 2013, ten Argentine defendants received more than 20 million shares of Entertainment Art, which was one-third of the company’s total outstanding shares. In a one-month period beginning in mid-May, eight of them sold more than 14 million shares. The sales yielded almost $34 million, of which almost $17 million was wired to overseas bank accounts. Their U.S. brokerage accounts, which include approximately $16 million in cash, are subject to the asset freeze.
In the press release today, the SEC also announced charges against ten Argentine citizens who unlawfully sold millions of shares of Biozoom, Inc. in unregistered transactions. The Complaint lists the following ten Defendants:
Andres Horacia Ficicchia resides in Buenos Aires, Argentina and is an Argentine citizen. Ficicchia is a self-employed music producer.
Gonzalo Garcia Blaya resides in Buenos Aires, Argentina, and is an Argentine citizen. Blaya is a music producer.
Luciana Mariana Hernando resides in Buenos Aires, Argentina, and is an Argentine citizen. Hernando is a marketing manager.
Cecilia De Lorenzo resides in Buenos Aires, Argentina, and is an Argentine citizen. Lorenzo is a self-employed marketing specialist. Lorenzo is an attorney practing administrative, intellectual property, and patent law.
Magdalena Tavella resides in Buenos Aires, Argentina, and is an Argentine citizen. Tavella is a retired school teacher.
Adriana Rosa Bagattin resides in Buenos Aires, Argentina, and is an Argentine citizen. Bagattin is in sales and marketing.
Daniela Patricia Goldman resides in Buenos Aires, Argentina, and is an Argentine citizen. Goldman is a delicatessen owner.
Mariano Pablo Ferrari resides in Buenos Aires, Argentina, and is an Argentine citizen.
Mariano Graciarena resides in Buenos Aires, Argentina, and is an Argentine citizen.
Fernando Loureyro resides in Buenos Aires, Argentina, and is an Argentine citizen.
We believe that these Argentine shareholders were just nominee shareholders holding the ownership of those securities in name only. The link to these Argentine shareholders is the former CEO of Biozoom (BIZM), Sara Deutsch, who runs a restaurant in Buenos Aires, Argentina called Magdelina's Party.
Sara Deutsch was assigned the nominee role of CEO when Medford Financial Ltd, an anonymous Belize entity which took ownership of all of the stock of BIZM (then known as Entertainment Art Inc), sold that control to another anonymous business entity located in the British Virgin Islands called Le Mond Capital.
Sara Deutsch helped locate nominee shareholders from Buenos Aires, Argentina to take ownership (in name only) of over 20 million shares of the BIZM stock from La Mond Capital to be sold into the market during the paid promotion.
With the help of Scottsdale Capital Advisors in Arizona and Legend Securities Inc in New York, these nominee Argentine citizens were provided with brokerage accounts to illegally sell their shares into the market.
Foreign bank accounts were set up for the nominee Argentine citizens to transfer the illicit proceeds from the illegal sales of their BIZM securities.
It is our opinion that Francisco Abellan is the true mastermind of the BIZM pump&dump and that he can probably be linked to all of these foreign bank accounts. Once all the share ownerships were arranged, it is our belief that Abellan then recruited Biozoom from German to merge into the BIZM shell to support the pump&dump scheme. This was a very similar set up to former Abellan linked pump&dumps, Raystream Inc (RAYS) and Bodytel Scientific Inc (BDYT). For full details of how we believe Abellan links to BIZM read this report. For additional research about who may have helped with the BIZM pump&dump scam read this report.
The SEC Complaint maps out sales by each of the nominee Argentine citizens including listing which brokerage firm helped with the sales and into which foreign bank those gotten gains were scheduled to be transferred.
Ficicchia: On June 7, 2013, defendant Ficicchia instructed Legend, to wire $1 million to Alpine Securities, Inc., a registered clearing broker-dealer. Alpine provides clearing services for Scottsdale, and as described earlier, Ficicchia opened an account at Scottsdale on or around June 10, 2013 and funded it with this $1 million. On June 25, 2013 --the same day as the Commission's order suspending trading in Biozoom - Ficicchia instructed Scottsdale to wire $325,000 to a bank account in Cyprus. This wire was not executed. Ficicchia's brokerage account at Legend currently has a cash balance of slightly over $1 million, and Ficicchia's brokerage account at Scottsdale currently has a cash balance of approximately $328,000.
Blaya: On June 14, 2013, Blaya instructed Legend to wire "all settled funds except $30,000" to an account held in Geneva, Switzerland. This wire was not executed. This account currently has a cash balance of approximately $3.5 million.
Hernando: On June 13, 2013, Hernando instructed his broker-dealer, Legend, to wire "all available settled cash" in her account, which at the time, was approximately $600,000, to an account held at Hellenic Bank Public Company Limited in Lemesos, Cyprus. This wire was executed. On June 17, 2013, Hernando instructed his broker-dealer, Legend, to wire $2 million, again to an account held at Hellenic Bank Public Company Limited in Lemesos, Cyprus. This wire was not executed by Legend. This account has a cash balance of approximately $4.5 million.
Tavella: On June 25, 2013 - the day of the Commission's order suspending trading in the securities of Biozoom Tavella attempted to wire approximately $2,450,000 out of her account at Scottsdale to a bank account in St. Vincent and the Grenandines. This wire has not been executed. The current cash balance in Tavella's brokerage account is approximately $2.47 million
Bagattin: On June 20, 2013, Bagattin instructed Scottsdale to wire approximately $4.33 million to a bank account in Cyprus. This w1re was executed. On June 24, 2013, Bagattin instructed Scottsdale to send an additional approximately $1.89 million to the same bank account. This wire was also executed. The current cash balance in Bagattin's brokerage account is $3,000.
Goldman: On June 11, 2013, Goldman instructed Scottsdale to wire approximately $3.77 million to an account held at a bank in Geneva, Switzerland - a bank where Blaya also holds an account. This wire was executed. The cash balance in Goldman's account is $0.
Ferrari: On June 19, 2013, Ferrari instructed Scottsdale to wire $500,000 to an account held at a bank in Panama. This wire was executed. On June 24, 2013, Ferrari instructed Scottsdale to wire an additional $4.9 million, this time to a bank in Belize. This wire was also executed. The cash balance in Ferrari's account is $0.
Scottsdale and Legend
Surprise, Surprise to see Scottsdale Capital Advisors once again involved in helping another pump&dump. Alpine Securities Inc provides clearing services for Scottsdale. Brokers linked to Scottsdale include the following:
Joseph Padilla (banned)
Brokers linked to Scottsdale have previously been name in FINRA litigation for selling unregistered securities in VMT Scientific Inc (VMTF), First Pet Life Inc (FPLF), Sustainable Power Corp (SSTP), Pearl Asian Mining Industries (PAIM), eHolding Technologies (EHDN), and Aladdin Trading & Company (ALDI). Scottsdale and/or brokers linked to Scottsdale were also previously named in SEC litigation for their role in facilitating the Rudy Nutrition (RUNU).
Read more about Scottsdale Capital Advisors including a new Panamanian clearing firm called Sterling Securities Group that we have reason to believe may be linked to Joseph Padilla.
The other complicit brokerage firm in the BIZM pump&dump is Legend Securities Inc. Legend Securities Inc also has a history of being complicit in stock fraud. Earlier this year, an unnamed broker from Legend Securities Inc was listed as a co-conspirator in a $30 million International market manipulation scheme that led to 14 arrests and involved several offshore accounts. Read the two Indictments for that case here and here.
Brokers linked to Legend Securities Inc include the following:
Will the SEC follow the bread crumbs to the end?
This is the fastest that we ever recall the SEC moving in on a pump&dump and filing charges. The SEC did an amazing job of moving in quickly and being able to stop much of the ill gotten gains from making it to those foreign bank accounts, but we hope they do not stop there. Despite the quick action, over $17m in illicit profits were already wired into overseas bank accounts and will probably never be recovered. We hope the SEC realizes that these Argentine citizens were just a front and they continue to follow the bread crumbs so they can find out who really controls those foreign bank accounts and really orchestrated the BIZM scam (we believe it is Francisco Abellan).
Here is our research about where we believe those bread crumbs will lead.