SEC target Wong says he just made software 2009-11-05 14:41 ET - Street Wire Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (C-PZG) Paramount Gold and Silver Corp
Also Street Wire (U-WHKA) World Hockey Association Corp (2)
by Mike Caswell Jason Wong, an Ontario man named as a defendant in a corporate hijacking case launched by the U.S. Securities and Exchange Commission, has filed a motion to dismiss the charges. He says he was just a software developer at a transfer agent, and his name may have been misused. The SEC claims that Mr. Wong and others filed false paperwork that allowed them to take control of 43 inactive public companies, which they then sold as shells. One of those shells became Toronto Stock Exchange listing Paramount Gold and Silver Corp., while another became Surrey-based pink sheets listing World Hockey Association Corp. The SEC halted those two stocks and 24 others on March 13, 2008, stating that they were the product of a name hijacking. It filed charges against Mr. Wong and others on Sept. 29, 2009. SEC's complaint The SEC's complaint, filed in the Southern District of New York, identifies Mr. Wong as a 32-year-old resident of Markham, Ont. The other defendants are Irwin Boock, 52, of Toronto; Stanton B.J. DeFreitas, 33, also of Toronto; Roger L. Shoss, 64, of Houston; and Nicolette D. Loisel, 52, also of Houston. The SEC claimed that Mr. Wong, Mr. Boock and Mr. DeFreitas ran a transfer agent called Select American Transfer, through which they ran the hijacking scheme from November, 2003, through June, 2007. The hijackings all followed a similar pattern, according to the complaint. The men would identify suitable candidates for their scheme by scanning the pink sheets website for inactive companies that were still quoted, but did not have current contact information or a transfer agent. Once they found a suitable candidate, they would check if the company was delinquent in its state of incorporation. If it was, they paid the necessary fees and filed the necessary documents to bring the company up to date. The SEC said Mr. Boock (using an alias) or Mr. Wong would represent that they were authorized to revive the company. They would generally provide a post office box for an address. In the event the secretary of state had declared the company void, the men simply incorporated a new company using the void corporation's name, the SEC claimed. The new company would assume the old company's identity, and after doing so it became publicly traded. Sometimes the men changed a company's name three or four times, which complicated efforts to investigate the hijackings, the SEC said. Mr. Shoss and Ms. Loisel helped the men issue free-trading shares in the hijacked companies, according to the complaint. The SEC said they drafted 28 bogus opinion letters, authorizing the issuance of 223 million free-trading shares in 19 of the companies. The letters relied on Rule 504 exemptions, which are normally only available to accredited investors who do not plan to sell the stock. The SEC said that Ms. Loisel also prepared fraudulent transfer agent verification forms, which represented that the shell companies could be revived. For her services, she received $455,000. (All figures are in U.S. dollars.) While the SEC noted Ms. Loisel's fee, it revealed little about other defendants' profits from the three-year scheme. The complaint stated that Mr. Boock received $267,625 in 2007 by selling shares of five of the companies through a Florida brokerage account. The SEC did not say if he made any other money, nor did it say much money Mr. Wong may have made. Unlike the others, there was some information in the complaint about Mr. DeFreitas's gains. The SEC said he sold shares of 30 of the hijacked companies through an account at New Jersey brokerage Franklin Ross, for proceeds of $2.2-million. The SEC sought appropriate civil penalties and disgorgement of ill-gotten gains against all defendants, as well as penny stock bans. It also sought orders banning Mr. Boock and Mr. Wong from acting as a director or officer of any company. Wong's motion to dismiss Mr. Wong filed a motion to dismiss the charges on Oct. 26, 2009. In an affidavit attached to the motion, he says that he did not participate in any corporate hijackings, nor has he ever submitted false papers to any secretary of state. According to Mr. Wong, he was just a computer programmer at Select American Transfer. "My involvement ... consisted entirely of building a software system to process securities transfers. I did not ... participate in any other corporate activities for any of its clients at any time," the affidavit reads. Mr. Wong says he concluded that somebody was misusing his name after he received a phone call from the SEC in 2006. The caller asked him if he was an officer or director of LeaseSmart Inc. (one of the hijacked companies). He told the caller that he did not have any roles with that company, and that he had left Select American Transfer the year before. "Because of that phone call, I concluded that my name was being misused by someone or that someone with my same name was out there," the affidavit reads. Mr. Wong claims that after that, he started receiving phone calls from shareholders of companies that he knew nothing about. In his motion to dismiss the charges, he says that the SEC improperly attributes the conduct of others to him. The complaint states that the defendants carried out the hijackings as a group, and does not describe the role of each man. As a result, no individual defendant can discern what he supposedly did, the motion states. Mr. Wong further argues that the complaint contains few details of his wrongdoing. His name does not appear on 18 of the 33 pages in the complaint, and where it does appear the SEC includes his name in a list of people. The SEC does not identify any amounts of shares he sold or where such sales occurred. In addition, Mr. Wong says that the courts in New York have no jurisdiction over him. All of the companies that the SEC claims he and others hijacked were incorporated in Delaware, Nevada, Florida, California or Utah. None were incorporated in New York. He also says that there is no evidence that any U.S. investors were harmed, or that the companies had U.S. shareholders. The judge has not yet set a date to hear his motion. | 
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