A once-imprisoned securities fraudster, convicted in Germany of illegal market manipulation, appears at the centre of a controversial stock scheme under investigation by B.C.’s top securities cop.
Aly Babu Mawji, a Coquitlam resident, is accused of arranging questionable consulting agreements with companies as far back as the summer of 2017 to distort the value of stock.
Meanwhile, the BC Securities Commission (BCSC), which has applied to permanently ban Mawji from trading and involvement in securities, is not offering an explanation as to how he was allowed to walk out of a German prison and re-enter B.C.’s capital markets.
Mawji, 40, was convicted in a Stuttgart court on Oct. 12, 2012, for a multimillion-dollar pump-and-dump scam with B.C. connections.
He has declined comment.
According to reports in 2006, Mawji had been promoting Vancouver-based De Beira Goldfields Inc., a shell company sold on the OTC Bulletin Board and Frankfurt Stock Exchange. He also appeared to be working at Varshney Capital at the time. Thereafter Mawji worked in Europe and West Asia. It was eventually determined by the German Federal Court of Justice he defrauded 25.7 million Euros from investors. He was sentenced to 38 months in prison.
BCSC applied for orders against Mawji on Oct. 1, only after 25 so-called consultants, including Mawji himself, and their 26 associated firms – collectively dubbed by the BCSC as the BridgeMark Group – are alleged to have entered into illegal consulting agreements with 11 Canadian Securities Exchange-listed (CSE) cannabis, cryptocurrency and alternative energy companies in what it said was a bid to manipulate stocks.
The commission, in applying to ban Mawji from business related to securities, said it made its October application “based on [his] conviction for securities misconduct in Germany.” It would not speak to ongoing enforcement actions of particular individuals. As such, it provided no explanation why Mawji wasn’t faced with orders in B.C. immediately after his highly publicized conviction in Germany.
When asked how it is possible for any person to commit securities fraud in Europe and subsequently engage in the B.C. market, the commission continued to state that it “does not discuss details of ongoing enforcement actions,” thus offering no assurances there was cross-jurisdictional regulatory and enforcement oversight in this instance.
Mawji also now stands accused by the BCSC of being one of the more prominent players in a scheme involving BridgeMark, based on the volume of shares he purchased.
BCSC alleged last month that between February and August, BridgeMark members privately bought at least $50.9 million worth of stock at pennies per share but had most of the money returned in alleged phoney consulting fees. Meanwhile, noted BCSC, the 11 companies publicly touted they had raised and secured all the money via the private placements (252 million shares), as evidence of investor interest. The members then dumped the shares into the market, at a fraction of the original purchase price, where retail investors picked them up.
None of the allegations have been proven by a commission panel, although temporary orders have been placed against the companies and BridgeMark members.
Unable to reach Mawji, Glacier Media contacted his wife, Denise Trainor. She is an officer of Northwest Marketing Management Inc., where Mawji works as a business consultant. Trainor and Mawji are cited in the ongoing BCSC investigation in relation to their investments and consulting arrangements via Northwest.
Trainor hung up when told she was speaking to a reporter. The couple’s lawyer, Abbas Sabur, phoned shortly thereafter, said he was “not commenting on pending proceedings” and asked Glacier Media to “leave them alone.”
One of the listed companies has filed a lawsuit against Mawji, his business associate Justin Liu and a host of consulting firms named in the BCSC allegations.
PreveCeutical Medical Inc. is claiming it is a victim of a “conspiracy” by Mawji and Liu, who are alleged to have set up $2.8 million worth of consulting agreements (including their own) with PreveCeutical while concurrently obtaining $4 million worth of securities under exemptions of the Securities Act – only to not provide any such services and quickly sell the newly issued securities back into the market.
“Unbeknownst to PreveCeutical, at no time did the defendants intend to provide services,” the Dec. 18, 2018, notice of claim states. The defendants have not filed a response.
PreveCeutical claims it entered into a consulting agreement with Stadnyk and Partners Inc. (S&P) on June 1, 2018. As advisers, S&P introduced registered dealer Robert Barber of Mackie Research Corp. Barber then introduced PreveCeutical CEO Stephen Van Deventer to Mawji on June 21. The claim states Mawji explained his services, such as connecting clients and online marketing. Mawji also said he wanted to buy shares.
Van Deventer told Glacier Media he believes some of the CSE-listed companies are in cahoots with the consultants while others, such as his, are victims.
He said he depended on Mackie for due diligence. He said he also depended on Mawji’s reference, Anthony Kevin Jackson, former CFO of SpeakEasy Cannabis Club Ltd. and principal of BridgeMark Financial Corp., one of the 26 associated firms in the BCSC order. Jackson, who has headed numerous startups, is also a central figure in the alleged fraud, according to the BCSC.
Jackson’s lawyer Patrick Sullivan told a BCSC panel last month that naming the BridgeMark Group consultants was prejudicial to his client. He told Glacier Media the group doesn’t exist and that it’s “legal fiction.”
Liu could not be reached for comment by phone at his West Vancouver home.