Vancouver stock promoter arrested in Vienna for alleged market
By David Baines, Vancouver Sun May 19, 2011
Vancouver stock promoter Aly Babu Mawji has been arrested in Vienna
at the behest of German authorities in connection with the alleged
multimillion-dollar manipulation of De Beira Goldfields Inc.
“We can confirm the arrest,” Stefan Biehl, a spokesman for the
public prosecutor’s office in Stuttgart stated in an email
“He was arrested in Austria and is still in jail. We wait for his
delivery. He is accused of market manipulation. There are two
accomplices, one of which is also in jail in Germany.”
Biehl declined to provide any further details.
Goldman Morgenstern & Partners, a German financial intelligence
service, earlier reported that one of the other defendants is
, former editor of two stock newsletters,
Focus Money and BullVestor, which heavily promoted De Beira
Goldman said Geraths was arrested in his Salzburg apartment on
Monday, but will not be extradited to Germany because market
manipulation is deemed an “administrative infraction” in Austria,
rather than a criminal offence.
Stuttgart prosecutors were apparently not pleased with Austria’s
refusal to extradite him: “After all, the accused by market
manipulation in early 2006 generated more than 47 million euros
[about $65 million],” Goldman quoted Stuttgart public prosecutor
Claudia Krauth as saying.
The third defendant has not been identified.
When it went public on the OTC Bulletin Board in the United States
in early 2006, De Beira was clearly a sham exploration company.
It was headed by Vancouver longshoreman Mike Fronzo, who had no
prior experience in mineral exploration. The company’s property
cost only $126 to stake and the company’s geologist was Erik
Ostensoe, who routinely recommended work programs on properties of
Seed shares were distributed to local residents who appear to have
been acting as nominees. Among them was Angelo Freda, who bought
125,000 shares. When I contacted Freda at the time, he said he had
bought them on Fronzo’s recommendation, but couldn’t remember how
much he paid for them. He said he sold them in January, before the
company went public, for about the same price as he bought them. “I
basically broke even,” he said.
This is the typical pattern: the promoters distribute the shares,
then gather them up. The net result is a tightly held, easily
controlled, publicly traded shell company that is perfect for some
Sure enough, immediately after clearing the company’s shares for
resale, Fronzo handed off the company to a pair of Australian
promoters, Reginald Gillard and Klaus Eckhof.
In May 2006, Gillard and Eckhof announced an option to explore a
project in Colombia and — without drilling a single hole — the
company’s total stock value jumped from practically nothing to $600
million US within several weeks.
The stock was co-listed on the Frankfurt Exchange in Germany, where
it was aggressively touted by newsletter writers and spam
“The whole thing is an insult to the concept of a free market,” I
reported at the time. “It is a carefully orchestrated piece of
artifice that is sure to bring grief to public investors, and more
injury to Vancouver’s financial reputation.”
Eckhof denounced my reports as “typical journalistic trash.”
In June 2006, the B.C. Securities Commission issued a cease-trade
order against the company on grounds that it had not made proper
disclosure of its mineral interests. The promotion subsequently
unravelled and the stock, which peaked at nearly $15, is now
trading at a dime under the name Panex Resources Inc.
Mawji’s alleged role in all this is not clear. When De Beira shares
were in full flight, Mawji told me he had introduced De Beira to
the Australian promoters. And during April and May 2006, when
control was changing hands, Mawji’s personal telephone number was
listed on De Beira’s press releases. The company’s website was also
registered in Mawji’s name.
Mawji recently became president and chief executive officer of
Golden Touch Resources Corp., a TSX Venture-listed company that is
exploring properties in Albania.
Last week, while en route to Albania, Mawji stopped over in Vienna,
where he was arrested.
Golden Touch issued a release stating that Mawji “has been detained
in Europe on matters that to the best of the company’s knowledge,
information and belief are completely unrelated to any of Golden
Touch’s business or affairs.”
The company also announced that Mawji had resigned as president and
CEO and had been replaced by Australian geologist Robert
Read more: http://www.vancouversun.com/business/Vancouver+stock+promote…