Evil’s letter to Martin Wheatley, Chief Executive of the FCA

8 mins. to read

Evil has given us permission to reproduce his letter to Martin Wheatley, Chief Executive of the FCA. As would be expected he doesn’t pull any punches, and it is well worth a read.

22nd March 2015
Martin Wheatley Esq.,
The FCA,

Dear Mr Wheatley,

          I am not wasting my time in writing since here is something so simple that even you can understand it.
          As you know, it is my long held view that those who regulate us are nearly invariably people who have no brains, no judgement and, since the selection and appointment procedures are so flawed, no experience of the  area of economic activity which they are supposed to regulate. This reduces their efficacy although they resolutely deny their uselessness.
          Certainly, when I described a stock distribution fraud to AIM’s regulation department a few years ago they confessed that they had not hitherto imagined, let alone encountered, such a style of deception. The fraud in question was called DongFang or something like that. So I’ll start with a description of that to offer you an introduction to stock distribution fraud.
          DongFang was insolvent at the very moment it was introduced to AIM. We know this since the balance sheet disclosed to the market as a condition of listing so strongly indicated insolvency that DongFang had to be taken as insolvent. The principal asset was an advance by DongFang to the chairman CEO who owned well over 50% of the stock and therefore at all material times influenced authoritatively any attempt by DongFang to recover this asset. I dare say that the advance had been used by the chairman to finance his stake in DongFang. I mention this circumspectly since I have no proof.
          It might reasonably be asked just what possible fruit could accrue to this chairman CEO. This is simply answered: he had merely to lend stock to A N Other who sold the stock into the market as and when demand emerged in the market. The demand was occasioned by buying from Far Eastern investment businesses, some regulated and others not, through London brokers. The Far Eastern investment businesses just got suckers in off the street and lied to them to part with their cash to get the investment in DongFang made.
          Suckers are of course not always permanently suckers. They can undergo a Pauline or Damascene conversion and demand their money back. However, at this point, the investment business in effect goes mysteriously missing and therefore the sucker is in effect chasing nothing. This is dispiriting for the sucker. However, it should be noted that the sucker does not enjoy any protection under British law. I forebear to add that he would not enjoy any protection anywhere anyway. That would be cynical.
          One point that can be adduced in support of the British end of the DongFang fraud is that there was just, albeit very remotely, the prospect of a shipyard handling ships. This is in clear contradistinction to the investment possibilities of Gate Ventures plc (GATE on AIM) to which I now turn. Here the company is solvent but has no discernible business or prospects.
          GATE was floated on 10th March 2015.  There were at that point only 32.4m shares all issued at 10p for cash. Net of expenses that would have left betting money within GATE of £3m. As I will shortly show it is nearly certain that investors will eventually find that there is no money (since fraudsters never leave anything on the table). Indeed, so certain is this prospect I advise you to see GATE suspended from trading immediately. I do not think it too fanciful to remark that failure to do so involves the FCA in the fraud.
          I now show an extract as to the initial shareholders. I got it from a bulletin board. But it seems honest and accurate enough to me. The Nomad is Beaumont Cornish and the poster’s first observation is that:  “Beaumont Cornish should be hauled in front of the AIM team for failing to disclose these related parties

Black and White Investments Limited 2,835,000 8.74
Hercules Ventures Limited 2,835,000 8.74
Last Capital Investments Limited 2,835,000 8.74
Dragon King Group International Holdings Limited 2,835,000 8.74
Righteous Group International Holdings Limited 2,835,000 8.74
Blue Dream Vantage Investments Limited 2,835,000 8.74
Bridgehead Venture Capital Limited 2,835,000 8.74
Black Elephant Ventures Limited 2,835,000 8.74
Lotus Capital Ventures Limited 2,835,000 8.74
Helvetan Investments Limited 2,835,000 8.74

These parties are all newly incorporated, or so the poster advises. It should be noted that all have exactly the same holding. This suggests that there is no chance whatsoever of these parties subscribing for new at arm’s length independent of one another. As a result they are clearly acting in concert which, in this case, is unlawful.
          If all these concert party members were to sell the same amount of shares at the same time, so achieving equity as between the members of the concert party, the broker would realise that some form of concerted operation was in place. So, to camouflage these sales, only one at a time is allowed to sell and it sells through a broker who is not party to the buying orders originating in the Far East. This party will of course have to account to the other parties.  This accounting will not be difficult since all the parties are related to and controlled by the fraudster.

The bulletin board poster then observes that,

“By the names it sounds like all 10 came from the same formation agent:

28,350,000 to 10 offshore shelf companies
…200,000 to 4 directors under own name = combined 88% of the equity.”

I have neither the budget nor the means of checking these assertions as to common ownership and method of their being called together but it is fair to say that this is a successful attempt at assembling a concert party. After all, GATE is now floated. And that is proof of success.

The poster adds: “Whoever is behind it likely controls the HK shelf companies but would have made sure his name was not mentioned in the admission document. It is interesting to see that there was a slight brushing over of the Chairman Geoff Morrow’s role with Johnny Han’s Global Group.

So, in the blah of March 2007 for Oriental City Group plc, the offering was:

“Mar 2007: Oriental City Group plc Geoff has been involved in entertainment and showbiz for forty years and is an internationally recognised song writer whose songs have been recorded by award winning artists such as Cliff Richard, Elvis Presley, The Carpenters and Barry Manilow. In all he has had over 60 hits around the world and formed two record companies that were sold to EMI and RCA. Geoff has also written for the stage. As Deputy Chairman of the Global Group of Companies he has also helped Asian companies raise funds and list on AIM/PLUS in London.

Come March 2015, Geoff reappears with the following blah:

“Mar 2015: Gate Ventures plc Geoff has been involved in entertainment and showbiz for forty years and is an internationally recognised song writer whose songs have been recorded by award winning artists such as Cliff Richard, Elvis Presley, The Carpenters and Barry Manilow. In all he has had over 60 hits around the world and formed two record companies that were sold to EMI and RCA. Geoff has also written for the stage. He has also helped Asian companies raise funds and list on AIM/ISDX in London.”

I think you will agree that there is a startling similarity in presentation, suggesting that Mr Morrow is perfectly well aware as to what is going on. The Global Group is controlled by Johnny Hon/Han, a well known fraudster – as you will find on checking the telephone directory (given that there must be at least 10m Chinese with the surname Hon/Han).
          GATE’s shares hit circa 70p on 12th March 2015 and Beaumont Cornish issued a “nothing to do with us guv” RNS.  You might have thought that the shares would retreat at that point. But, au contraire, they took flight and on Friday 20th March they hit 180p. This was hardly surprising since the buying, completely uninfluenced by the tedious details of an RNS issued in London, continued to flood in from the Far East (you can check this assertion by asking London’s market makers, there are only three, as to who was doing the buying. I bet that that will reveal just one, certainly not more than two London brokers who will be found to have received instructions from Far Eastern investment businesses).
          Were you to have the time and means, investigation in the Far East will presumably take you back to the relevant Mr Hon. However, that depth of enquiry is not necessary since Beaumont Cornish surely know all about this and they are in the London telephone directory. Their last public pronouncement comes in their RNS of 20th March. Here they continue their “nothing to do with us guv” theme but advise that GATE’s only investment so far is a proposed £35,000 for something theatrical. Perhaps it is the premier of Up and Coming, a comic display at The Bellend and Bush pub in the Mile End Road. Backing accompaniment will be sung with feeling by The Colonnadiers, a loose association of warbling bunglers from Canary Wharf.

Yours sincerely,

Simon Cawkwell

PS: I still want that £400,000 of mine that the FCA wantonly threw away.

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