The U.S. Securities and Exchange Commission has filed a civil suit against a former Canadian firm and several of its insiders, alleging that they perpetrated a massive stock fraud in the Nasdaq Over-The-Counter securities market.

The SEC complaint alleges that the defendants issued stock of Environmental Solutions Worldwide Inc. of Telford, Penn. and formerly of Markham, Ont., to various insiders through a sham private offering, and then “pumped” the market with a promotional campaign designed to artificially prime the market for ESWW stock. The campaign worked, as the price of ESWW stock soared by about 250%, from $2 to $7 per share. Concurrently, two of the defendants, Teodisio Pangia, of Kleinburg, Ont. and New York City, and Satbal Singh a/k/a Spal Singh, of Toronto, sold approximately US$15 million of ESWW stock into the unsuspecting market.

The other defendants in the case are: Jalon Investments Ltd., Gata Investments Ltd., and Altea Investments,Ltd., three Guernsey companies controlled by Pangia; Zoya Financial Company Ltd., a promotional firm controlled by Singh; Adam Michael Oliver of Otterville, Ont., ESWW’s former sole officer and director; Michael Smith, a Canadian attorney residing in London, Ont.; Bengt Odner, of the U.K., ESWW’s current chairman; Michael Bergman, of Jersey City, and his firm Access 1 Financial Inc.; and, Eugene Foo of Toronto, who the SEC says helped facilitate the offering.

Specifically, the commission’s complaint alleges that from October 1998 through June 2000, Pangia, Smith, and Singh orchestrated a pump-and-dump scheme using fraudulent press releases, millions of spam e-mails, and a paid analyst report to prime the market for ESWW stock. It says that the promotional documents falsely claimed that that ESWW had developed a revolutionary catalytic converter that dramatically reduced toxic emissions, including nitrous oxide, a greenhouse gas believed to be a cause of global warming. These claims were false and contrary to ESWW’s own test results, the SEC says.

The complaint also alleges that Pangia, Smith, Singh, and Foo orchestrated a sham private offering in which millions of unregistered ESWW shares were issued to themselves. These shares were dumped into the inflated market. The three of them realized approximately US$15 million from these stock sales. According to the complaint, Pangia also violated the beneficial ownership reporting provisions of the federal securities laws and ESWW violated the books and records and financial reporting provisions.

The SEC seeks injunctions against all the defendants, officer and director bars against Pangia, Smith, Oliver, and Singh, disgorgement of ill-gotten gains plus pre-judgment interest from Pangia, Jalon, Gata, Altea, Singh, Bergman, and Access 1, and civil penalties against Pangia, Jalon, Gata, Altea, Smith, Oliver, Singh, Zoya, Bergman, Access 1, Odner, and Foo.

http://www.sec.gov/news/digest/08-12.txt