Former Vancouver stockbroker accused of creating and selling 15 'sham' exploration companies
By David Baines, Vancouver Sun
The U.S. Securities and Exchange Commission has accused former Vancouver stockbroker Tom Coldicutt Jr., his wife Elizabeth and four associates of engaging in "an elaborate scheme" to create and sell sham exploration companies listed on the OTC Bulletin Board in the United States.
The SEC also identified two B.C. geologists, Laurence Sookochoff and James W. McLeod, who allegedly facilitated their scheme, although neither is named as a defendant.
The allegations have not been proved and none of the defendants has yet filed a defence.
The SEC complaint, filed in U.S. District Court in Fort Worth, Texas, alleges that between 2006 and 2011, the Coldicutts and their associates "engaged in an elaborate scheme to create and sell at least 15 public shell companies , from which they derived nearly $5 million in ill-gotten gains."
It alleges the couple installed nominee officers and directors in companies they secretly funded and controlled, then helped them file disclosure reports "that misrepresented that the companies were formed to pursue mining activities, when in fact they neither conducted, nor were intended to conduct, any real mining activities."
Their four alleged accomplices are:
. Robert C. Weaver Jr., 68, a San Diego lawyer and close friend and business associate of Tom Coldicutt.
. Christopher C. Greenwood, 33, also of San Diego, Elizabeth Coldicutt's son and Tom Coldicutt's stepson.
. Linda S. Farrell, 50, of Indio, Calif., who has worked for Tom Coldicutt since 2000.
. Susana Gomez, 48, of Chula Vista, Calif., who worked as a part-time housekeeper and caterer for the Coldicutts.
Tom Coldicutt is 68 and his wife 63. They now reside in Rancho Mirage, Calif. According to the complaint, both declined to talk to SEC investigators, citing their Fifth Amendment right against self-incrimination.
Tom Coldicutt is a former Vancouver resident. He attended two exclusive private schools in B.C, Shawni-gan Lake School on Vancouver Island and St. George's School in Vancouver, then obtained a BA from the University of B.C.
In 1982, he became registered as a broker in B.C. and soon ran into regulatory problems. In December 1985, the Vancouver Stock Exchange suspended his licence for five years for trading violations while serving as branch manager of Osler Wills Bickle Ltd. in Vancouver.
He subsequently moved to the United States and became a broker and principal of a San Diego broker-age firm called Burnett Grey & Co. His wife was president and majority owner of the firm and licensed as a broker.
In 1991, the SEC charged the couple and their firm with selling unregistered stock of a "sham corporation." They did not defend themselves and were consequently enjoined by default from committing further securities violations.
In 2001, Elizabeth Coldicutt appealed the injunction on grounds that she had left the securities industry to become a documentary film maker and there was "simply no danger" that she would violate the injunction in future. The court rejected her argument.
The SEC complaint alleges that by 2006 - contrary to her earlier assurances - she returned to the securities industry and, along with her husband, launched "a fraudulent scheme of their own design."
The SEC alleges they "formed, funded, registered, offered and sold stock in, and ultimately sold 15 public shell companies, all of which claimed to be formed to pursue mining opportunities, none of which engaged in mining activities, and all of which were sold as public shell companies with little or no return to investors."
The 15 companies are Las Rocas Mining Inc., Wilson Creek Mining Corp., Rite Time Mining Inc., Wolfe Creek Mining Inc., Canusa Capital Corp., Centaurus Resources Corp., Mesquite Mining Inc., Red Sun Mining Inc., Wollemi Mining Inc., Laredo Mining Inc., Sienna Resources Corp., Green Star Mining Corp., Bomps Mining Inc., Saguaro Resources Inc. and Mondas Minerals Corp.
The SEC alleges that, through the sale of these 15 companies, they realized gross proceeds of $4.84 million.
In the case of Mesquite Mining, the SEC alleges the company was incorporated by a friend of Elizabeth Col-dicutt (a California realtor named Beverly Frederick) who acted under Elizabeth's direction and control.
The company went public on the basis of a Nevada mineral claim (acquired from Larry Sostad, a Vancouver resident and frequent purveyor of questionable claims to bulletin board companies) for a mere $8,500. The company then engaged Vancouver geologist Laurence Sookochoff, who recommended a work program on the property.
The SEC complaint notes that Sooko-choff "is listed as the sole geological expert in filings by several other Col-dicutt companies, all of which abandoned mining after their public offerings and were ultimately sold as public shells."
In its public offering, Mesquite purportedly raised $25,000 from 25 shareholders, including 17 from Mexico who were allegedly arranged by Gomez. In all cases, the SEC alleges, the Coldicutts provided the money for them to purchase the shares.
The SEC further alleges that the stock certificates, rather than being delivered to the named shareholders, were sent to Claridge and Associates, a financial consulting company owned and operated by Tom Coldicutt.
Then, instead of pursuing the mining venture, Coldicutt negotiated the sale of the shell company for $225,000. The bulk of proceeds accrued to Clar-idge, with smaller amounts to Elizabeth Coldicutt and her nominee friend, the SEC alleges.
"Mesquite's investors received minimal or no proceeds from the sale, a universal pattern across all Coldicutt companies," the SEC alleged.
That Sookochoff is mentioned in this complaint is no surprise to me. In two columns published in 2007, I identified him as a geological consultant for many bulletin board exploration companies that go nowhere.
NEXT: Sookochoff's support of dubious bulletin board companies rivals Kamloops-area geologist James W. McLeod. According to the SEC com-plaint, McLeod has been listed as consulting geologist for 47 different companies - including several Coldicutt companies - but not one has developed into a successful mining venture. We once again ask the question: Where is the regulatory body for B.C. professional geologists in all this?
dbaines@vancouversun.com
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