YBM – Dirty-Money Magnet – YBM Magnex International Inc., which sold bicycles and industrial magnets, proved attractive for investors until the FBI raided its head office in Pennsylvania in May 1998. Trading of its shares on the Toronto Stock Exchange was halted and never resumed, leaving investors with millions of dollars in losses.
Things only got worse in November 1999, when, in Toronto, the Ontario Securities Commission (OSC) charged YBM with violating Canadian securities laws. By that point, the magnet-maker had been linked by American authorities to a possible Russian money-laundering plot.
The OSC alleged that YBM filed a prospectus in 1997 that “failed to contain full, true, and plain disclosure of all material facts relating to the securities offered.” Specifically, the company failed to disclose it was under investigation by the U.S. Attorney General’s Office.
That American investigation included a hard look at how billions of dollars moved through several accounts at the Bank of New York. In June 1999, YBM Magnex International Inc. pleaded guilty to conspiracy to commit securities and mail fraud, and the corporation agreed to pay a $3-million fine and make restitution to thousands of defrauded shareholders.
The criminal investigation by the Organized Crime Strike Force of the U.S. Attorney’s Office in Philadelphia “may involve or relate to the possible links between YBM and certain alleged organized-crime members,” according to the statement. Names weren’t provided. A forensic audit also uncovered a version of the company’s books that showed “sales to nonexistent U.S. customers.”
Among the YBM directors was former Ontario premier David Peterson, but he and the other directors said they were innocent of any wrongdoing. Some of their lawyers argued that, because of the OSC’S police contacts, its staff should have known as much, if not more, about the alleged Russian Mob connections as the directors and officers of the firm. Still, the OSC allowed the YBM prospectus to be issued and the share sale to go ahead.
Yuetch, Dutch Henry – See Dutch Henry .
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