Israeli court rules that asset recovery for terrorism judgments can be collected from foreign duty and tax authorities

By Christine Duhaime | April 29th, 2020

Judgment day in Jerusalem

The Jerusalem District Court has ruled that damages awarded to victims of acts of terrorism can be satisfied over time from taxes and duties collected for another foreign state.

The ruling arose from a tort litigation filed in Jerusalem involving claims for compensation from a number of terrorist acts committed during the al-Aqsa Intifada from 2000-2002 attributed to Palestinian organizations against Israelis.

دولة فلسطين

Eight families filed claims for terrorism related compensation against the Palestinian Authority دولة فلسطين and the Palestine Liberation Organization (“PLO“). Claims were also filed for non-terrorism related acts. For example, the murder of two Israeli reserve officers, Yossi Avrahami and Vadim Nurzhitz, at a police station in Ramallah.

In 2019, the Jerusalem District Court ruled that the Palestinian Authority, the PLO and others were liable for the acts of terrorism under the claims.

محمد ياسر عبد الرحمن عبد الرؤوف عرفات القدوة الحسيني

In terms of asset recovery, the Court had earlier agreed to a lien over a small piece of real property in the Mount of Olives Cemetery in Jerusalem that was owned in 2004 by now deceased PLO leader Mohammed Abdel-Raouf Arafat As Qudwa al-Hussaeini, now owned by his estate, which suggests that Courts will at least preserve and may allow asset recovery for terrorism damages from the family of the leadership of a terrorist organization or one that was once aligned with terrorism ideology. It appears that Mr. Arrafat’s estate was a named defendant in the litigation and some of the acts occurred while he was the leader of the PLO.

Arafat: “I come bearing an olive branch … do not let the olive branch fall from my hand.” (Source: NPR)

On Friday, the Jerusalem District Court assessed the damages under the families’ claims at US$150 million and ruled that the judgment could be satisfied from money in the control and custody of the government of Israel held in trust for the Palestinian Authority.

At least two different Israeli government agencies collect about US$50 million a month in taxes and duties from the West Bank and Gaza on behalf of the Palestinian Authority and transfers it to them. The taxes and duties are from import and export duties and VAT collected at Israeli ports and from payroll withholding taxes from Palestinians working in Israel.

The Israeli government agencies act as an agent for the Palestinian Authority, collecting and holding the funds collected in trust until the end of each month when the funds collected are then remitted to the Palestinian Authority.

The international transfer payments are collected and remitted by Israel pursuant to the terms of an international peace accord between the two states.

The Court held that the judgment can be satisfied over time from those duties and taxes collected by Israeli government agencies and held in trust for a foreign state – in essence, allowing the claimants to satisfy the judgment by garnishing from the fund of transfer payments owed to another foreign state. A basic garnishing order can trump the terms of a peace accord among two foreign states.

تحصيل الديون

The effect of the judgement is that while the PLO and the Palestine Authority, among others, which are outside Israel, were held liable, government agencies of another state (Israel) can be forced to be a type of debt collector to satisfy tort terrorism judgments and a successful party can garnish transfer payments payable under international agreements.

Israel has 30 days to appeal the decision, which it may do because the garnishment of funds owed to Palestine at this time will significantly impact humanitarian aid, for which the judgment makes no exemption.

Iran?

What this may mean for Iran is up for debate. Iran owes the most amount of money in the world in unsatisfied terrorism judgments. If one can collect or garnish funds from other foreign government agencies who owe Iranian agencies in recurring or periodic transfer payments, it may change the asset recovery process overnight.

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BC Securities Commission issues intriguing cease trade order against a non-BC company

By Christine Duhaime | April 28th, 2020

Cease trade order against foreign entity

The British Columbia Securities Commission (the “BCSC“) has issued an intriguing order that all persons must cease trading (the “CTO“) the shares of a non-British Columbia company called Sandy Steele Unlimited Inc. (“Sandy Steele“). Sandy Steele is a pubco incorporated in Minnesota that appears to have an office in California. Its shares are quoted on the OTC markets platform under the symbol SSTU.

The order is intriguing because it is in respect of a non-British Columbia reporting issuer that must have a material connection to British Columbia. We don’t know what that connection is but clearly the BCSC does, and likely the Securities Exchange Commission (“SEC“), considering that this is a US entity.

Mystery person in British Columbia?

According to the terms of the CTO, Sandy Steele is being directed or administered in or from British Columbia and its promotional activities are being carried out in British Columbia.

But by who?

Sandy Steele one year trading history.

Previous Covid-19 suspension of trading

The shares of Sandy Steele were previously temporarily suspended from trading by the SEC over concerns arising from Covid-19 promotions by promoters, inter alia, who e-mailed investors claiming that Sandy Steele could produce protective masks that were in high demand because of the Covid-19 pandemic and subsequent substantial sales of its shares in offshore locations. The SEC suspension order suggests that Sandy Steele’s disclosure material indicates that it lacks operational and financial capacity to manufacturer protective masks for Covid-19.

Battery powered merch

According to the website of Sandy Steele here, it does not produce medical equipment. It says it produces battery powered clothing for sub-zero environments, such as socks, vests, pants and gloves, using a battery that has a patent pending. There does not appear to be a patent application for a battery filed by Sandy Steele with the US Patent and Trademark Office. The website lists a few items of merch for sale but there is no ability to check out online and buy a pair of patent-pending-battery-heated pants or socks like the ones below.

Sandy Steele represents on its website that the company did battery R&D for Rosneft, Russia’s state-owned oil exploration company, and made such strides that it is in consultation with several “G20 countries and their militaries” (bolded in the original). According to their website, the team of three in Taiwan aims to be the “world standard” in battery production. The website doesn’t address how battery powered merch meshes with Covid-19 protective masks.

Also in anti-aging cream space

A year ago here, Sandy Steele said it had no location, one piece of equipment chilling in a warehouse in China, and was creating anti-aging beauty products.

Its probably not unreasonable for the investing public to expect that companies accorded the privilege of listing their shares, and who reap the benefits of easier financing, be forced to articulate the line of business that they are actually in so that the public can make an informed decision in respect of that line of business – whether it’s patent-pending-battery-heated socks and pants, anti-aging cream or Covid-19 protective masks.

County Line Energy Corp. also CTO’ed

This is not the first MI51-101 CTO issued against a foreign entity by the BCSC, but they are infrequent.

In 2013, the BCSC issued a MI51-101 CTO against a Nevada company called County Line Energy Corp., requiring it to file its disclosure material for investors. According to SEDAR, it does not have a profile and has not filed any continuous disclosure material on SEDAR. That issuer went through a number of name changes and is now called County Line Energy Inc. and went from mining to cannabis. The BCSC refreshed its CTO under MI51-101 against the new-named entity.

Canadian control persons

According to its US filings, it has or had a beneficial owner who is Canadian named Dennis Serruya and has or had a control person attached to a British Columbia numbered company named Arif Jamani.

In this old Vancouver Sun article from David Baines, Jamani is identified as a promoter. The article says that he and another promoter named Bob Vukovich were part of an FBI sting. According to David Baines, the two promoters appear to have hired Vancouver securities lawyer Penny Green for their securities law work back then.

County Line Energy Corp. five year trading history.

A cross-over of control persons

Another CTO was issued by the BCSC against a foreign entity under MI51-101 in 2015, named BRK Inc., with some of the same cross-over persons as County Line Energy.

According to its website, here, it has filed to enforce a US civil judgment in a court in Canada somewhere for US$2.5 million. Now that BRK Inc. has acquiesced to what we call the kompetenz of the jurisdiction of Canada, one imagines that the lawyers at the BCSC may have taken steps to consider a filing in that enforcement action in Canada to recoup payment of fines that may have accrued from the failures of BRK Inc. to file disclosure materials on SEDAR and on SEDI pursuant to the 2015 CTO.

Filing on SEDAR

For Sandy Steele or any other pubco under a MI51-101 CTO to qualify to have the order lifted, it must hire lawyers and commence to prepare and file its public disclosure documents on SEDAR, consistent with Canadian securities legislation and instruments.

But that may be difficult for Sandy Steele for two reasons – there is an unidentified actor in British Columbia directing or administering and promoting Sandy Steele who is clearly material, and the SEC order can be interpreted as a red flag – both of those factors may make the file too risky for normally risk-adverse lawyers.

If you want to read more about the fact that the Vancouver securities market culture breeds the most amount of OTC markets fraud in the world and a little about its shell (and shelf) re-selling ecosystem, see this 17-year-old article from David Baines here.

Since that article, the SEC has been coming hard and fast after anyone associated with re-selling shell and shelf companies in British Columbia remotely tied to a securities law violation.

Three examples:

  • The SEC files for default judgment in connection with US$33 million Vancouver-connected alleged shell scheme;
  • The SEC settles in a shell resale and flipping case involving a Canadian issuer; and
  • The SEC locates alleged main actor in US$34 million alleged pump and dump scheme created by shell-hunter in Vancouver.
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SEC files complaint against digital currency business co-founders, alleging they lied during investigation, provided fake business records and launched illegal ICO

By Christine Duhaime | April 27th, 2020

The Securities and Exchange Commission (“SEC“) has filed a complaint against an initial coin offering (“ICO“) and digital currency exchange platform called Dropil Inc. and three of its co-founders, Jeremy McAlpine, Zachary Matar and Patrick O’Hara, alleging that they took funds from the public on the basis of numerous untrue statements made on social media and on YouTube, and used the funds to operate an unviable business and pay their own salaries and expenses.

Moreover, the SEC alleges that when it commenced an investigation into Dropil, they gave staff at the securities commission fabricated documents about the business activities and made material untrue statements to them.

Dropil is based in Belize but its principals are in the US. In addition to launching and selling coins pursuant to its ICO to the public, according to its website, it operated an exchange, a smart wallet service and an arbitrage service for digital currencies. The ICO was not registered with the SEC.

Among the untrue statements the SEC alleges were made to the public to entice them to send the exchange money, were statements on the number of users registered at the exchange, amount of funds raised and numerous statements that the digital currency exchange was profitable, when the SEC says it was not. Its website is still active and it says that Dropil has 75,000 registered users.

Dropil website – allegedly over 75,000 accounts

The SEC alleges that the co-founders produced business documents and records for them that included thousands of pages of fake trading activity in order to give the illusion that the business had more trading activity than it did. The SEC believes that the co-founders went down the path of producing false information in an attempt to conceal fraudulent activities.

The SEC alleges that funds solicited from the public were sold though the exchange’s website and some of it was held at a Vancouver digital currency exchange called CoinPayments.

Dropil website – “Easily buy and sell crypto”

In the YouTube video below, one of its co-founders says that there is a bright future for Dropil and that it is a sustainable investment platform, with a bot that “wins most of the time.”

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Canadian securities regulators issue warning about Vancouver website pretending to have securities regulatory powers

By Christine Duhaime | April 24th, 2020

Impersonating a government agency function

The Canadian Securities Administrators (“CSA“), which is an organization of the provincial and territorial securities regulators in Canada, has issued a warning to alert the public about a website purportedly in Vancouver that is fraudulently claiming to function as a securities regulator – in effect, that seems to be committing a fraud against the securities regulators.

The CSA warning indicates that the fake securities regulator is called the Canadian Office of Derivative Trading. Its website has not been taken down by law enforcement yet. It is here. It registered with Godaddy on September 11, 2019. The website is not impersonating any one securities regulator by name but it is impersonating the role and function of a securities governmental agency, which is tantamount to an impersonation of a government agency. For example, it claims to regulate derivatives, stock exchanges, market intermediaries, insider trading and securities legislation.

There is no “Canadian Office of Derivative Trading” (“CODT“) authorized to regulate any securities, let alone derivates. In fact, there is no federal securities regulator in Canada. Securities regulation is provincial jurisdiction in Canada.

Use of coat of arms of British Columbia

CODT uses blurry BC coat of arms

The CODT logo contains a blurry coat of arms of the province of British Columbia, perhaps to give it the illusion of being a government agency. It is an offence under the Provincial Symbols and Honours Act, to use the British Columbia coat of arms without consent or to use it or a facsimile of it, to induce the public into believing that an organization has authority from the government or is exercising a function of the government. The Provincial Symbols and Honours Act authorizes the removal by injunction of the illegal use of the provincial coat of arms irrespective of the commencement of proceedings in connection with the offence of misusing it.

Page from the fake securities regulator website promises to improve Vancouver’s reputation

Among its purported governmental authority and activities, the CODT purports to:

  • regulate the futures market in Vancouver;
  • contribute to Vancovouer’s economic reputation;
  • warn the public against dealing with bogus entities;
  • protect the integrity of the financial services sector; and
  • monitor and enforce money laundering activities.

Fake due diligence portal

The CSA believes the fake website was erected to deceive investors into obtaining comfort in respect of some companies that are “listed” on the CODT website as having no regulatory issues in order to induce the public to invest in those companies. Presumably, those CODT listed companies, or one or more of them, may be the creators of the CODT website.

Who are those companies? Well they can be ascertained by entering search terms on the CODT website. For example, entering search terms such as “trust”, “capital” or “company”, yields over 20 companies. However, out of the 20 “capital” companies listed, only the profiles of five of them function to yield an alleged clean slate for each of them.

It is possible that some or most of the entities listed are not part of the fake securities regulator site and may have no knowledge of being included in the website’s search database. For example, CODT claims to licence the financial entity Squirrel, which does not even operate in Canada, and which is regulated as a financial entity in the UK. Squirrel likely has no knowledge that it is listed as being allegedly licensed by CODT.

FIU and other claims

CODT also claims, indirectly to be an FIU and says that it is a member of Egmont.

No doubt the CODT website will be taken down fast, given that there is triple harm occurring – one set of harm to the reputation and integrity of multiple provincial and federal agencies who regulate securities, anti-money laundering law and financial institutions, and the other set of potential harm to the investing public. There is also the reputational harm to companies in the search database that are not affiliated with CODT.

Surge in government agency impersonations

The US Federal Trade Commission here warned against the increase of scammers impersonating government agencies, and since Covid-19, law enforcement agencies all over the US and some in Canada, have reported a large increase in incidents involving the impersonation of law enforcement officers and medical personnel during the pandemic for the commission of numerous crimes. Corona virus fraud schemes are surging all over, on multiple fronts, around the world.

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Arizona Court denies emergency motion by Bitcoin exchange CEO charged with money laundering and fraud, seeking Covid-19 release

By Christine Duhaime | April 22nd, 2020

Krypto king sought Covid-19 release

Krypto king standing in the centre. Source: Cigar Aficionado Magazine

The US District Court for the District Court of Arizona has denied a Covid-19 emergency motion by John Michael Caruso to reopen his detention hearing to be released from pretrial custody because of what he argued was a threat to his life in jail arising from the virus.

Caruso was the CEO of a digital currency platform called Zima Digital Assets. He called himself the “krypto king.”

He was charged in January 2020, in Arizona with money laundering and wire fraud after an investigation by the US Secret Service. A complaint against him filed in January 2020, alleged that the digital currency business took in money from the public and its two principals, of which one was Caruso, blew through US$4.5 million of customer money to live a lavish lifestyle. Former MLB players were among the pool of victims. See “Two crypto dudes who allegedly blew through US$4.5 million, used customer funds to live in a mansion together, take a private jet, gamble at casinos and drive around in exotic fast cars, charged.”

Balancing health risks versus risks to society

At the Covid-19 detention rehearing on April 8, 2020, Caruso argued that his pretrial incarceration presented a deadly threat to his person and he ought to be released.

The Court held that although Covid-19 generally presents a serious health risk to the public, governments, including prison institutions, are taking steps to minimize the risk to incarcerated persons.

The Court cited United States v. Caddo, No. CR 18-08341-002-PCT-JJT (D. Ariz., March 23, 2020) with approval for the proposition essentially that [with respect to the balance between the risks to a person of Covid-19 in prison and the risk to the community of releasing a detainee charged with serious criminality], speculation in respect of the dangers of the virus do not outweigh legitimate countervailing concerns raised by the government for the continued incarceration of certain detainees, and although some Courts have found that the pandemic justifies release of certain detainees in certain circumstances, many Court have not so found, supporting a case-by-case analysis (citing United States v. Motley, No. 19-CR-00026-LRH-WGC-1 (D. Nevada, Apr. 2, 2020).

Severity of allegations warranted continued incarceration during Covid-19

With respect to the case-by-case analysis balancing personal interests and personal safety versus the interests and safety of the community, the Court held that Caruso’s indictment on 17 counts of money laundering, fraud and conspiracy involving an alleged scheme of at least US$9 million, together with the fact that Caruso and his family had contacted some of the alleged victims after his arrest, warranted against his release during Covid-19.

Caruso had an initial detention hearing on February 7, 2020, in which he was ordered incarcerated pending trial. At that time, he was charged with carrying out a Bitcoin Ponzi scheme that defrauded over 100 victims of at least US$7.5 million. Since then, the amount of the alleged fraud continues to increase as more victims are located, and Caruso was subsequently indicted.

At the February pretrial detention hearing, the Court noted that the government alleged that it had records from casinos, private jet rental companies, a mansion rental company and exotic car rental companies that evidenced that Casuso “lived an extravagant lifestyle”, including a private jet trip to Las Vegas where he allegedly gambled large sums and other trips overseas allegedly paid for with customers’ money – all the while earning only US$22,800 in income. The Court noted that financial crime investigators were unable to locate where all the money from customers had gone. Because millions of dollars was in the control of Caruso and not accounted for, there was a risk Caruso could use those funds to flee.

Court noted Caruso lied about his education, gambling and the exchange’s success

At that first detention hearing, the Court noted that Caruso lied to investigators when they questioned him about the Bitcoin business and his activities during the time of the alleged fraud – for example, he is alleged to have lied about how money was spent, denying that it was spent at casinos and to have lied about his education, alleging qualifications that he did not have. Moreover, in promotional materials in respect of the Bitcoin business, the Court noted untrue statements he made about his success.

The Court held that Caruso posed a danger to the community, inter alia, because of his track record of making untrue statements, including those made to investigators in the course of a government authorized investigation, his receipt of millions of dollars from victims and the allegations of serious financial fraud.

In 2016, Caruso was charged with attempted extortion for allegedly threatening someone with physical harm in order to extract money from them.

Salter obtains pretrial release

In contrast to Caruso, the co-accused Zachary Salter, was released from prison shortly after he was arrested by the Secret Service on January 30, 2020, in Paradise Valley, Arizona, and placed in the custody of a relative. It is possible that the view of the government is that Salter was duped by Caruso. Salter is prohibited from having any bank or other financial accounts or from buying anything above $500 and prohibited from traveling or taking drugs or alcohol. Salter was a singer before he went into the Bitcoin business with Caruso.

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SEC files for default judgment against several offshore tax haven shells allegedly tied to Vancouver men accused of facilitating US$35 million in illegal trades

By Christine Duhaime | April 18th, 2020

This week, the Securities and Exchange Commission (“SEC“) filed applications for default judgement against several companies, including several shells incorporated in tax havens with nominee control persons, that the SEC alleges were used to generate US$35 million in illegal sales of shares.

Six individuals, including three Canadians, at least one from Vancouver, were charged in the case. The three Canadians are Steve M. Bajic, Rajesh Taneja and Christopher McKnight. McKnight is alleged to have been the money mover in the alleged scheme.

The SEC alleges that Bajic and Taneja took control of shares of issuers on behalf of others, paid money to have those shares pumped to jack up the prices, and then dumped the shares. They allegedly earned a cut from the proceeds of the alleged scheme. With respect to the shell companies, they are alleged to have concocted a scheme to manufacture beneficial ownership to obfuscate who the actual control persons were behind the offshore entities.

The SEC application for default judgment states that none of the corporate defendants responded to the claim by the SEC. The default judgements seek over US$16 million from the entities.

Before the default applications, the SEC obtained a double-barrelled order for a mareva injunction and asset forfeiture against all of the defendants, effectively depriving them each and collectively of funds to hire lawyers. Banks, including BMO, CIBC and TD Bank, who provided banking to the defendants, and lawyers of the defendants, were ordered to patriate the proceeds of the alleged fraud to the Court in the US where the claim was filed.

The application for the asset seizure and patriation order was based on affidavit evidence that showed that over US$42 million in trading proceeds were handled by the defendants and on statements made to the RCMP about Bajic and Taneja, records seized during a search of Bajic’s home in Vancouver and WeChat text messages of Bajic obtained by law enforcement.

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Another week; another SEC suspension of pubco shares connected to Canada promoting Covid-19 treatment

By Christine Duhaime | April 14th, 2020

Cedar tree drugs for China

The Securities and Exchange Commission (“SEC“) issued an order to temporarily suspend the trading of the shares of another pubco with ties to Canada – this time is was Vancouver-based Roadman Investments Corp. (“Roadman“).

Roadman made statements to the investing public suggesting oil from cedar leaves may be effective to treat Covid-19. There is no known cure for Covid-19.

The shares were suspended over concerns in respect of the accuracy of the disclosure information of Roadman.

Among other things, Roadman filed on SEDAR, a license agreement to acquire a licence for certain intellectual property connected to oil from cedar tree leaves (cedar leaf oil), which the agreement states, in its exhibit, may be effective against the corona virus.

In a press release here, which relies on medical research from an alleged expert paid by Roadman Investments who works at the University of British Columbia, its headline states that its cedar leaf oil helps with Covid-19.

Roadman earlier announced a deal to sell cedar leaf oil to consumers in Asia on WeChat with a Hong Kong company called Shanghai Ingredients Trading Limited. Roadman stated that the principals of that company have imported “premium western” pharmaceutical drugs (e.g., controlled substances) to China for over ten years, and they could, it stated, bring market demand to China for cedar leaf oil products for Covid-19.

Shanghai Ingredients, the corporate entity, was also represented as having commercially imported pharmaceutical drugs from Canada to China for ten years. However, according to the Hong Kong corporate registry, Shanghai Ingredients has only been incorporated for 130 days in Hong Kong – since November 21, 2019.

With respect to Shanghai Ingredients’ business of commercial exportation of premium pharmaceuticals from Canada to China, as stated by Roadman, such substances can only be exported and imported by a licensed dealer under export permits.

Enter another Vancouver publo

Another public mining company in Vancouver called Brigadier Gold Limited, issued a somewhat similar news release here about WeChat sales of drugs to consumers in China and represented that it was meeting with the heads of a provincial government from China in mid-January 2020 to collaborate and discuss investment. During mid-January 2020, China was in lockdown over Covid-19.

SEDAR filings from Roadman and Brigadier Gold both mention deals involving James Foster of Shanghai Ingredients and agreements with another material person named Ranjeet Sundher. Neither issuer appears to have disclosed the cross-over, namely of the same two people with the same plan to use the WeChat platform to sell drugs to the exact same market using the expertise of the exact same one person, James Foster. In the event the cross-over is material to investors, or the apparent statutory conflict under the Business Corporations Act is, neither reporting issuer has made a filing in connection therewith on SEDAR.

And enter another Vancouver pubco

Another Vancouver mining pubco called Bolt Metals also has a cross over of China, James Foster and Ranjeet Sundher. Both of the latter are officers of Bolt Metals according to its SEDAR filings and are striking out to sell products in China.

3–[2–(dimethylamino)ethyl]–4–phosphoryloxyindole

Magic drugs for California

Roadman is also funding a centre in California for psychedelic experiences with magic truffles in case the dispensation and administration of magic truffles by non-medical persons is legalized. Magic truffles, known as psilocybin and chemically as 3–[2–(dimethylamino)ethyl]–4–phosphoryloxyindole, are a Schedule III controlled substance under the Controlled Drugs and Substances Act.

Until Canadian law changes, the Controlled Drugs and Substances Act makes it a criminal offence for a Canadian corporation to provide, give or deliver a controlled drug indirectly whether or not money changes hands.

The City of Vancouver passed a motion here to stop what it called the problem of dirty money in Vancouver from illegal drugs and specifically named psilocybin in the motion.

A few months ago, Roadman was a lithium mining company, and filed a 43-101. Now its a multi-hybrid lithium mining and tree leaf oil exporting issuer that will offer psychedelic experiences on the side.

It’s surprising that a company is allowed to maintain the privilege of being a listed company, which provides access to the securities marketplace, without having one clearly defined business.

The securities marketplace in British Columbia is ready for a change in national policies to require a 43-101 from a licensed medical professional for issuers who raise funds based on claims tied to medicine and medical products. Investors and the investing public, even if highly sophisticated, have no current way of evaluating the legitimacy of medical and scientific claims by the exploding number of issuers now pivoting from mining, cannabis or Blockchain into medicine.

Under the 51-102 disclosure rules, Roadman must immediately file on SEDAR, a news release and within ten days, a material change report to disclose the SEC cease trade.

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SEC suspends trading temporarily of pubco, with ties to Canada, selling a virus killing mask for covid-19

By Christine Duhaime | April 11th, 2020

The US Securities and Exchange Commission (“SEC“) temporarily halted the trading of shares of an issuer called Bioelife Corp. over concerns about the accuracy of its claims, and claims of stock promoters, that it has developed coronavirus protective products, and over potentially manipulative trading activity.

Bioelife is a shell, according to its website. It has a Vancouver accountant, who is its auditor. It used to be a company that operated a mining project in Saskatchewan – now it sells “coronavirus covid-19 prevention products”, such as masks and pain relieving creams.

Excerpt from the Bioelife website

Bitcoin advisor

The company made a number of recent announcements, including that it retained a Bitcoin and Blockchain person as an advisor, who advises VideoCoin, the Vancouver Blockchain company and ICO issuer, and Factom, a Vancouver footprint Blockchain and ICO company that is allegedly facing bankruptcy. One VideoCoin adviser, Jason King, is also the owner of another Vancouver ICO called FlashCoin.

A virus killing mask

Bioelife sells a mask from the US, marketed for covid-19, that is represented as capable of killing viruses – a “virus killer” with a represented effective rate of 99.9%. There is no cure for covid-19 at this time. However, this Canadian scientist is working in a university laboratory to develop a mask that may kill viruses on an exterior mask surface, and even if successful, is 18 months away after trials, and government approvals, the scientist says.

The most effective relief cream available

Bioelife also sells a cannabis oil cream online from the US, that is represented to consumers to be “the most effective relief cream available” that relieves pain symptoms “on contact.” The FDA controlled substance, fentanyl, in topical form (e.g., fentanyl patches), administered to relieve pain in patients with 3rd degree burns or terminal cancer, is considered to be the most effective topical preparation available in the world for pain relief.

“…the most effective relief cream available”

A half-pivot that went kaput

Bioelife did a half-pivot into Bitcoin in 2017, while it was in the mining business in Saskatchewan, paying US$100,000 for a digital currency ICO called KaBoomCoin, and promised in a press release, anonymous payment processing for marijuana purchases in the US that complied with US state KYC (anti-money laundering laws), representing that the company would “actually” become a “GATEKEEPER” (all caps in the original). The domain purchased by the company for the KaBoomCoin went kaput. It’s gone.

Its twitter account is active with few tweets but one tweet is a retweet by Steven Nerayoff, who is the subject of a criminal complaint and also indicted by a Grand Jury for alleged extortion. He is the alleged co-inventor of the first Ethereum ICO (the one before the DAO ICO) and was / is the chairman of a Vancouver Blockchain pubco that was called Global Blockchain Technologies Corp., which raised $64 million and is now also kaput and cease-traded.

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Interpol issues warning that Bitcoin ransomware cyberattacks targeting hospitals could lead directly to deaths in covid-19

By Christine Duhaime | April 7th, 2020

Interpol has released a warning that, during the Covid-19 pandemic, ransomware cybersecurity attacks against hospitals and other institutions and research departments, are expected to increase.

The way ransomware attacks work is that hackers infiltrate and take exclusive control over computer systems, locking out the administrators, and promise to relinquish control of the computer systems on receipt of large payments of ransom in Bitcoin.

Hospitals are a critical infrastructure, although research institutions are not. Because hospitals are significantly being targeted, emergency medical care will be impacted during covid-19, which Interpol believes could lead directly to deaths.

How do you legally pay an illegal Bitcoin payment and not go to jail?

A number of organizations and experts came together a few years ago to develop a response, in consultation with regulators, to enable a Bitcoin payment to be made responsibly, through a digital currency exchange to an extortionist that satisfied the US government, and would not lead to prosecution.

The steps are more involved than this but generally, despite the otherwise illegality of the conduct, a digital currency exchange may allow its services to be used for the payment in Bitcoin to a criminal cyberattacker on behalf of one of its customers in a limited fashion provided:

(a) the digital currency exchange takes or charges no commission or fees, directly or indirectly, on either end of the transaction; and

(b) the digital currency exchange prepares and files a suspicious activity report tailored for digital currency transactions, meaning it includes the wallet addresses, the IP address from its systems, the IP from the emails provided by the customer and such. The customer is the subject of the suspicious activity report even though the customer is also the victim of the ransomware cyberattack.

Also, keep in mind that the customer is usually a corporate entity, such as a hospital, and they must be on-boarded as a customer in order for a digital currency exchange to partake in facilitating the payment and no shortcuts can be made with the identity ascertainment and verification process, even though it is clear that time is of the essence.

The digital currency exchange and its officers, directors and employees are at risk of prosecution and administrative fines for facilitating the payment of a ransomware attack, but it has been generally recognized that by taking the above steps, avoiding the profiting off of a criminal transaction and reporting it to government as soon as practicable, liability can be avoided.

One should bear in mind that the filing of a report to government is the quid pro quo here, and if an exchange or participating person fails to submit the report or submits a report lacking details that would allow law enforcement to trace (clearly only by IP address here, Bitcoin wallet address and such), there is not going to be the protection from prosecution for knowingly facilitating the commission of a criminal offence.

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Vancouver payment processor took US$147 million in proceeds of crime in Bitcoin, according to UK news site

By Christine Duhaime | April 4th, 2020

According to an article published in the digital currency news website Cointelegraph, a Vancouver-based payment processor and digital currency exchange called CoinPayments, took in US$147 million in proceeds of crime.

According to the article, the US$147 million was in Bitcoin and was proceeds from a fraudulent scheme run by a UK entity named Control-Finance Limited. The founder, CEO and director of Control Finance was Benjamin Reynolds, who has since disappeared. Over 1,000 consumers were allegedly defrauded by the scheme.

Global payments processor, CoinPayments

Vancouver’s CoinPayments, located at 808 Nelson Street according to its Instagram account, is a global payment processor, and a custodial digital currency exchange. It offers a darknet option for services, as well as a non-darknet option for payment processing and digital currency trading. Their services are offered in Farsi for Iranian foreign nationals. On Twitter, they posted a tweet stating they have no anti-money laundering or know your client [processes in place], with instant transfer of funds from anywhere in the world from a mobile app. They raised US$10.4 million from investors in a series A round. In 2017, CoinPayments processed US$1.3 billion in consumer financial transactions, making them larger than most credit unions in British Columbia in terms of financial transactional volume processed in the province.

CFTC complaint against Control-Finance

On March 23, 2020, the Commodity Futures Trading Commission (“CFTC“) applied to adjourn certain litigation steps against Reynolds and Control-Finance because Reynolds could not be located to be served with notice of a complaint filed by the CFTC on June 17, 2019.

The CFTC filed for default judgment against Reynolds and Control-Finance. When the CFTC attempted to effect service on the company, it discovered that the company address did not exist, or at best corresponded to a building that was boarded up and abandoned.

The CFTC complaint alleges that Control-Finance and its CEO, falsely claimed to consumers that it was operated by Bitcoin experts and that it manufactured an aura of profitability to lure consumers to send Bitcoin, promising rewards if customers referred “friends and family” to the company. The CEO used social media and YouTube to distribute links to refer new customers, but the promise of a referral payment was bogus and no customer ever received a referral bonus.

The CEO, according to the CFTC complaint, lied to customers and defrauded them by making available a dashboard that customers could sign into online that purported to show the balances in their accounts, which were in reality “sham balances.” The sham balances showed customers non-existence Bitcoin and non-existent referral bonuses credited to them. In actual fact, the balances were zero because the CEO had already misappropriated all the digital currencies, and there was no ability to withdraw funds.

After fraudulently soliciting Bitcoin from consumers, the CFTC alleges that the CEO abruptly terminated operations and began to delete parts of the company’s website and social media postings. The CFTC alleges that the CEO then began to make promises to “deceive customers” further with promises to pay some of the customers back. In reality, he had no intention of ever doing so and “deliberately lulled customers into complacency” with the fake pay-back promises while he worked to move out money from the company and launder it, with US$150 million being moved and laundered in Vancouver, Canada, at CoinPayments and at Toronto-based Shapeshift, and Korea’s Bithumb and Coinone.

The CFTC alleged that the CEO illegally diverted digital currencies deposited by new customers to satisfy some withdrawal requests of existing customers (the definition of a Ponzi scheme).

The CEO at various times, promised consumers that he was preserving their investments and made material misrepresentations including that the company was a safe haven and that the company was profitable, which were untrue and were made to conceal his fraud and entice customers to transfer Bitcoin to the company, according to the CFTC.

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