An English court has sent two men Jeremy Linsdell and John Miles to prison for fraudulently trading the stock of a Utah-originated blind pool corporation, GSS Venture Capital Corp.
GSS Venture has links to a number of people and companies associated with Utahn Michael Drew Wright. Wright, who has not been charged with any criminal wrongdoing, has been been named in U.S. court documents as a target of an IRS fraud investigation in which he's alleged to have created several blind pools and manipulated their stock.The IRS has alleged that one of Wright's business associates was disbarred New York lawyer and former stockbroker Thomas F. Quinn, the same man authorities suspect of having masterminded a network of European boiler rooms now under investigation in several countries. Quinn has been held in a Paris prison awaiting trial since his arrest last July on fraud charges.
Authorities say more than 10,000 investors worldwide lost at least $500 million on stocks - GSS Venture among them - that they bought from the European boiler rooms.
The two men convicted in the London case were accused of defrauding 400 to 500 investors, most of them in the United Kingdom, of more than $1.3 million between October and December 1986 with their trading of GSS stock, said Chief Inspector Norman Good, of the London Metropolitan Police Fraud Squad. A third defendant was acquitted, and a fourth died during the proceedings.
Linsdell, who got a three-year sentence, was chairman, and Miles, who got 18 months, was a director of a London-based brokerage firm called Financial Management Services Ltd., which was closed by British authorities in 1987, said Good.
The police inspector said Quinn was known to have frequented the London offices of FMS and to have issued instructions to the brokerage.
FMS sold stock of GSS Venture, representing it as shares of a company called GSS-I-Point, which didn't exist, Good said.
GSS Venture had at one time sought to acquire the parent company of a Swedish corporation called I-Point Biotechnology A.B. But Dietrich Herzog, the parent company's largest shareholder, had backed away from the deal when GSS Venture failed to come through with promised financing, according to a lawsuit filed by Herzog.
Nevertheless, brokerage houses "which seemed to have been part of Quinn's network" began selling GSS stock and telling investors the I-Point acquisition had taken place when it had not, said James Murray, one of I-Point's lawyers.
Herzog sued and got an injunction to stop GSS from claiming ownership of I-Point. Then Quinn - who said he had an interest in the trading of GSS shares - contacted Herzog to work out a settlement, Murray said.
The case was settled after negotiations with then-GSS Venture officer Carl Porto, Fort Lauderdale, Fla. Porto's lawyer told the Deseret News that Porto is a longtime friend of Quinn, but the two have had no business dealings in the past five years.
Porto was not one of the original officers of GSS Venture - he had taken office after the company was first created in Utah. One of the original officers was Terri Graff, daughter of a Michael Wright associate - Arthur Packard Condie.
Condie told the Deseret News that GSS Venture came out of what he first described as "Michael Wright's office" - he later clarified that he meant Executive Services, a Murray-based secretarial and bookkeeping services firm that the IRS claims is linked to Wright.
Condie said he got his daughter and son involved as shareholders and his daughter as an officer of GSS Venture because it looked like a good way to make a few dollars when the blind pool corporation merged with a private company. "But at the time that it was done, I didn't particularly know all the details."
GSS Venture eventually was sold, Condie said. Neither Condie nor his daughter can recall how the connection was made or who the buyers were. But Quinn's friend Porto became its new secretary, and a Porto associate took over as president.
Porto later became president, but now has resigned from GSS Venture because of a settlement with the Securities and Exchange Commission in a separate case, his lawyer said.
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Terms of art
Boiler room: A room equipped with many telephones, used for high-pressure sales of securities and other products, which may or may not have value.
Blind pool: (Also called blank check) A corporation that makes its initial public stock offering with little or no stated business purpose. Usually potential investors are just told management will seek profitable ventures with which to merge or otherwise combine.