By Caribbean News Now contributor
NEW YORK, USA -- Authorities in Canada and the US are searching for John Babikian, a Montreal man accused of running a penny stock fraud known as “scalping” and who reportedly has passports from four countries including St Kitts and Nevis, the latter acquired under that country’s citizenship by investment programme.
According to a complaint filed in March in federal court in Manhattan by the Securities and Exchange Commission (SEC), Babikian used two websites to disseminate e-mails to approximately 700,000 people shortly after 2:30 pm on the afternoon of February 23, 2012, and recommended the penny stock America West Resources Inc.
What the e-mails failed to disclose among other things was that Babikian held more than 1.4 million shares of America West stock, which he had already positioned and intended to sell immediately through a Swiss bank. The APS emails immediately triggered massive increases in America West's share price and trading volume, which Babikian exploited by unloading shares of America West's stock over the remaining 90 minutes of the trading day for ill-gotten gains of more than $1.9 million.
According to court documents, Babikian ran his affairs solely with specially encrypted Blackberry smartphones that he used for a few days or weeks before he destroyed and replaced them. After destroying each smartphone and breaking it into multiple pieces that he tosses into different garbage cans “it is absolutely impossible … to access the information that they hold”.
Babikian also reportedly has a special portable device from HSBC Bank in Hong Kong that lets him make international wire transfers from anywhere in the world.
According to the SEC, Babikian was actively attempting to liquidate his US assets, which he held in the names of “alter ego front companies” and was seeking to wire the proceeds offshore.
The SEC sought and obtained a court order, among other things, freezing Babikian's assets.
US District Judge Paul Crotty in Manhattan on April 21 refused to disturb the asset freeze he had imposed on March 13 against Babikian, and again ordered him to account for his assets and respond to the SEC's allegations.
"The evidence establishes a strong likelihood that Babikian committed securities fraud through the alleged pump and dump scheme," Crotty wrote. "There is also a high risk that, unless enjoined, Babikian may commit the alleged fraudulent acts again, given his control of penny stock websites and his aptitude at using anonymous email accounts, alter-ego front companies, and mass email distribution systems."
On April 30, Babikian won a reduction in the size of the asset freeze against him and also had writs of attachment against his fractional interest in a NetJets plane, two houses in Los Angeles, and a vineyard vacated.
According to court documents, Babikian left Canada in 2012 following tax evasion allegations and Revenu Québec said it had won a judgment last year to recoup millions of dollars of back taxes from Babikian.
Babikian reportedly owns significant real estate, bank accounts and a number of shell companies in St Kitts and Nevis as well as other locations such as The Bahamas, Belize and the British Virgin Islands.
Babikian is yet another on a growing list of dubious individuals that have purchased diplomatic and other passports issued by St Kitts and Nevis that include:
• Dr Arthur Porter, the man behind what a Canadian police investigator described last week as “the biggest corruption fraud in the history of Canada” and who is currently fighting extradition from Panama http://www.caribbeannewsnow.com/topstory-St-Kitts-Nevis-economic-citizen-split-%2422.5-million-corruption-payout-21504.html
• Teodoro Nguema Obiang Mangue, nicknamed Teodori, who is the son of President Teodoro Obiang Nguema Mbasogo of Equatorial Guinea. In 2011, the United States government filed a corruption charge against him, seized US$70 million of his assets. In July 2012, the French police filed a warrant for his arrest, and one month later they seized his mansion in Paris, as well as his cars.
• Rustem Tursunbayev, who is wanted for embezzlement in Kazakhstan.
• Alireza Moghadam, an Iranian, entered Canada with a St Kitts and Nevis diplomatic passport, claiming untruthfully that he was there to meet with officials, including the Canadian prime minister. Moghadam reportedly told Canadian immigration officials that he paid $1 million for his diplomatic passport.
• Godswill Obot Akpabio, the governor of Akwa Ibom state in Nigeria, who reportedly also carries a St Kitts and Nevis diplomatic passport. Akpabio has been accused of orchestrating secret and silent killings, assassinations and unprecedented abuse of power.
• Oluwaseun Ogunbambo, who is facing trial in Nigeria for obtaining money by false pretences, forgery, using false documents and conspiring to fraudulently obtain money from the Nigerian government. A judge in Nigeria refused him bail in October 2012 because of Ogunbambo’s criminal past and his “crooked history of illicitly obtaining international passports”, and with different identities.
• Pourya Nayebi, Houshang Hosseinpour and Hushang Farsoudeh, all Iranian holders of St Kitts and Nevis economic citizenship, are at the centre of a US Treasury Department investigation into companies in Switzerland and elsewhere that are evading US sanctions against Iran.
The St Kitts and Nevis citizenship by investment programme offers citizenship to a non-citizen who either invests in designated real estate with a value of at least US$400,000 or contributes US$250,000 to the St Kitts and Nevis Sugar Industry Diversification Foundation.
According to Douglas, the programme rakes in more than $100 million annually.
However, on May 20, 2014, the US Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an advisory to financial institutions stating that foreign individuals are abusing the St Kitts and Nevis programme for the purpose of engaging in illicit financial activity.
Specifically, FinCEN believes that illicit actors are abusing the programme to acquire citizenship in order to mask their identity and geographic background for the purpose of evading US or international sanctions or engaging in other financial crime.