Lighting firm involved in shadowy stock dealings

Catching up on some of the stock market developments this summer, I see that the Vancouverbased Mantra Venture Group Ltd. is taking one of its subsidiaries, Climate Esco Ltd., public on the OTC Bulletin Board.

Mantra is the brainchild, if you can call it that, of Vancouver promoter Larry Kristof, who knows a thing or two about promoting stock.

From 2003 to 2005, he worked as president of a similarly named private company, Lexington Communications Ltd., which provided investor relations services to public companies.

In 2007, Kristof formed Mantra Venture Group, whose stated business purpose was to develop "technologies and services that reduce the environmental impact of energy production and resource consumption."

He then hired Vancouver lawyer Penny Green to file a registration statement with the U.S. Securities and Exchange Commission. This qualified for resale several million shares of relatively cheap seed shares that the company had sold to a tightly knit group of investors.

Among them was Eva Dudas, who served as president of K-Care Nutritional Products Ltd., a sham bulletin board company that went public (once again with the help of lawyer Penny Green) on the ridiculous premise that it was going to sell bottled water to dogs.

Another was Andrea Molnar, an ESL teacher who served as president of another silly bulletin board company called EZ English Online Inc. (Green also helped usher this company onto the bulletin board.) Molnar was also a seed shareholder in another Green-assisted bulletin board deal called Novori Inc. This company made headlines in October 2008, when Vancouver police alleged in search warrant information that Vancouver promoters Arif Jamani and Bob Vukovich, and Global Securities broker Scott Lower had providing secret commissions to an undercover FBI agent posing as a broker who could muster wealthy clients to buy Novori shares.

The criminal investigation went nowhere, but in January this year, the SEC filed a civil complaint in New York naming Vukovich in a similar bribery scheme involving an unrelated stock. That case is still in progress. The regulatory organization for Canadian stockbrokers, meanwhile, banned Lower for life after he refused to answer questions about the matter.

Another Mantra shareholder was Vancouver realtor Mikhail Ratchkovski. He and Andrea Molnar were shareholders in another bulletin board sham called Fitmedia Inc., which had its own list of suspicious seed shareholders.

Among them was a Bahamian company called Draycott Investments Inc., which was also a shareholder in Novori and K-Care. Draycott was represented by Lawrence Collie, who works for Elco Bank & Trust Co. Ltd., a Bahamian company that helps people set up companies in offshore tax and secrecy havens.

In any event, you get the picture: a closely connected group of investors who pop in and out of penny stock deals that may vary in their themes, but never seem to go anywhere.

Since its inception in January 2007, Mantra has generated only $22,504 in revenues while racking up more than $6 million in losses. The stock, which traded at over a dollar when it first went public, affording seed shareholders with the opportunity to make big trading profits, is now languishing at seven cents.

Rather than pull the curtain on this dud, Kristof has decided to spin off one of Mantra subsidiaries, Climate Esco, as a publicly traded company on the bulletin board.

Climate Esco sells and installs LED lighting, or at least that's the plan. Since its inception in July 2007, it has generated only $2,258 in revenues. Its total assets are only $105,088 against $83,534 in liabilities. There are hotdog stands bigger than this.

Penny Green did not file the registration statement. She vacated this line of business, I suspect because she became tired of seeing her name in this column. But there are many familiar names among Climate Esco's seed shareholders.

The second largest, with 2.1 million shares, is Ilati Enterprises Corp, which is owned by Andrea Molnar.

Third largest, at 1.5 million shares, is InSpace Inc., which is owned by Kerrie McHugh, who is the wife of banned broker Scott Lower. She also owns 300,000 shares directly.

Fourth largest, with 1.6 million shares, is Elco Securities, represented by Isaac Collie, which is clearly connected to Elco Bank & Trust, represented by Lawrence Collie, our faithful offshore facilitator.

Fifth largest, with 1.17 million shares, is Amped Consulting Ltd., which owned by Mikhail Ratchkovski. He owns another 10,000 shares directly.

But the largest shareholder is Naoleto Management Inc., with 2.16 million shares. According to Climate Esco's registration statement, these shares are controlled by "Carlos Cheveilli," but this is a misspelling. It is actually Carlo Civelli, who has been a major player in Vancouver junior stocks for several decades.

From 1988 to 1990, Civelli was a director of Swiss subsidiary of Vancouver-based Yorkton Securities. During the 1990s, Yorkton sponsored hundreds of penny stock issues. In what became a very familiar pattern, many of these companies, while still in the formative stages, would privately sell large blocks of stock to some of the brokers and their close associates, including Civelli's private management company, Clarion Finanz. Then the promoters would pump up the stock price, enabling the early investors to cash out at huge profits.

In October 1994, Civelli made headlines when British inspectors who were probing suspected insider trading surrounding a proposed takeover of Consolidated Gold Fields PLC reported that Civelli had been involved in suspicious share transactions and possible money laundering. He was never charged.

More recently, in October 2009, Canadian brokerage regulators accused Blackmont Securitas (the successor to Yorkton) with paying undisclosed commissions to Civelli for placing huge trade orders for seven banks domiciled in Switzerland and Liechtenstein.

The matter concluded in January this year when Blackmont was ordered to pay $732,500 in fines. But several crucial questions remain unanswered, such as what stocks Civelli was trading, for whom he was trading them, and why he was trading them through offshore banks at Vancouver brokerage firms.

Similar questions hover over Climate Esco. Why are Civelli and these other penny stock players buying large quantities of a company that has no past and little prospect of a future? This company may be in the LED business, but there isn't a lot of light shining on it.

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