Mark Valentine, the former Chairman of Thomson Kernaghan, a Toronto, Canada based brokerage firm, pleaded guilty yesterday to one count of securities fraud in United States District Court, Fort Lauderdale, Florida.
The announcement was made today by Marcos Daniel Jiménez, United States Attorney for the Southern District of Florida, and Jonathan I. Solomon, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Miami Field office.
The defendant faces a maximum term of ten years’ imprisonment, to be followed by a term of supervised release, a fine of up to $250,000 and the imposition of court costs. Sentencing is presently scheduled for May 21, 2004, before United States District Court Judge James Cohn.
This conviction stemmed from a two-year undercover investigation conducted by the FBI, named Operation Bermuda Short, which targeted corrupt practices in the securities industry in South Florida. An agent of the FBI, acting in an undercover capacity, posed as a corrupt securities trader employed by a United States-based representative of a fictitious foreign mutual fund that had a number of investors who had invested millions of dollars. The undercover agent claimed that he worked with two due diligence officers whose job was to research and approve which securities the agent would be allowed to purchase on behalf of the mutual fund’s investors. The undercover agent also claimed that a purported manager of the mutual fund was corrupt and had knowledge of the agent’s corrupt activities concerning the fund.
In the part of the investigation involving Valentine, the defendant had agreed to arrange the sale of stock in a publicly traded company called Softquad Software Ltd., a Delaware based holding company, to the fictitious mutual fund, knowing or believing that approximately 25% of the sale price would be paid back to the brokers and manager of the fund in the form of an undisclosed commission or “kickback.” Valentine had also been told that the due diligence officers of the fund had been paid off to approve the sale.
Mr. Jiménez commended the investigative efforts of the Federal Bureau of Investigation, as well as the cooperative efforts of the Southeast Regional Office of the United States Securities and Exchange Commission and the Criminal Prosecution Assistance Group of the NASD. The case pertaining to Valentine is being prosecuted by Assistant United States Attorneys Edward C. Nucci and Roger H. Stefin.