Watchdog has eye on share sales company

By PAUL PANCKHURST

Benjaman J. Mauerberger's last sharebroking firm in Auckland, Mauer-Swisse, went bust after featuring in an Australian Securities and Investment Commission probe into cold-calling scams.

Now he is back. Bergers Securities, a "specialist sharebroker" with a claimed 17 staff here and an offshoot in Sydney, has taken up residence in serviced offices on floor 27 of the PricewaterhouseCoopers Tower in Auckland.

A staff member says the Auckland operation "got cracking before Christmas - that's when everybody came aboard".

The company cites a British company, Bergers Holdings (UK), as also being connected.

Tenants in the office tower know Bergers mainly for the flashy sports cars in the parking spots downstairs.

The company's websites Bergers Securities NZ and Bergers Securities Australia - look professional and depict an expertise in fields such as global sharemarket investing, research, venture capital and private equity.

The Business Herald became interested in Bergers after learning that a staff member had pushed shares in an obscure United States company, ITec Environmental Group, to local investors despite knowing little about shares or sharemarkets.

The staff member's background before joining Bergers was sales, not sharebroking.

That combination - an obscure stock and a salesman with a lack of sharebroking expertise - is more typical of a so-called boiler room, where a sales force pushes "house stocks" to as many investors as possible, than a typical sharebroking operation.

The Securities Commission head of enforcement, Norman Miller, refused to comment, but the Business Herald has confirmed that the commission is investigating the company.

Asked to comment on the investigation, the company's head and sole director, Clinton Braude, said: "I have no comment at this stage - I would be curious as to where you gained that information, however."

Braude is a former member of the funds management industry in South Africa.

Companies Office records show Mauerberger holds 100 of 198 shares in Bergers, a company incorporated in February last year. The files do not show who holds the other 98.

Braude and Bergers each have a sharebroking licence - a document obtained by filling out forms at the district court and paying $250 - but are not registered with the New Zealand Stock Exchange.

Inquiries by the Business Herald reveal one of Mauerberger's associates, Alan Goldman, 47, of Glendowie - who was the sole director of Mauer-Swisse - is researching United States stocks for Bergers.

Goldman was last year stripped of his passport and held in Australia for 11 days as part of an Australian Securities and Investment Commission probe.

In November, he was convicted of four charges of offering financial services on behalf of Mauer-Swisse without a licence and permanently restrained from offering securities or carrying on a financial services business contrary to the Corporations Act.

Goldman is originally from South Africa, describes himself as a New Zealand citizen and, according to court documents, is Mauerberger's uncle.

A New South Wales Supreme Court judgment from last year fleshes out some of Mauerberger and Goldman's past activities.

Mauer-Swisse was incorporated in Auckland in January 2001, obtained a sharebroker's licence in late 2001 and went into liquidation in October last year.

Ninety-nine of 100 shares were held by Mauerberger.

The company's sole director was first Mauerberger, then Goldman.

During the ASIC probe and court case, contradictory statements from Goldman put the number of administrative staff at zero or three.

According to the judgment, Mauerberger and Goldman had business dealings in 2001 with the principals of Orbit E-Commerce, a Canadian company whose shares were earlier sold to Australian investors in an apparently Bangkok-based boiler room scam.

The classic "boiler room" is a small army of phone jockeys, cold-calling investors to sell "house stock", typically thinly traded and obscure shares that the company buys or sells as a market maker.

The judge who heard the case noted that Orbit E-Commerce shares were not listed on any stock exchange, their on-sale was limited by transfer restrictions, and the price reportedly collapsed from about US$4.50 to 10USc.

The Mauer-Swisse and Orbit E-Commerce connection emerged when a press release - datelined Toronto, October 25 - appeared on the Orbit E-Commerce website in 2001.

It said Orbit E-Commerce had concluded "two option agreements with Mauer-Swisse Securities Ltd of Auckland, New Zealand" for Mauer-Swisse to raise US$16 million ($28.7 million) by selling Orbit E-Commerce shares "to its retail and institutional clients in Australia".

The press release said Mauer-Swisse offered "a wide range of brokerage services to retail and institutional clients, including blue chip investments on all major international stock exchanges, access to top performing international mutual funds, equity trading, access to captive initial public offerings, and balanced portfolio and asset management".

It added that Mauer-Swisse "represents both publicly listed and private companies and brokers their stock through its international network of offices, provides venture capital and assists companies to list their shares on public markets".

The court judgment said the impression conveyed by those descriptions was "totally false".

The press release led to ASIC emailing Mauer-Swisse in November, pointing out the company did not have an Australian securities licence and could face legal action.

Mauerberger and Goldman responded that the press release was unauthorised and the share offer would not take place.

ASIC evidence showed the pair went on to contact Sydney investors who held Orbit E-Commerce shares, urging them to sell through Mauer-Swisse and to invest the proceeds - with extra sums - in investment schemes promoted by Mauer-Swisse and claimed to give 25 per cent to 30 per cent returns.

Detaining Goldman for the ASIC to complete its investigations, the court found "strong prima facie evidence of a wide-scale fraud perpetrated or connived at by a foreign national, whose return to Australia to submit to investigation is dubious".

Contrary to that impression, Goldman's lawyer had argued the only actual or potential claim against Goldman or Mauer-Swisse was for about US$12,000.

The Business Herald has not been able to contact Mauerberger.

The residential address that he listed for himself on the Companies Office files for both Mauer-Swisse and Bergers was the former address of Mauer-Swisse itself - serviced offices in Cook St, Auckland.