Crestview Exploration Inc. headquartered in this building in downtown Calgary on June 10, 2020.Todd Korol/The Globe and Mail
Crestview Exploration Inc. , the Calgary gold company targeted with a phony stock promotion campaign that kicked off an RCMP-led fraud investigation in Canada last spring, was recently the subject of a similarly misleading promotional push in Europe.
Last month, a German stock promotion website called Pennystocks.de blasted out a series of posts to its subscribers touting shares in Crestview. Written in German, the posts contained a litany of false statements, exaggerations and half truths about the tiny exploration-stage company, which trades for pennies on the Canadian Securities Exchange and the Frankfurt Exchange.
“I’ve read this company’s ’43-101′ reports (This is the official government-approved report issued by a certified geologist in Canada),” a person identified as stock promoter Torsten Schmidt wrote in a Pennystocks.de e-mail blast on Feb. 22. “The company is sitting on billions of dollars in gold.”
Last spring, Canada Post delivered almost identically worded materials touting Crestview in letter form to homes across Canada.
“Looking through Crestview Exploration’s 43-101 reports (that’s the official government-approved reports that certified geologists issue)” said the letter from a person identified as promoter James Campbell. “Crestview is literally sitting on billions of dollars of precious metals.”
But far from sitting on billions of dollars in gold, Crestview, whose market value is $12-million, holds no precious metals reserves.
In June, the RCMP, the British Columbia Securities Commission (BCSC) and the Alberta Securities Commission (ASC) said they had started an investigation into possible securities market violations related to the Crestview letters.
The trading patterns last month in Crestview, and after last spring’s letters in Canada, conform to those of a pump-and-dump stock manipulation. In such schemes, bad actors buy shares in a thinly traded stock, then spread false information that pumps up the price and trading volume. Taking advantage of the transient surge in volume, the con artists sell huge amounts of stock at inflated prices, leaving legions of honest investors holding near-worthless securities.
The German promotional materials contained several other misleading passages that closely resembled the letters sent in Canada.
“The area where their mine is located has already produced more than 100 billion euros in metals,” one of the German posts said, echoing the Canadian letters, which stated that the company’s operations were in an area that has “produced more than $100-billion of gold.”
Crestview does not own any operating gold mines.
The company’s chief executive officer, Glen Watson, told The Globe last year that nobody at Crestview had anything to do with the letters in Canada, and they had caused the company great harm. When asked this week about the newly distributed German materials, Mr. Watson declined to comment.
After the first post from Pennystocks.de was sent out on Feb. 22, shares in Crestview shot up by 22 per cent on the Canadian Securities Exchange amid trading volume of 1.3 million, four times higher than usual. The next day, after the second Pennystocks.de post was published, Crestview plummeted by 48 per cent, with trading volume eight times higher than normal. There was no material news release from the company on either day that explained the stock moves.
“Alberta RCMP are aware of the stock promotion in Germany,” RCMP spokesperson Fraser Logan wrote in an e-mail to The Globe this week. When asked if the RCMP was looking into whether the same entity might be behind the materials distributed by PennyStocks.de and the letters last year in Canada, Mr. Logan said the RCMP would not publicly speculate on that.
Owned by U.K.-based Latitude Media Group Ltd., PennyStocks.de was incorporated in December. It lists its address as 170 Knightsbridge in London, which according to Google Maps, does not exist. PennyStocks.de did not respond to a request for comment for this story.
Canada has a long history of pump and dumps in the resource sector, but a dismal track record in enforcement. Maureen Jensen, former chair of the Ontario Securities Commission, told The Globe last year that the lack of a single securities regulator, and the fact that Canada’s securities laws vary by province, impede enforcement.
This week, Canada had a rare win in a pump-and-dump case. The ASC imposed penalties totalling $2.7-million and levied permanent capital markets bans against Cem (Jim) Can, Charles Michael Miller and Bluforest Inc. for perpetrating a pump-and-dump scheme dating back to 2010. Bluforest took over a gold exploration company and morphed into a carbon credit marketing company.
Bluforest was “the subject of an orchestrated promotional campaign in which dozens of stock promoters disseminated material rife with hyperbole urging immediate purchase,” the ASC said in its decision this week.
Cynthia Campbell, director of enforcement at the ASC, called pump-and-dump schemes a “deplorable form of securities fraud.”
Ms. Campbell was among the many Canadians who last year received the Crestview promotional letter.
The ASC and the BCSC declined to comment for this story, saying they don’t discuss the status of an investigation.
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