SEC: Freeze Spaniard's assets

A U.S. Court in Tacoma ordered the freezing of the assets of a resident of Spain who allegedly made more than $13 million by fraudulently hyping the stock of a Bremerton-based company, quickly dumping its shares and stashing the proceeds in Andorra.

The Securities and Exchange Commission asked the Western District of Washington court to take action against Francisco Abellán of Barcelona and GHL Technologies, a small company that specializes in installing GPS tracking devices and is now named NXGen. NXGen chief executive Gene Hew-Len is also named in the lawsuit.

The SEC complaint was prompted by a tip from Andorran authorities that Abellán — who said he didn't benefit from the stock sales and proposed to settle with the SEC — was trying to get some of the money out of the European principality.

The court also requested the help of Andorran authorities.

The action underscores the complexity of pump-and-dump schemes, many of which are operated by far-flung networks of stock promoters who can move information and capital across borders to take advantage of investors in loosely regulated U.S. markets.

Earlier this month the SEC accused G. Brent Pierce, a Vancouver, B.C., stock promoter, of illegally reaping millions from the sale of unregistered stock in a firm called Lexington Resources. Last year, Pierce paid for the promotion of the shares of CellCyte Genetics, a Bothell-based biotech firm which traded in the U.S. pink sheets and in the Frankfurt, Germany, stock exchange.

But regulatory agencies are also increasingly willing to cooperate with their foreign peers.

"Globalization works both ways," said SEC staff attorney Robert Tashjian.

Hew-Len did not respond to a voice mail left at his company. The SEC didn't ask for a freeze on Hew-Len's accounts, Tashjian said.

Abellán didn't reply to an e-mail sent Friday.

International scheme

The SEC alleged that Hew-Len and Abellán engaged in an international scheme to defraud U.S. investors. Hew-Len met Abellán on the Internet while looking for ways to take his fledging company public. In late 2005 and early 2006, the pair converted the small-time Bremerton operation — which had little revenue and installed GPS tracking devices in police department and corporate fleets — into a publicly traded company registered in the pink sheets, a high-risk way of trading shares without having to comply with the expensive oversight imposed by major markets such as the New York Stock Exchange of Nasdaq.

Abellán paid Hew-Len and the firm $500,000 in exchange for millions of shares, without disclosing the transaction to regulatory authorities.

In April 2006, Abellán paid a Wichita, Kan., printer nearly $1 million to print and distribute millions of mailers touting the stock among U.S. investors, according to the complaint. At the same time, Abellán and the company coordinated a barrage of news releases exaggerating the terms of contracts entered with cement makers Titan America and Cemex, the complaint said.

Shares jumped from $1.83 in early May to a high of $8.80 in June. Abellán sold his shares in late May and stashed some $13.5 million in proceeds in Andorra, the complaint alleges.

The stock traded at less than a penny in August, the SEC said.

Abellán said in an affidavit filed in July that he didn't benefit from the sale of the company's stock. After being investigated by the SEC, he proposed to pay a $1.8 million settlement without admitting guilt. But on July 31, Andorran authorities told the SEC that Abellán controlled the accounts where the money from the sale of GHL Technology shares was deposited, and where some $2.4 million remain. This week, he tried to transfer $600,000 to a Swiss bank account, according to court filings.

E-mailed threats

Abellán sought to distance himself from the company by asking the mailer printer not to disclose his name or address. But in 2006, a Dow Jones Newswires story revealed the link between Abellán and the stock promotion.

After being contacted by the news-service writer, Abellán sent an e-mail to Paula Argento, the lawyer who helped take GHL Technologies public, questioning whether she had broken their confidentiality agreement.

Argento found the exchange threatening, according to the SEC.

According to the court filings, one e-mail said: "Trust me, when someone tries to damage me some way, sooner or later pays for it ... When you touch me, you make many people unhappy, really upset, and they live not too far from you.

"I just hope you don't give them more arguments to consider taking any actions. Playing with fire is highly dangerous, didn't your parents ever tell you?" the e-mail concluded.

The address the e-mail was sent from belongs to Abellán Hnos., a Barcelona-based family-owned printing service. The company was founded in 1945 by Francisco Abellán — and is now run by his sons, Francisco and Jordi, the Web site said.