Calgary (August 31, 2020) – The Alberta Securities Commission (ASC) announced that they found that Cem (Jim) Can and Charles Michael Miller engaged in a fraudulent pump and dump scheme using the carbon-offsets marketing company Bluforest Inc. while breaching Alberta securities law. A panel of the regulatory agency handed down their decision on August 24 in which they ruled on the misconduct that occurred between December 2010 and November 2013. The hearing management session regarding sanctions against Can and Miller will be held on September 11.
An Alberta Securities Commission (ASC) panel found Cem (Jim) Can and Charles Michael Miller perpetrated fraud while engaging in a pump and dump scheme according to a press release from August 27. They were breaching Alberta securities law manipulating the shares of Bluforest Inc.
The pump and dump scheme
Can and Miller were accused of using Bluforest Inc., a carbon-offset marketing company, as a vehicle for a false promotional campaign to sell secretly-controlled shares into the market. Bluforest was a Nevada-based company, formerly known as Greenwood Gold Resources Inc. Miller was a Greenwood director and its CEO as of April 2012. In May 2012, he was appointed as acting chief financial officer and treasurer. They had a Calgary office and claimed to have acquired hundreds of millions of dollars in Ecuadorian property rights for use in the evolving carbon credits market. The ASC said it became aware in mid-2013 that Bluforest shares were trading in large volumes.
Can ran Mainland Investments Ltd., which became a consultant of Greenwood in March 2012. He also controlled several other companies including a brokerage firm located in Belize. Can acquired control of Bluforest in December 2010 and the company was quoted for trading in 2012 and 2013 on U.S. over-the-counter quotation boards.
Between December 2010 and November 2013, Can and or Miller were alleged of causing Bluforest to enter into the Mainland Consulting Agreement – a company that Can controlled – for a yearly fee of US$1 million. Thereafter, they issued an additional US$100 million in Bluforest shares for $900,000 of fictitious debt to other international businesses, which were owned or controlled by Can and Miller, according to the ASC.
Then, they transferred Bluforest shares to a brokerage in Belize for sale into the market causing Bluforest to enter into non-arm’s length agreements with Ecuadorian entities owned or controlled by Miller or Can, and positively promoting these agreements in press releases. Non-arm’s length agreements are transactions where the buyers and sellers have an existing relationship, whether business-related or personal.
Subsequently, Can and Miller secretly controlled the majority of Bluforest free-trading shares and engaged in a promotional campaign including promotional newsletters in order to sell Bluforest shares into the artificially inflated market for profit. The ASC investigators submitted that these acts would, on their own, support a finding of fraud, but collectively they establish ‘a dedicated and intentional campaign of deception’.
ASC: Pump and Dump schemes are ‘objectively dishonest and antithetical to the operation of a fair and efficient capital market’
On August 24, an ASC panel ruled that Can and Miller engaged in a course of conduct that perpetrated a fraud by participating in the pump and dump scheme. According to the ASC, Can also illegally distributed securities to Alberta investors and engaged in a course of conduct that resulted in or contributed to an artificial price for Bluforest securities and that Blueforest made misrepresentations.
The ASC stated in their decision that pump and dump schemes ‘are calculated to enrich the scheme’s architects by deceiving capital market participants as to the value of the target company’s shares, at least for enough time to allow those responsible to sell their shares.’
The panel made clear that they found that Can and Miller were both centrally involved in virtually all aspects of Bluforest’s pump and dump scheme and that they sold a significant number of the shares they controlled during a promotional campaign directed by Can.
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The investigation resulted also in allegations against two other individuals, Farhang (Fred) Dagostar Nikoo and Norman David Anderson. Nikoo was a financial planner from Alberta. He was listed as a ‘Co-Founder’ of Bluforest, although it was unclear from the evidence whether he formally held any position with Bluforest, ASC said. Anderson is a lawyer at a Calgary-based law firm, which acted on behalf of Can since 2002. They respectively resolved the allegations by settlement.
The ASC panel set the hearing management session for Can and Miller on September 11 to set a timetable for submissions with respect to sanctions.