Integrated Market Enforcement Teams (IMETs) - Three Persons charged with Stock Market Fraud

Backgounder - Integrated Market Enforcement Teams (IMETs)

Toronto, ON. Tuesday September 26, 2006 —The Royal Canadian Mounted Police Integrated Market Enforcement Team (IMET) today arrested and charged three persons following an 18-month investigation.

Charged are:

• Aneillo Peluso, age 47, of Country Club Drive, King City
  Conspiracy to commit fraud over $5000
  Fraud over $5000
  Robbery
  Assault Causing Bodily harm
  Extortion (2 counts)

• Michael Ciavarella, age 44, of Suncrest Blvd, Markham
  Conspiracy to commit fraud over $5000
  Fraud over $5000
  Laundering the Proceeds of Crime
  Possession of the Proceeds of Crime
  Extortion (2 counts)

• Michael Mitton, age 47, of Ottawa - who is facing charges of;
  Conspiracy to commit fraud over $5000
  Fraud over $5000
  Laundering the Proceeds of Crime
  Possession of the Proceeds of Crime
  Extortion (2 counts)

In December, 2004, the GTA IMET began work on this file following a referral from the Ontario Securities Commission (OSC) dealing with trading irregularities by a group of individuals in a security known as Pender International Inc. Authorities are alleging that this case mirrors a version of a “Pump and Dump” scheme.

The financial fraud known as a “Pump and Dump” involves artificially inflating the price of a stock or other security through fraudulent promotion in order to sell at the inflated price after creating artificial demand.

“All of the measures put in place to ensure the integrity of our capital markets have proven to be very effective,” stated Superintendent Don Panchuk, Officer in Charge of Toronto IMET. ”The OSC issued the Cease Trade Order almost immediately upon hearing of this group. Today, after a thorough investigation IMET has laid charges against these three individuals. By recognizing the threat immediately, and acting together, we were able to avert a potential fraud that would have been capable of netting over $360 million.”

"This project demonstrates the cooperation amongst Canada's securities regulators and police agencies," said David Wilson, OSC Chair. "Our referral in this matter sends a message that manipulating Canada's capital markets for personal gain will not be tolerated."

The two persons arrested will appear today at Old City Hall in Toronto.

One of the RCMP’s strategic priorities for 2006/07 is economic integrity. IMETs, in cooperation with partners, support economic integrity by their integrated, project-status approach to ensuring a safe and secure economy for Canadians.

Project status investigations make use of a full team of integrated experts to resolve files that are judged to be priorities based on factors such as the value of the capitalization put at risk and the number of victims. The national IMET program currently has several ongoing project status capital markets fraud investigations across Canada.

For more information, please visit http://www.rcmp.ca/fio/financial_crime_e.htm.

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Backgounder: The investigation and prosecution of capital markets fraud in Canada requires an integrated approach to support early detection and timely enforcement. The need to integrate resources and initiate effective intelligence gathering activities for early detection was heightened by corporate scandals in the United States, such as Enron and WorldCom.

In 2003, The Government of Canada provided up to $30 million a year over five years to the Royal Canadian Mounted Police (RCMP) and federal partners to detect, investigate and deter capital markets fraud. As a result, nine International Market Enforcement Teams (IMETS) are operational in Canada - three in Toronto and two are located in Vancouver, Montreal and Calgary respectively. The teams consist of police officers, lawyers and other financial investigative experts, such as accountants. The teams are RCMP-led and they work closely with other federal government departments and various securities industry regulatory agencies.

Police officers chosen for IMET work are highly qualified financial crime investigators. The RCMP ensures that these investigators receive additional markets-related training, are kept abreast of the latest techniques and legal developments in their field, and are dedicated to the teams for specified periods of time.

All teams have a presence in the key financial districts of their cities. The teams have a quick-start capability, allowing them to respond to instances of capital markets fraud anywhere in Canada.