Ex-Wall Street Trader’s Shadow Raises Questions In Canada

[Policing Wall Street]

The lesson here is always know who you’re getting in bed with.

Recently I attended a small cap conference--companies with a low market value with perhaps a promising product.  It was a two day affair.  This year the attendance was perhaps one third of that of last year- a reflection of economic conditions.

I attend these conferences and I listen. Usually I read the Annual Report and 10-K, which disclose the financial picture of the company.

But this year was different.  This year one of the companies, which did a presentation, was NXT Energy Solutions, Inc.  Now this company is familiar to me, as is the name of the CEO, George Lisziascz.  NXT’s headquarters are in Calgary, Canada.

My familiarity with NXT extended to its previous incarnations as Pinnacle Oil International in 1996; Energy Exploration Technologies, Inc in 2000; and finally, NXT Energy Solutions, Inc. in 2008.  Usually corporate name changes are not good- unless it involves Exxon to Exxon-Mobil or something of that nature.

So I quickly went to the table where the annual report and 10-K are usually displayed- but there were none- just a picturesque stapled booklet, which showed second quarter revenues of $2,638,000.  The booklet referred the reader to the NXT filings on Edgar, the Securities and Exchange Commission database.  This is not usual procedure.  A small company’s 10-K is an important piece of financial information and is invariably provided.  The 10-K provides important information concerning the financial condition of a company:  most importantly the profit and loss; cash flow; etc. liabilities, such as bonds and short term loans; the number of shares outstanding and the number of shares, which are owned by management and directors; cash and equivalents; etc.

I then went to a library and looked up the annual report and 10-K for NXT.  Lo and behold, a revelation.  NXT’s income statement was a wonder to read.  

In 2008 NXT lost $1.1 million on revenue of $2.9 million (Canadian dollars); in 2007 NXT had a profit of $350,000 on revenue of $5.6 million (Canadian dollars); and in 2006 NXT lost $4.2 million on revenue of $1.2 million (Canadian dollars).

And NXT’s balance sheet showed that NXT has financed itself via conversion of debentures ($3.2 million in 2006 and $240,000 in 2007) and private placement of stock ($775,000 in 2006).

So profits have been skinny or non-existent. 

The names of the members of the Board of Directors were provided.  Absent from that list was the name of Robert VanCaneghan, who had been a director of NXT and its predecessor Energy Exploration Technologies for several years.  Readers of my column may remember the name, VanCaneghan.  In two recent articles, Morgenthau’s Hypocrisy On Drug War and How Morgenthau Didn’t Prosecute Wall Street Drug Smugglers, I exposed VanCaneghan’s criminal activities.  So let me briefly recap.
VanCaneghan is the former member of the Board of the American Stock Exchange, who laundered drug money from the Cayman Islands via his Amex specialist firm, Miceli-VanCaneghan.  VanCaneghan had also engaged with Al Avasso, a self-proclaimed front man for the Italian Mafia, in the stock fraud, PNF.  These criminal activities have been fully documented on my personal website, www.wallstreetscandals.com.

VanCaneghan was never convicted of laundering drug money due to the intervention of Arthur Levitt, former Chairman of the American Stock Exchange and then Chairman of the Securities and Exchange Commission, and Robert Morgenthau, Manhattan District Attorney, who used their influence and positions to sabotage the FBI investigation.

In previous SEC filings NXT Energy Solutions had praised VanCaneghan for his financial expertise.  But what financial expertise did VanCaneghan possess?  In the 2006 annual report NXT stated:  “Mr. Van Caneghan’s knowledge of equity, option and bond trading is extensive and he has experience in analyzing financials of various companies for which he had the franchise to make markets.”  Really?  Van Caneghan’s stock trading franchise unit, Miceli-VanCaneghan, lost so much money that he gave it up in 1991.   

As for Van Caneghan’s financial expertise in analyzing the financial statements of the companies for which he served as the specialist in options, it was his small profits in trading options that compelled him to launder drug money.

Later when I searched the SEC filings of NXT, I found a revealing filing-- that VanCaneghan had resigned from the Board of NXT as of December 2007.  He remained a member of the audit board of its inactive American subsidiary.

There was something unusual in NXT’s presentation.  Usually a small company presents what it portrays as cutting edge technology in a specific field.  But not NXT.  NXT trotted out its Stress Field Detector, which can detect changes in subsurface stress caused by geographic faults, to evaluate potential oil and gas deposits.  In 1996 its predecessor, Pinnacle Oil International, hailed the Stress Field Detector as a major advance.  That was in 1996.  Fourteen years is several generations in technology. 
Several seminar attendees said that exploration could be done more efficiently by satellite- because satellite technology is currently being used for oil and gas exploration.  But a satellite costs in excess of $100 million- not a viable expense for a company with revenues in the single digit millions.  And the software for the satellite would cost in the neighborhood of another $100 million. 

Why would any company keep a money launderer on its board of directors?

So in all fairness I attempted to contact George Lisziascz, NXT’s CEO.   Instead Ken Rogers, the Chief Financial Officer returned the telephone call.  Rogers has been at NXT since 2006.

Rogers seemed to be a very congenial individual.  He told me that he had attempted to contact George Lisziascz, NXT’s CEO, but he was unable to reach him because he was traveling.  It is unusual when the CFO of a company cannot contact the CEO.

I asked Rogers a direct question.  Considering VanCaneghan’s shady and nefarious background, was NXT also involved in money laundering and narcotics smuggling.
“Definitely not,” Rogers said, sounding incredulous that I would ask such a question.  I also asked whether NXT was being investigated by authorities in Canada and the United States concerning such allegations.  “No,” he said.

I then called the Financial Transactions and Reports Analysis Centre of Canada. “We don’t confirm anything that we are working on,” Peter Lamey, the spokesperson told me.  “We don’t disclose the research we are doing or analysis,” he added, noting that FINTRAC worked in support of or in conjunction with the police department’s financial crimes unit.

When I asked NXT’s Rogers about the lack of an annual report and 10-K at the presentation by NXT, Rogers replied that since NXT was a Canadian company it had to file a 20F with the Canadian regulatory authorities.  Yes, but since NXT was listed in America it had to file an annual report and 10-K with the SEC.  Regardless there was no copy of a 20-F at the company’s presentation.  Only a colorful laser printed piece of fluff was provided.

Rogers told me that VanCaneghan was a member of the Board of NXT from 2002 to 2007 when he resigned.  But there was something very strange.  Rogers had never met VanCaneghan.  When I said how was that possible when VanCaneghan was a member of the Board, Rogers replied that VanCaneghan attended the conference via a telephone line.  VanCaneghan did not physically attend the annual meetings of NXT.

Rogers said that NXT felt that the Board needed someone, who was closer to the headquarters of NXT, which is situated in Calgary.

When I told Rogers that VanCaneghan had been involved in laundering drug money when he was a member of the Board of the American Stock Exchange, Rogers replied that he did not know that. 

When I asked how NXT verified VanCaneghan’s credentials, Rogers replied that he did not know.  Rogers said that VanCaneghan had been made a member of the NXT Board before he was hired. 

When I asked if he had ever googled VanCaneghan’s name, Rogers stated that he had not.  I was stupefied.  I replied that this was unusual.  Rogers assured me that from now on he would Google the names of NXT’s Board members to discover additional information.

When I asked if VanCaneghan had owned a significant amount of NXT stock, Rogers replied that VanCaneghan had not owned a significant amount of stock.  When asked if VanCaneghan had traded the stock, Rogers replied that according to a form that VanCaneghan had filled out, he had neither purchased nor sold stock.  But there was no verification of this.  VanCaneghan’s word was merely accepted.

Rogers also told me that Scott Schrammer, a close personal friend of VanCaneghan and former member of the American Stock Exchange, had been the corporate secretary- because VanCaneghan had recommended him.

This is all too strange.

But in deference to Rogers it must be stated that he was not employed by NXT when VanCaneghan was initially made a member of the Board of NXT. 

If you have any tips about Wall Street corruption please send them to edward@blackstarnews.com

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