U.S. securities regulators have charged controversial Vancouver promoter Sakwinder Narwal with defrauding investors in an alleged pumpand-dump stock scheme.

In a complaint filed in U.S. District Court in Los Angeles this week, the U.S. Securities and Exchange Commission alleges that in February 2009, Narwal hired Del Mar Corporate Communications, a nowdefunct California investor relations firm, to promote Pax Clean Energy Inc.

Del Mar was run by three California men: Justin Beck, Brian Hill and Larry Downs, who were also named as co-conspirators. Pax was a Saanich-based company whose shares traded on the OTC Bulletin Board in the United States.

"Narwal funded and controlled the entire fraudulent campaign. He directed Beck, Hill, and Downs to hype the stock by telling investors that Pax Clean Energy would be the "next Google" and its price would rise to $100 per share by the end of the year," the SEC alleged in a release.

"By April 2009, the defendants successfully pumped the stock price to an all-time high of $11.24 per share. During this time, and without disclosing to investors, Narwal and Del Mar Corporate Communications repeatedly sold Pax Clean Energy shares -the very securities they were recommending investors to buy."

The SEC said Narwal reaped $455,000 through his illicit trades, and Del Mar made $140,000.

I first wrote about Pax in September 2007, when it filed a registration statement with the SEC. At that time, it was proposing to build a biodiesel plant in Serbia.

I noted that Pax's president was Paul Hammond, a chartered accountant who worked as Rakesh Saxena's right-hand man before and after Saxena was arrested in 1996 for allegedly embezzling $88 million US from the Bangkok Bank of Commerce. The company's chairman was Mike Andric, who worked as Saxena's bodyguard.

The biodiesel plant never materialized. In December 2008, Pax announced it had been "unable to locate transactions in the biodiesel industry that were on terms favourable to us."

In February 2009, the company announced it was going to acquire Mobile Video Development Inc., a New Yorkbased company that was developing technology to enable mobile-device users to share videos and pictures.

Although the company had no track record, Hammond said that if his projections came true, it would be worth $5 billion by 2010.

Stimulated by paid Internet hypesters, the stock rocketed to $11.24 by late April 2009. At that point, the SEC questioned the accuracy of the company's disclosure and issued a temporary cease-trade order.

Hammond and Andric were senior officers and directors throughout this period, but neither was named in the SEC complaint.

There was no mention of Narwal's name in any of Pax's disclosure documents. This would have been a source of alarm for me, because Narwal has a long history of controversial dealings on Howe Street.

I first wrote about Narwal in 1996, when he was pumping a dubious Vancouver Stock Exchange company, Trellis Technology Corp., which was linked to disgraced former lawyer Martin Chambers. (Chambers is now serving a 15-year prison sentence in the United States for money laundering.)

Narwal popped up again in 2004 as the largest shareholder of Silver Star Energy Inc., a bulletin board deal that featured Vancouver promoter William Scott Marshall.

In early 2004, the RCMP IMET raided Silver Star's offices in Vancouver, alleging that its share distribution had been rigged, but no charges were ever laid.

In July 2007, Marshall abruptly left town after somebody fired at least six shots at his palatial Arthur Erickson-designed home in Shaughnessy.

"Narwal, who is linked to several other U.S. penny stocks, is a close relative of convicted kidnapper Jethinder Singh (Roman) Narwal, who is now serving a 15-year sentence," Vancouver Sun crime reporter Kim Bolan noted at the time.

"At the time of his 2006 conviction, Roman owned stocks in three other companies founded by Sak Narwal. Roman's late father Avtar Singh Narwal was identified at the Air India trial as a suspect in the 1985 Air India bombing," she added.

Despite Narwal's murky stock dealings, securities regulators took no action against him until Wednesday, when the SEC filed its complaint.

The complaint also alleges that, after it suspended trading in Pax in May 2009, Narwal retained Del Mar to promote Green Star Alternative Energy Inc.

Green Star also featured Andric as chairman and purported to be developing wind farms in Serbia. Its shares traded on the Pink Sheets in the United States.

In June and July 2009, I reported that Andric had announced a series of "discussions" and "negotiations" with big-name companies in the wind-energy industry, and that those announcements had been promptly discredited by Carol Remond in her "In the Money" column for Dow Jones Newswires.

In its complaint, the SEC alleges that Green Star's shares price jumped from $2.60 to $4.75, enabling Narwal to sell 25,600 shares and reap another $56,280 in trading profits. The SEC said that, as in the case of Pax, Del Mar never told investors that Narwal was dumping shares.

Without admitting or denying the allegations, Beck, Hill and Downs entered into settlement agreements with the SEC. Among other things, the settlements require them to disgorge their trading profits.

Narwal has not settled. The SEC is seeking a court order barring him from any future stock market dealings, and requiring him to disgorge his trading profits and pay a civil penalty.

dbaines@vancouversun.com