Is notorious brokerage boss Harold Gallison back in the penny stock game?

Has Kyle Rowe, the barred brokerage executive behind Going Public LLC, reunited with his former boss, convicted felon Harold “B.J.” Gallison?

Securities and Exchange Commission filings for three of Going Public’s clients show that big blocks of their stock went to a company called Carmel Valley Corp.

Public records show that Gallison — who pleaded guilty in 2003 to conspiracy to commit securities fraud and was sentenced to five years in prison — once was Carmel Valley’s registered agent.

They also show that the company operated from a house in Las Vegas that was owned by another of Gallison’s companies, La Jolla Capital Holding Corp.

David K. Rushing, the person now listed in SEC filings as president of Carmel Valley, is the brother of one of Gallison’s longtime associates.

David Rushing also is an officer of a second company that has physical and financial ties to Gallison’s offshore stock exchange, called GISBeX.

Going Public, based in San Diego, Calif., helps clients gain listings on stock exchanges through stock offerings or reverse mergers.

MILLIONS OF SHARES

SEC filings show that Carmel Valley got 4.54 million shares of Omni Ventures Inc. (OTCBB:OMVE.OB) and 3.02 million shares of LIG Assets Inc. in connection with Going Public’s work for those companies.

The filings did not describe what services Carmel Valley performed in return for those shares, which amounted to just under 5 percent of each company’s stock.

A filing for a third company not mentioned in Sharesleuth’s previous reports on Rowe shows that Carmel Valley got 1.8 million shares of its stock, or nearly 3 percent of the total outstanding. That company is American Real Estate Assets Inc., of San Diego.

Omni Ventures’ stock, which traded earlier this year for more than $1 a share, is now at 44 cents, giving the company a market value of $45.2 million.

At that price, the stake issued to Carmel Valley has a market value of nearly $2 million.

Omni Ventures reported in its latest quarterly SEC filing that it had no revenue for the nine months that ended June 30, and that it finished the period with just $9,353 in cash.

The SEC has not yet authorized trading in the shares of LIG Assets and American Real Estate Assets, the other companies that issued shares to Carmel Valley through their deals with Going Public.

FAMILY TIES

David Rushing is the brother of Robin M. Rushing, one of Gallison’s key lieutenants at La Jolla Capital Corp., a San Diego-area brokerage that had frequent run-ins with regulators.

The National Association of Securities Dealers (now the Financial Industry Regulatory Authority) barred La Jolla Capital and Gallison from the penny stock business in 1997. La Jolla Capital’s successor, Pacific Cortez Securities Inc., shut down under regulatory pressure in 1999.

Rowe also worked at La Jolla Capital, and later ran another brokerage called Salomon Grey Financial Corp., which was implicated in at least two fraud schemes.

Rowe was permanently barred by the National Association of Securities Dealers in 2006, and also was barred by the SEC (pdf).

As Sharesleuth previously reported, he legally changed his name earlier this year to Marvin K. Rowe II, a move that obscured his regulatory past.

GALLISON’S CRIMINAL HISTORY

Gallison was indicted in 2000 in connection with a “pump-and-dump” scheme facilitated by Pacific Cortez. He pleaded guilty in 2003 to conspiracy to commit securities fraud and was sentenced to five years in prison.

At the time, prosecutor Steve Davis said he believed that Gallison was still involved in securities schemes, using other people as proxies. Davis told the San Diego Union-Tribune that Gallison had been contemptuous of regulators’ efforts to halt his activities, and predicted that Gallison might continue to operate GISBeX from prison.

“‘I think he is scheming right now … I don’t think he will be a changed person,’ Davis said. “We will see him again.”

Gallison was released from custody in 2006.

When Sharesleuth first asked Going Public whether Marvin K. Rowe II was in fact Kyle Browning Rowe, we heard back from Irving M. Einhorn, an attorney who once headed the SEC’s regional office in Los Angeles.

After leaving the agency, Einhorn represented Gallison and Robin Rushing in SEC and NASD disciplinary proceedings.

When we asked Einhorn in April whether Gallison had any involvement with Going Public, he responded: “You don’t have that.” Einhorn did not respond to our follow-up questions late last month.

AN OFFSHORE BROKERAGE

GISBeX – short for Global Internet Stock Brokerage Exchange – is based in Costa Rica. It purports to be an electronic exchange that deals in all types of stocks and bonds, including certain types of restricted securities sold by U.S. companies to offshore investors.

Davis, the San Diego prosecutor, told KYC News in 2005 that his office had established that Gallison owned GISBex through a private trust controlled by his family.

Gallison’s father, Harold Gallison Sr., told the San Diego Reader that same year that his son was not running GISBex. However, he identified Robin Rushing as a key operative at the brokerage.

Sharesleuth found documents that also link David Rushing to GISBeX. He has signed SEC filings in recent years as assistant secretary of Sandias Azucaradas CR S.A., another Costa Rican business.

Sandias Azucaradas has shared a mailing address with GISBeX in San Jose, Costa Rica. Its website was created and registered by the same company that created GISBeX’s site, and those of a handful of GISBeX affiliates, including Evalesco Trading and Moneyline Brokers.

And, for a time at least, GISBex instructed clients who want to open accounts by wire transfer to send their money to a Panamanian branch of HSBC Bank, for credit to Sandias Azucaradas.

Sharesleuth recently obtained a letter that Sandias Azucaradas sent to a securities transfer agent in connection with shares it owned in another public company. The letter was signed by Robin Rushing, as managing director.

SEC filings show that Sandias Azucaradas owned large blocks of stock in several companies with ties to Regis M. Possino, a two-time felon and disbarred lawyer. ((see previous Sharesleuth stories here and here.

ARISA CAPITAL

The registration statements filed with the SEC by LIG Assets and American Real Estate Assets show that an entity called Arisa Capital Inc. also got big blocks of their stock. Nevada corporation filings list Cynthia A. Taylor as Arisa’s president.

Taylor also is an officer of Corporate Capital Formation Inc., a Las Vegas company that has served as registered agent for 175 businesses, including Carmel Valley Corp. and four others with current or historic ties to David Rushing, Robin Rushing or Gallison.

The president of Corporate Capital Formation is Roger G. Coleman Sr., a former securities transfer agent who pleaded guilty in two different fraud-related criminal cases in 1989 and 1990.

A check of the other companies for which Corporate Capital Formation serves or has served as registered agent turned up at least six connected to Robert M. Bryson, another financial felon.

Bryson served 18 months in prison in the 1980s after pleading guilty in a securities fraud case. According to stories in San Diego, he had close ties to people at La Jolla Capital and Pacific Cortez.

Corporate Capital Formation once was a subsidiary of Triad Industries Inc., a publicly traded company headed by Bryson’s daughter. Coleman was a director of Triad.

According to SEC filings, Corporate Capital Formation was spun off into an independent entity in 2006.

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