Ordinary Loss or Fraud? (Tampa edition)

Ordinary Loss or Fraud? (Tampa edition)

A former stockbroker who sold to Tampa's business elite says large losses should be blamed on the market, not him.

By David R. Corder

Associate Editor

Jacques Chrysochoos blew into Tampa like a whirlwind 10 years ago. Movie star looks, a salesman's gift for gab and a spectacular golf swing earned the securities broker introductions to the business elite. Outback Steakhouse co-founder Chris Sullivan endorsed Chrysochoos' membership into the Old Memorial Golf Club - a sanctuary for the city's rich and famous.

Some of those well-connected business people, including Ford auto dealer Ernie Haire III, turned to Chrysochoos, an African immigrant, for investment advice.

By most accounts, the 33-year-old Chrysochoos did well. In 1998, he and his wife, Leslie, bought a Harbour Island town home for nearly $2 million. Three years later they sold a vacant lot on the downtown island for about $1.4 million to Joel Glazer, son of the Tampa Bay Buccaneer's owner. Last year, the couple acquired a Gulf front home for $850,000 in Clearwater. He drove a yellow Lamborghini.

"I had a good run, and did make some good money for a year," Chrysochoos says.

Not all went well.

A Belgium-based businessman - angered over investment losses - has leveled a serious accusation at Chrysochoos. In a federal lawsuit, the Belgian says Chrysochoos illegally funneled investor dollars - earmarked for purchase of a Canadian corporation's private stock - into a Cayman Islands trust account that dispersed loans to a failed New Orleans nightclub venture. The principals in that failed venture included Chrysochoos; Donald P. Kleinhans, a Tampa businessman with a portfolio of diversified interests, including adult bookstore and strip-club investments; and Dennis Sonnenschein, who pleaded guilty earlier this year to a federal charge of prostitution over a St. Louis area strip-club operation and then paid nearly $1 million to charities to avoid prison.

In turn, Chrysochoos accuses Samir Ahmed El Masri, the Belgium-based mining equipment distributor, of orchestrating an unfair smear campaign against him over ordinary investment losses in a weak international economic climate. Chrysochoos says many of his customers - including numerous unnamed but well-heeled investors throughout the Tampa Bay area - lost considerable dollars over the past few years as national and international economic markets softened. But he says it doesn't mean he did anything wrong.

"When you're a broker and making millions for everybody, buying at $1 and selling for $10, you're a hero," Chrysochoos says. "When it turns around you're the jackass. I regret very dearly my friends who lost money in the stock market, but I can't control the stock market."

Haire says Chrysochoos is a gentleman, even though the auto dealer acknowledges he, too, lost money in the deal involving the Cayman Islands trust. He considers Chrysochoos as much a victim as any other investor in recent turbulent economic times.

"When the stock market collapsed, (Chrysochoos and his wife) were devastated themselves," says Haire, who could not recall exactly how much he actually lost through the Cayman Islands trust. "I made some money, too. I have had many a transaction with Mr. Chrysochoos and his brokerage firm, Shields & Co."

But public records paint a different picture of Chrysochoos and his business dealings.

×××

Earlier this year, the New York-based brokerage firm Shields & Co. agreed to a mediated settlement with El Masri over Chrysochoos' recommendation to invest in Alis Technologies Inc., a Montreal, Canada-based provider of online language management services. Chrysochoos urged investors to acquire private stock in Alis, now reorganizing under Canadian bankruptcy laws, on speculation in the late 1990s-early 2000s it would issue public stock.

Under terms of the mediation agreement, Shields & Co. agreed to pay El Masri $250,000 if he released the brokerage from any future claims or lawsuits. However, the agreement mediated through the National Association of Securities Dealers exempted Chrysochoos, which allowed El Masri to sue him for damages.

An audit of El Masri's stock account with Shields shows he maintained an average net worth of about $1 million and made purchases of $34 million over an 18-month period.

Although the agreement is available to the public, Chrysochoos told the GCBR that El Masri actually lost at mediation. "All of those allegations he has in the current (lawsuit) were pretty much thrown out," Chrysochoos says.

Relying on evidence El Masri submitted during mediation, the NASD disbarred Chrysochoos from any future association with the U.S. securities industry. An NASD letter of acceptance, waiver and consent claims he participated in private securities transactions that raised about $2 million from investors without disclosing those deals to Shields & Co.

But Chrysochoos insists the NASD did not discipline him for the private stock deals but his outside real estate interests - a defunct bar in St. Petersburg, a partial interest in the Howl at the Moon bar in New Orleans and other income-producing properties.

"The only thing they say is I have been involved in other activity that I didn't disclose to the NASD," Chrysochoos says. "I'm not a practicing broker anymore. So I said, 'If you want to take my license away I'm not going to fight you over it.' They said, 'You have a real estate business and a bar, and if you don't disclose them you can lose your license.' "

Not content with the NASD mediation and enforcement actions, El Masri pushed his claim farther into the public record by filing a $10 million civil fraud action in mid-September against Chrysochoos in U.S. District Court, Tampa division. Among the 16 defendants, the federal complaint also named Kleinhans, Alis Technologies and its chief executive officer and Mercury Management Trust, the Cayman Islands trust.

In response, Chrysochoos, Kleinhans, Alis Technologies, its chief executive officer and other defendants have denied El Masri's allegations.

Atlanta attorney Hassan Elkhalil, who represents El Masri, is waging a vigorous battle to keep the lawsuit in federal court. Each of the defendants, who are contesting the charges, contends the court has no jurisdiction in the matter.

×××

The son of Greek immigrants, Chrysochoos was born in a tiny mining village near Lubumbashi in the Democratic Republic of the Congo. There he met El Masri, a Lebanese immigrant and family friend. On a resume, Chrysochoos claims he won a golf scholarship through the Italian Golf Federation and then earned a bachelor's degree in business administration from the University of Brussels.

In the early 1990s, he studied international language at the University of California-San Diego and then computer automation at that city's Coleman College.

By 1993, Chrysochoos had relocated to Tampa, where he opened a corporate travel agency, Uniglobe Travel. A year later, he took a job as director of operations at Defend A Cell Inc., a Clearwater-based mobile telephone services company that has since dissolved. In 1996, he started work at Shields & Co.

While at Shields in 1999, court records show Chrysochoos formed a venture known as Chrysochoos Inc., a Tampa company with investment interests in the telecommunications industry. Of 1,000 private shares issued by the company, Chrysochoos mother, Liliane Guerrini, controlled 75%. Other investors included Haire, Kleinhans and Tampa attorney G. Michael Nelson, who currently represents Chrysochoos in the federal lawsuit.

Court records also show Chrysochoos linked Chrysochoos Inc. to Mercury Management Trust, doing business as Mercury Finance Trust.

In April 2000, Chrysochoos negotiated a deal to acquire private stock in Alis Technologies through Claude Lemay, the Canadian corporation's president. In exchange for a 20% ownership, court documents show Lemay agreed to sell 937,500 shares for $2.25 or about $2.1 million in Canadian dollars or about $1.55 or $1.5 million in U.S. dollars.

Then Chrysochoos sold 122,549 shares of the Alis Technologies stock for $4 a share in U.S. dollars to El Masri in a deal valued at about $500,000. Kleinhans, for instance, bought 4,000 shares of the Canadian company's stock for $6.25 a share in U.S. dollars in a deal valued at about $25,000.

×××

In January 2001, Mercury Management issued promissory notes of $200,000 and $175,000 to Bourbon Club Management LLC with guarantees signed by Kleinhans, Sonnenschein and Chrysochoos. El Masri claims in court records he had no knowledge of those loans.

Court records show Bourbon Club Management acquired leases for four nightclubs - Jazz, Utopia, Ragin Rooster and Howl at the Moon - in New Orleans' famed Bourbon Street district.

For unexplained reasons, however, the partnership quickly unraveled leaving harsh feelings between some of the investors.

"Well, I guess we're going to have to format something that makes sense in reference to getting Don off the Bourbon Street companies as a member, shareholder and guarantor," Sonnenschein wrote in a May 2002 memo to Kleinhans' Tampa-based attorney, Randolph J. Wolfe of Foley & Lardner.

Although hesitant to talk, Kleinhans acknowledges he harbors ill feelings toward Chrysochoos. He called Chrysochoos a compulsive liar. He says he knew nothing about Chrysochoos' use of El Masri's investment proceeds.

"(Chrysochoos) was our stockbroker," Kleinhans says. "He was dying to get into the nightclub business. He was supposed to bring the money to the table, and he did for a couple of the nightclubs. Then he said Dennis and I should come up with our own money.

"That's when I turned my stock over to the company," he adds. "I took my losses - I lost about $100,000 myself - and turned my cheek and said, 'I don't have any interest in doing business or seeing him ever again.' "