Corporate Payout or Deceit?

Corporate Payout or Deceit?

By David R. Corder

Associate Editor

About six years ago, Owen Rice Jr. accepted an assignment from a United Kingdom firm to distribute proceeds from the sale of millions of dollars in U.S. Treasury bonds. The retired Tampa lawyer says he had no idea the transactions were part of an alleged scheme to defraud an Italian manufacturing group of about $23 million in corporate assets.

Now the principals of Italy-based Sitindustrie SpA have accused Rice and Kerry Jo Davies, a Sarasota businesswoman also known as Kerry Jo Walsh, of participating in a conspiracy to defraud the Italian manufacturing group and convert its assets. The plaintiffs want an accounting of the pairis involvement along with unspecified compensatory and punitive damages, according to a lawsuit filed Dec. 7 in U.S. District Court, Tampa.

iThat complaint has many lies, which I consider to be actionable, defamatory, slanderous and libelous,i says Rice, who threatened legal action against GCBR for reporting on the lawsuit. iThat complaint so far as it concerns me is lies.i

The lawsuit is one of several the manufacturing group has filed against alleged co-conspirators since its principals discovered assets missing about two years ago.

About a year ago, the manufacturing groupis principals sued its former chief executive officer, Grazia Antonella Bocciolone, the daughter of Sitindustrieis founder, and her husband, David W. Brenman, in Colorado District Court on charges the two orchestrated the scheme to convert the corporate assets for personal use.

In another lawsuit, a Nevada federal judge earlier this year awarded a $15.1 million default judgment against Lionheart (KJD) International Inc. over its involvement in the fund transfer. Davies is listed as Lionheartis president.

In the Southern District of Florida, the manufacturing group sued Miami businessman Edward M. Reizen last year on charges he aided the former CEO and her husband in the wrongful transfer of $10 million in Sitindustrie assets. Reizen has asked the court to dismiss the lawsuit.

The complaints by Sitindustrie describe a murky tale of international intrigue that began in 1993 with the unexpected death of wealthy Italian industrialist Germano Bocciolone. He founded Sitindustrieis predecessor companies in the mid- to late-1950s and transformed his holdings into one of Europeis premier producers of stainless steel tubes. Today the diversified multinational manufacturing group owns 15 mills throughout Europe, employs more than 1,400 workers and produces almost $400 million in annual revenue.

Family ties

Following the founderis death, his daughter, known as Antonella Bocciolone, became Sitindustrieis chief executive officer. Over the next several years, she orchestrated an expansion into new markets through corporate acquisitions.

Taltos, a producer of refined natural stone, was one of those acquisitions. In 1995 through Taltos, Antonella Bocciolone met Brenman, a Denver attorney. They married five years later.

To finance the corporate expansion, Antonella Bocciolone secured about $27 million in loans and pledged as collateral about $50 million in corporate reserves her father amassed over the years, according to the complaint filed by Miami attorney Carlos Francisco Concepcion.

Meanwhile, Bocciolone and Brenman developed an investment strategy to enhance the value of $50 million in corporate reserves. They persuaded Boccioloneis siblings and other family members to consolidate all her fatheris corporate holdings into an entity known as Quetzaltengo, the lawsuit states. That entity is the sole stockholder in Kobarid Holding SA, a Luxembourg corporation that controls Sitindustrie and the affiliated Tambourine Comercio Internacional SA and Hawksbay Ltd.

The investment strategy apparently relied to some extent on a scam known as the ihigh-yield investment programi or iprime banki financial instruments, the complaint states. Promoters tout these iprime banki instruments as exclusive opportunities that the worldis leading financial institutions purportedly offer only to a select group of investors. However, the Securities and Exchange Commission considers such financial instruments as nothing more than a sham and advises investors to avoid them.

Financiers of Sitindustrieis expansion plan became concerned as Antonella Bocciolone transferred the $50 million in corporate reserves to new accounts belonging to Tambourine Comercio. In response to her actions, the financiers called the loans and Sitindustrie encountered financial difficulties. Bocciolone then used about $27 million of the corporate reserves to pay the outstanding amounts.

In the first quarter of 1998, Bocciolone authorized the transfer of about $20 million of the remaining reserve funds to Hawksbay, the lawsuit states. Sometime during the year, Bocciolone and Brenman contacted Daviesi firm, Lionheart, and hired Reizen, as a Hawksbay officer, to negotiate a complicated series of acquisitions and sales of U.S. Treasury bonds through accounts in Chicago, New York and Tampa. For instance, court records claim Bocciolone and Brenman authorized the sale and acquisition of more than $100 million in U.S. Treasury bonds from Dec. 9-24 that year.

Tampa connection

In December 1998, Temple Trading purportedly retained Rice to disburse proceeds on sales of U.S. Treasury bonds through an account at the Bank of Tampa. Court records list Clive J. Hamilton as a principal officer of Temple Trading. The complaint alleges Temple Trading is fictitious since the firm is not listed with the Companies House, a British agency responsible for the licensing of all UK corporations.

Around the same time, Bocciolone and Brenman appointed Davies to serve as a Tambourine Comercio director. Court records claim Davies instructed an unregistered Chicago securities firm, D.H. Brush, to transfer Sitindustrie assets in a Tambourine account from Chicago to an account in Tampa and to a New York corporate account in the name of Eagle Point Inc. Court records list Davies as Eagle Pointis president.

Rice did not say how he became an agent for Tambourine. He acknowledges he knows Davies, but says he knows nothing about the other people or entities mentioned in the Sitindustrie lawsuit. Rice is a former Carlton Fields PA lawyer described by some as a venture capitalist.

Rice says he intends to vigorously defend against the allegations. He has retained Edward O. Savitz of Tampais Bush Ross Gardner Warren & Rudy PA.

Since he just learned about the lawsuit, Rice says he has not yet had the time to answer the allegations. But he disclosed plans to seek a reprimand against the plaintiffsi attorney. Neither Concepcion nor his associate, Teresa J. Urda, responded to a GCBR request for comment.

Besides his financial work, state records list Rice as president of Tampa-based Lex Systems (USA) Inc. Federal records list Lex Systems, Rice and Bruce A. Joblonicky of Spring Hill as owners of patent No. 4,999,672. They filed a patent application in 1983 for a device that transmits computer logic to line signals between a computer and photocopier.

Efforts to reach Davies for comment were unsuccessful. Davies operates a liquor store in Sarasota through K&N Investments LLC, but the state Division of Alcoholic Beverages and Tobacco did not respond to a GCBR request for information about K&Nis liquor license. Davies also is listed as an officer of Sarasota-based Camelot Properties LLC.

In March 1999, Lionheart transferred $10 million from a joint Lionheart-Tambourine account to an account belonging solely to Tambourine, court records state. Then Davies transferred the money to Eagle Point. Later that year Lionheart apparently agreed to pay Tambourine $1.5 million in compensation for alleged damages because of late reimbursement of funds. But neither Lionheart nor Eagle Point returned the money, court records state.

In December 1999, court records state, Rice closed the account at the Bank of Tampa. Fausto Bocciolone, Antonellais brother, discovered paperwork that revealed the extent of her business dealings with Brenman and the other firms in 2002, the complaint states. Following the disclosure, Antonella resigned her job as Sitindustrieis CEO and now resides with her husband in the Denver area.

iIn late 2002, when Fausto Bocciolone and other Bocciolone family shareholders questioned Brenman and Antonella Bocciolone about the Tambourine transactions, Brenman and Antonella Bocciolone promised they would promptly return the money,i the Tampa complaint states.

The two purportedly explained they had an obligation to maintain the confidentiality of the iprime banki investments out of concern that any interference could jeopardize those investments, court records state. Later, the family members discovered the warnings about such iprime banki investments.

iSeveral times throughout the year 2002 plaintiffs demanded that Brenman and Antonella Bocciolone and others provide information about the investments and the location of the funds and demanded the immediate return of the funds, but no information was provided,i court records state.

Battle wages

When Antonella Bocciolone resigned her job in early 2003, the family took control of Kobarid Holding, Sitindustrie, Tambourine Comercio and Hawksbay.

Through those entities, the Bocciolone family filed an action in the Colorado District Court against Antonella Bocciolone and Brenman. But the couple successfully persuaded a U.S. District Court judge to dismiss that lawsuit.

Undaunted, however, the family hired the Denver law firm of Brownstein Hyatt & Farber PC to refile a state action in the Denver County District Court. Just recently a judge dismissed the coupleis request to transfer jurisdiction of the state action to the European courts.