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FBI Snares Serial Schemer By PAUL FOUTCH
/ The Dallas Morning News
Convicted felons often have trouble
getting jobs, but not Jim Bolt.
In the 12 years since he left prison,
in between skipping out on testimony in the Oklahoma City bombing
case and twice filing for bankruptcy, Mr. Bolt has been chief
operating officer for a golf course company-turned-TV station,
compliance manager for a pharmaceutical firm and managing editor
of the Arkansas Chronicle.
None of those ventures was quite
what it seemed.
Mr. Bolt's tortuous tale is about
to be told in a federal court in Arkansas, where he and three
associates face securities fraud charges. An undercover FBI operation,
using a purported brokerage firm in Addison, broke open the case.
The accused men have pleaded not
guilty. A court filing and articles from Mr. Bolt's online "news
magazine," the Arkansas Chronicle, hint at their defense
strategy by suggesting government officials are conspiring to
destroy their company as it tries to cure cancer.
In the annals of 21st century corporate
fraud, the story of Shimoda-Atlantic Inc. of Rogers, Ark., is
barely worth a mention. But it offers an extreme cautionary tale
of the dangers of deception in the Internet age.
Legal filings, criminal records and
dozens of interviews, including with local and federal officials,
paint a picture of an audacious career criminal who, with his
associates, has tried to fool investors, the media and public
officials for decades, often successfully.
"These guys are terrible,"
said Leonard Mauck, a Dallas investing veteran whose Web site,
longandshortreports. com, in conjunction with two Arkansas business
publications, produced evidence of illegal stock manipulation
by Mr. Bolt's broadcasting company, Golf Entertainment Inc., that
resulted in a cease-and-desist order by the Arkansas Securities
Department in 2002.
"They sued us in federal court,
and the case of course was dismissed, but not until we spent about
$50,000 in legal fees," Mr. Mauck said.
By all accounts, Mr. Bolt is quick
to sue. His legal history shows a pattern of creating sham companies
and false identities, attacking public officials in lawsuits and
Arkansas Chronicle articles, and fomenting suspicion about the
government.
Mr. Bolt, 55, has criminal convictions
over the last three decades for lying to a bank and mail fraud,
theft by deception, and impersonating a deputy sheriff. He's charged
in the federal indictment in the Western District of Arkansas
along with Melvin Lynn Robinson, who was convicted in 1993 of
federal wire fraud charges and served time with Mr. Bolt; Leroy
Hoback, who was ordered by Arkansas regulators in 2005 to stop
selling unregistered securities in an unrelated case; and lawyer
John Dodge, who filed many of the lawsuits in question.
Those who have run afoul of Mr. Bolt
exhibit something of a fascination with him. His tactics are audacious.
His legal filings and Arkansas Chronicle articles are well-written
and sprinkled with down-home humor. His critics consistently describe
him as having the intelligence of a genius, with the ability to
operate in the diverse fields of journalism, law, finance and
pharmacology.
"If he would have applied his
talents to some legitimate enterprise, this guy would have been
a success," said Crandell Addington, co-founder of Phoenix
Biotechnology Inc. in San Antonio, a cancer research company that
Mr. Bolt's firm considered a competitor. "I'm astonished
that he's continued to follow the paths he's followed, because
he's smart."
Convictions and appeals
In 1983, Mr. Bolt was found guilty
in Oklahoma of federal charges of mail fraud and lying to a federally
insured bank and was sentenced to 4 ½ years in prison.
He was accused of seeking a loan in the name of Russ J. Woolf,
falsely telling the bank that he owned a houseboat, and trying
to pass checks he'd counterfeited from the National Bank of Liberia,
including one for $275,000.
Mr. Bolt appealed, contending in
part that the government hadn't given him enough time to obtain
documents from Liberia proving that he had legally changed his
name there to Russell Woolf.
It's not clear if Mr. Bolt has ever
been to Liberia, and he didn't respond to detailed questions for
this article.
The 10th Circuit Court of Appeals
rejected his arguments in 1985 and described a company called
Saturation Systems that Mr. Bolt ran out of a small Tulsa office:
"The Government has aptly described
this business as being an enterprise which included a group of
imaginary employees, engaged in developing imaginary products
and services, located in various imaginary locations in the United
States, Scotland, Norway and other overseas locations. The schemes
involved the sophisticated use of computers and telex machines
and the preparation of various false documents created by Bolt,
who appeared to be a skilled draftsman and printer."
In 1992, in Washington County, Ark.,
Mr. Bolt was convicted of theft by deception and sentenced to
three years in prison, to be served concurrently with the revocation
of his federal parole.
He appealed, arguing that he had
not "personally" waived his right to a jury trial, even
though he was present when his lawyer waived that right and he
had assisted his lawyer throughout the trial.
The Arkansas high court rejected
the appeal, but did use it to clarify the state Constitution's
requirements about a defendant's right to a jury trial. One justice
dissented.
Mr. Bolt's sentence at the El Reno
federal prison near Oklahoma City overlapped that of Mr. Robinson,
who was serving a 2 ½ -year sentence for insurance fraud.
In July 1995, Mr. Bolt was released
from prison and moved back to Benton County, Ark. He went to work
for a copy shop and used it to launch the Arkansas Chronicle,
according to the former county sheriff and others.
A review of the archives of the Chronicle's
Web site shows the publication mostly pursued government conspiracy
theories and attacked local law enforcement officials and anyone
investigating Mr. Bolt's business dealings.
Three Arkansas Chronicle articles
released on the Internet since 2004 imply:
•That in reporting on Golf
Entertainment, Mr. Mauck of Dallas and two Arkansas business journals
were engaged in a conspiracy to manipulate the company's stock.
•That corrupt FBI agents engineered
the securities charges against Shimoda-Atlantic.
•And that former Benton County
Sheriff Andy Lee is a member of a white supremacist group.
In the late 1990s, Mr. Lee said,
the Chronicle began writing about his office's purchase of surplus
Defense Department helicopters, alleging discrepancies in the
county's inventory.
"They got quite a bit of front-page
publicity because they sued quite a bit and did a lot of investigations
about my office regarding helicopters, and they tried to get a
couple of grand juries called to try and get some indictments
on us," Mr. Lee said in an interview.
The allegations were investigated
multiple times by local and state officials and no wrongdoing
was ever found, according to court documents.
Mr. Lee and another official sued
Mr. Bolt, his lawyer Mr. Dodge and others for defamation. Mr.
Bolt and company countersued for malicious prosecution, and after
a four-year battle ended in 2004, Benton County settled.
"We paid them to dump the suit
altogether," Mr. Lee said. "It wasn't much."
The pattern of suits and countersuits
is a familiar one for Mr. Bolt. Federal and county court records
show that since 2000, Mr. Bolt or one of his companies has been
a plaintiff or defendant in more than a dozen lawsuits, with either
Mr. Bolt or Mr. Dodge acting as counsel.
"I have been served by them
I don't know how many times," Mr. Lee said.
Bolt goes into TV
In 2002, Mr. Mauck's longandshortreports.com
and the weekly publications Arkansas Business and Northwest Arkansas
Business Journal teamed up to examine Golf Entertainment after
noticing discrepancies between the company's press releases and
its filings with the Securities and Exchange Commission.
Their reports, published in August
2002, said Golf Entertainment was an inactive golf-course management
firm in Alpharetta, Ga., when Mr. Bolt and an associate acquired
the publicly traded company's shell.
Golf Entertainment began operating
a low-power TV station in Springdale, Ark., with Spanish-language
programming. The stated business plan was that the region and
nation's increasingly Hispanic population would boost demand for
their programming.
But the reports cited the local wireless
cable provider as saying only 340 people subscribed to Golf Entertainment's
station.
The reports alleged that Golf Entertainment
doubled the number of shares of stock available for trading through
a sham settlement of a lawsuit with Genesis Trust. The reports
alleged that Mr. Dodge, Golf's lawyer, had created the trust as
a nonprofit but with an invalid tax identification number.
The reports also told of a payment
of 2 million Golf Entertainment shares to a Florida stock promoter;
a suspicious spike in the company's share price from 3 cents to
30 cents over three days in January 2002; and unsubstantiated
claims of $5 million in funding.
A month later, the Arkansas Securities
Department issued a cease-and-desist order against Golf Entertainment,
Mr. Bolt, Mr. Dodge, Mr. Robinson and others, ordering an end
to the sale of Golf Entertainment shares.
Undeterred, Mr. Bolt said in the
company's quarterly SEC filing that Golf Entertainment was the
target of stock manipulators working in league with the Arkansas
Securities Department.
The SEC filing, which Mr. Bolt signed
as principal executive officer, reflected a company struggling
to stay afloat. The company reported $3,381 in cash, quarterly
revenue of $28,958, and a net loss of $2,450, which rounded down
to a 0-cent loss per each of the 22 million shares.
Golf Entertainment also said in its
SEC filing that it had filed a federal lawsuit alleging market
manipulation and extortion by Mr. Mauck of Dallas, an Arkansas
reporter, others who had raised allegations in online forums,
and several John Does. The judge dismissed the suit in July 2003.
Mr. Bolt, Mr. Robinson and two associates
also sued Northwest Arkansas Business Journal and its parent company,
Arkansas Business Publishing Group, for libel, seeking $42 million
in damages. The suit, filed by Mr. Dodge, eventually was dropped.
In the midst of the controversy,
Mr. Bolt filed with the Arkansas secretary of state to incorporate
the names "Northwest Arkansas Business Journal Inc.,"
"Arkansas Business Journal Inc." and "Arkansas
Business Publishing Group Inc." Mr. Dodge then demanded that
the publications stop using those names and threatened to sue
the papers' Internet service providers if they continued to service
those Web sites.
The publications, in response, sued
Mr. Bolt and Mr. Dodge for trademark violations. Mr. Bolt countersued.
And finally, in late 2004, a federal court granted the publications
summary judgment and barred Mr. Bolt and Mr. Dodge from using
the names of the journals or their parent.
Mr. Bolt and Mr. Dodge were ordered
to pay the publications' legal fees of $92,000. But they have
yet to pay, according to the publications. Both men have filed
for personal bankruptcy.
In his filing, Mr. Bolt reported
assets of $65,553, including a $59,000 home in Rogers, Ark., $100
in fishing equipment, a pacemaker, a worthless coon dog, and 300
million shares of the "companies" he incorporated using
the names of the local business journals, valued at $0.
As the Golf Entertainment case unfolded,
then-U.S. Sen. Tim Hutchinson sent a letter to SEC Chairman Harvey
Pitt, requesting an investigation of the company and citing a
similar request from Benton County prosecutor Robert Balfe.
According to a Dow Jones Newswires
article, Mr. Balfe said in his letter that "Golf Entertainment
is an organization created and operated simply to funnel stock
to a fictitious organization."
Mr. Balfe declined comment, saying
his office had recused itself from the current case.
Like Mr. Mauck's Web site, the local
business journals spent tens of thousands of dollars defending
themselves against Mr. Bolt's lawsuits. Jeff Hankins, the publisher
of Arkansas Business, said it was disappointing that no criminal
charges emerged from the case.
"We always thought that the
Golf Entertainment case had merit," he said. "We reported
details extensively, and now we'll watch the justice system take
its course."
New business
Mr. Bolt, Mr. Robinson and Mr. Dodge
moved next into the pharmaceutical business – apparently
under the watchful eye of the FBI.
The Web site of ShimodaAtlantic Oncology
BioSciences LLC, as the company was originally called, shows photos
of test tubes, cells under a microscope, a scientist with a beaker
and a cancer cell.
"ShimodaAtlantic is a 29-year
old company specializing in the development of niche pharmaceuticals
for neoplastic disease processes," the site says. The company
claims to be involved in pharmaceutical research and development,
clinical trial management, pharmaceutical quality assurance programs
and clinical trial candidate screening programs.
But that description doesn't jibe
with a Food and Drug Administration inspection report of Shimoda's
operation in Rogers, Ark., dated Dec. 5, 2005, a copy of which
Mr. Bolt provided to The Dallas Morning News.
In the "initial inspection of a prescription drug relabeler/repackager,"
the FDA inspector quoted Mr. Bolt as saying the company was not
currently conducting any studies but planned to buy some oleander
tincture from a company in West Virginia and repackage it.
According to the report, Mr. Bolt identified himself as the firm's
compliance manager and said there were only three other employees:
Mr. Dodge, the company attorney; Mr. Robinson, "the fundraiser";
and Mr. Hoback, who handled business affairs.
The federal indictment alleges that
although Mr. Hoback is Shimoda's CEO, Mr. Bolt founded the company.
Shimoda's marketing efforts seem
to have been limited to promoting its oleander-based lung cancer
drug, Xenavex, in Internet forums and denigrating a similar treatment,
Phoenix Biotech's Anvirzel.
"They'd put up these cartoons
about us producing this drug in a bathtub or under unsanitary
conditions," said Mr. Addington, whose company is in the
sixth year of a sponsored research agreement with M.D. Anderson
Cancer Center in Houston.
In an online forum devoted to alternative
cancer treatments in March 2005, Tony Isaacs of Garland believes
he ran afoul of Mr. Bolt.
After reading entries promoting Xenavex
– posted by users with the screen names Boris Batenov and
Natashya Fatale, reminiscent of the old Rocky and Bullwinkle cartoons
– Mr. Isaacs said, he passed on a rumor that Shimoda wasn't
on the up and up. He immediately received a barrage of e-mails
threatening lawsuits from people identifying themselves as Gerald
Bernstein, Shimoda's in-house counsel, and Paul McLouth, the company's
executive manager.
Mr. Isaacs, who previously worked
as an investigator tracking deadbeats, suspected the names were
fake after he searched electronic databases and found no likely
matches in Arkansas. For example, there is no licensed attorney
in Arkansas named Gerald Bernstein, according to the Arkansas
judiciary Web site.
"I've spent 20 years in private
investigation, and they don't exist," he said. "All
the names attached to Shimoda are fictitious for the most part."
Paul McLouth is an alias used by
one of the Shimoda defendants, according to an FBI affidavit.
Mr. Bolt told Dow Jones Newswires last year that Paul McLouth
was the name of his late grandfather.
Shimoda listed a planned clinical
trial for Xenavex in an online National Institutes of Health database.
The trial sought lung cancer patients whose previous treatments
had failed but who had at least three months to live. For more
information, dying cancer patients could call Paul McLouth.
Mr. Isaacs said that, after the e-mail
barrage, two men identifying themselves as a Shimoda official
and a U.S. marshal went to his former employer, Statewide Adjusters
in Garland, trying to find him.
"The very next week they had
two guys show up at the office where I had worked, looking for
me," Mr. Isaacs said. "They said, 'These people are
looking for you,' and I said, 'Holy cow!' "
Mr. Isaacs, who works for former
NFL star Isiah Robertson's North Texas Recovery Center, House
of Isaiah, complained to the U.S. Marshals Service, the FBI and
other federal agencies and passed on evidence he'd turned up on
Mr. Bolt and his alleged activities and aliases. None of the agencies
would comment.
Dallas connection
Shimoda's Web site says it is a privately
held company and provides an e-mail address for interested investors.
"At this time, our policy is to respond only to investment
inquiries originating from accredited investment banking firms,
commercial banks, and NASD licensed broker-dealers."
In April 2005, as Shimoda was trying
to raise money to fund its clinical trial, the company began talking
to a man who identified himself as John Firo, a broker from a
firm in Addison called Talon Holdings, according to court records.
Mr. Bolt told The News in a phone
interview last May that the company checked out Mr. Firo and Talon
Holdings on the Web site of the NASD, which regulates brokers
and brokerage firms, and found them to be in good standing.
Mr. Firo introduced an investor from
Dubai who eventually agreed to buy 20 million shares of Shimoda
at 15 cents a share, for a $3 million investment and a 20 percent
share in the company, court records show.
The agreement was signed May 9, 2006.
The next day, the Shimoda employees were handed a subpoena by
a U.S. marshal and told that John Firo and the Dubai investor
were actually undercover agents, Mr. Bolt said.
Talon Holdings was an FBI operation,
created to gather evidence in the extortion case against Robert
Vigil, the former New Mexico state treasurer. (Mr. Vigil was acquitted
in September on 23 of 24 counts related to allegations that he
extorted money from brokers wanting to do business with the state.)
The undercover deal with Shimoda
was done the same day that Robert Bettes, now retired from the
Dallas FBI office, testified as to Talon Holdings' true identity
during Mr. Vigil's trial in Albuquerque.
Claim of FDA approval
The federal indictment against Mr.
Bolt and associates alleges that at the May 9 meeting, Mr. Bolt
falsely told the Dubai investor that Xenavex had been approved
by the Food and Drug Administration and could legally be marketed
as a treatment for congestive heart failure, herpes and eczema.
Neither Xenavex nor oleander appear
on the FDA's Web site as approved prescription or over-the-counter
drugs. Xenavex does have a National Drug Code number, but an FDA
spokeswoman said a manufacturer can register a product without
it being approved by regulators.
The indictment also alleges that
all four defendants discussed with John Firo the need to conceal
from the investor Mr. Firo's $300,000 kickback fee. Concealing
such a fee is illegal under securities law.
Mr. Bolt, Mr. Dodge, Mr. Robinson
and Mr. Hoback face charges of wire fraud, mail fraud, and conspiracy
to commit securities fraud. The charges carry sentences of between
five and 20 years.
Their trial is set to begin Monday
in federal court in Fayetteville, Ark.
After Mr. Bolt received the subpoena
last May, he began calling reporters to complain that Shimoda
hadn't done anything wrong.
Mr. Dodge sued Talon Holdings, the
undercover agents and the NASD on behalf of Shimoda, alleging
fraud and theft of trade secrets.
In its response, the NASD noted that
Mr. Dodge may have a conflict of interest since he had both filed
the lawsuit and faced charges in the case; that it was the second
securities investigation in four years against three of the four
men; and that Mr. Bolt had "been convicted of a string of
crimes that evidence a fundamental dishonesty running back 30
years."
The NASD said the suit appeared to
be a ploy to use the legal discovery process to gather information
in the men's criminal defense. "This current litigation is
also not the first time these individuals have lashed out at parties
involved in exposing their illegal acts – in fact it is
entirely consistent with a familiar pattern."
Shimoda withdrew the suit against
the NASD and the undercover FBI agents, although it remains active
against a man who is believed to be a cooperating witness.
In a filing in that case, Shimoda
maintained that Xenavex is a "monograph drug" –
available without prescription – and suggested a wide-ranging
government conspiracy against the company.
Mr. Robinson said in an interview
that the November filing is the basis for the men's defense. He
contended that local Republican officials have been out to get
them ever since Golf Entertainment's TV station editorialized
against Sen. Hutchinson's re-election campaign.
"What's going on up here
is a tragedy, and no one seems to have the cojones in this area
to do anything about it," Mr. Robinson said.
