Why are government investigators in countries as far away as West Germany and Australia interested in a group of companies that began life in Utah?

The answer involves an intricate chain of international stock dealings that authorities still haven't completely figured out.The Utah-born companies started out with such workaday names as Williams Welding - hardly the stuff one would expect to fascinate law enforcement officials around the world. But through the magic of mergers, they took on new names and more glamorous identities - one company says it's building a cable car system to the Great Wall of China.

Then, with their new names, the corporations' stock ended up being sold throughout the world by Continental American Investments N.V., a brokerage that operated in Europe.

Many of the investors worldwide who bought the stock found when they tried to sell that the brokerage was gone and they were left with stock for which there was no longer any market.

Last fall the Salt Lake office of the Securities and Exchange Commission temporarily suspended trading in M.A.G. Holdings Inc., Golden Glory USA Inc., Alan Jones Pit Stop (USA) Inc. and Bitter Corporation Inc. The agency said the companies had failed to provide accurate and adequate information to investors.

Each of the four Utah-born companies was a revived defunct corporation that had been turned into a purportedly public shell. After being revived, each had apparently merged with a private company. Then, following a series of transactions that government authorities are struggling to trace, the companies' shares were sold overseas.

The first step in the marketing of the companies was their listing in the "pink sheets," a quotation service in the United States that identifies brokerages making a market in stocks too small for the major exchanges or NASDAQ.

One common element was that the Salt Lake brokerage of Western Capital & Securities Inc. made a market in the stock of all four former shells. Western Capital, which closed last December, was beneficially owned by David A. Parker, according to SEC records. Parker declined to be interviewed about the former shell companies.

Parker and his brokerage have been the object of regulators' scrutiny in the past. Without admitting guilt, they have been fined and had suspensions imposed in settlement of previous SEC and National Association of Securities Dealers cases, in which they were accused of charging unfair markups on stocks and fraudulently misleading investors, according to court and regulatory records.

Western Capital's name is even known to securities regulators as far away as Australia.

In 1987, Australia's National Companies and Securities Commission moved against an unlicensed brokerage called Gresham Clarence Investment Services Ltd. for illegally selling to New Zealand investors shares of one of the Utah-born companies - Alan Jones Pit Stop.

The Australian commission forced Gresham to offer refunds to all the New Zealand purchasers. And the commission required the brokerage to disclose its dealings with Western Capital & Securities, the Salt Lake brokerage.

Former Western Capital director Kim Johnson, however, said the Salt Lake brokerage, which made a market in the stock of Alan Jones Pit Stop, never did any business with any Australian brokerage.

He said one of Western Capital's customer accounts was Continental American Investments, the brokerage that operated in Europe and sold stock of Alan Jones Pit Stop. Continental American and Gresham Clarence both had links to members of the same family. One of Gresham Clarence's directors was Gregory John Huxley, son of Peter Geoff Huxley, one of Australia's most notorious white-collar criminals.

The elder Huxley served time in Australia for a multimillion-dollar bank fraud, then moved to Europe. The father was involved in running Continental American Investments, said Salt Lake attorney James Barber, who represents both Continental American and Alan Jones Pit Stop.

And although the younger Huxley may not have been directly involved in Continental American or its West German subsidiary, C.A. Management Consultants GmBH, Barber said, "I'm sure that he acted in various consulting capacities for them."

Continental American was registered in the Netherlands Antilles in the Caribbean, but it operated in Europe, with offices in Monaco and West Germany, Barber said.

Continental American shut down

Barber said West German authorities seized Continental American's operating premises and froze its accounts last September about the time that the SEC suspended trading in Alan Jones Pit Stop and more than 30 other Utah-originated companies. The West German action forced Continental American to shut down, Barber said.

Continental American had marketed shares not only of Alan Jones Pit Stop but also of Golden Glory, Bitter Corporation and M.A.G. Holdings, Barber said. Unable to resell their shares through the closed Continental American, frustrated owners of Golden Glory and Alan Jones Pit Stop stock turned to Western Capital in Salt Lake City, but to no avail.

Johnson, a former Western Capital director, said the Salt Lake brokerage had stopped making a market in the stocks by then and referred callers to the SEC or government officials in their own countries.

Barber, who was hired at the time of the trading suspension and closure, has been busy ever since with damage control and repair. He's already helped write a February report telling Alan Jones Pit Stop shareholders their stock is unregistered and the promoters of the original Utah shell violated U.S. securities laws by creating false corporate records of a non-existent 1979 public offering.

The letter said Alan Jones Pit Stop management had not known the shell records were false because management dealt with intermediaries, whom Barber declined to name.

How did the company's stock, originally listed on the pink sheets where U.S. penny stocks are traded, end up overseas?

Between February 1987 and September 1988, Continental American bought and resold nearly all of the free-trading Alan Jones Pit Stop stock, obtaining a substantial number of the shares within a short time, Barber said.

The attorney wouldn't say from whom Continental American bought the stock or what price it paid. But Continental American sold that stock to more than 2,100 investors abroad at prices ranging between $1 and $5 per share, he said.

According to court records, Continental American and C.A. Management were investigated by Australian securities officials, who concluded that their promotion of Bitter and M.A.G. shares violated Australian law.

And the New South Wales commissioner for corporate affairs warned Australian investors last year not to invest in Golden Glory. He said the Golden Glory proposal had "all the hallmarks of the investment scams promoted by many suspect organizations," including a glossy brochure sent through the mail, "which is in itself an illegal offer document."

Interpol also has asked the Salt Lake City Police Department for help with an investigation by Belgian authorities related to Continental American, its West German subsidiary and Alan Jones Pit Stop.

New York ties

Continental American and C.A. Management touted their stocks in their own newsletter, the Sigmund Roths-child's Investors Guide to Profits.

Rothschild, a prominent New York art appraiser, told the Deseret News he had initially let Continental American use his name on the newsletter, but after seeing the first couple of issues he withdrew his permission.

Perhaps coincidentally, SEC rec-ords show that the principal underwriter on a company called Sigmund Rothschild Consulting Ltd. was Western Capital, the Salt Lake brokerage, and the consulting company's attorney - as well as a stockholder - was Benjamin Sprecher, of New York. Sprecher said the consulting company never finished going public, and he doesn't know if it was related to the investment newsletter.

H. Robert Harber, a New York printer, was listed in SEC records and other filings as an officer of both Sigmund Rothschild Consulting Ltd. and Golden Glory. He told the Deseret News he is "totally unfamiliar" with the consulting company. But he said he knowingly served as an interim officer of Golden Glory at the request of a man named Frank from Continental American, who was the brokerage's controller or something similar.

Attorney James Barber said Frank Moore, the main person he deals with on Continental American, serves as the company's comptroller or something of that nature.

Harber said that when he agreed to be an interim officer on Golden Glory, he signed papers at Sprecher's New York offices.

Saga of former shells continues

The Utah-related stocks sold by Continental American haven't traded in the United States since the SEC imposed its 10-day suspension in September, Barber said. But the letter to Alan Jones Pit Stop shareholders said that company, at least, plans to submit new information to the pink sheets to allow brokers to trade the stock.

Barber said that if proper disclosures are made about Alan Jones Pit Stop and its troubled history, a new trading market might be established in the United States.

-Next: Utahn Michael Wright in the middle of blind pool investigation.

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(ADDITIONAL INFORMATION)

Terms of Investment

REVIVED SHELL: a public company that has gone defunct for whatever reason andis then revived. Often the revival will be accompanied by an increase in the numbere of authorized shares. The revived shell typically has few or no assets and can be used as a vehicle by which a non-public company can go public by merging or otherwise combining with the shell. As used in this series, a former revived shell refers to the company after such a merger or combination.

PINK SHEETS: a quotation service for so-called "penny stocks," or stocks too small for listing on the major stock exchanges or NASDAQ. The pink sheets list the market makers in a particular stock, their telephone numbers and sometimnes the prices they are quoting.

NASDAQ: an automated quotation system of the National Association of Securities Dealers by which, primarily, stock of companies too small for the major exchanges but larger than penny stocks are traded.

MAJOR EXCHANGES: in the United States, generally considered to include the New York Stock Exchange and American Stock Exchange.

MARKET MAKER: a securities dealer who holds himself out as being willing to buy or sell a particular security for his own account on a regular or continuous basis.