Boston Man's Alleged Trail of Deception May Reach an End

Just prior the offer announcement, Indo Sakura converted 70,000 of those warrants into actual shares. After the offer announcement–and the immediate increase in Imagis’ stock price–Indo Sakura converted the remaining 35,000 warrants into shares. With Mr. Thomas holding 50,000 of his own warrants to buy the stock at US$2.20, he advised what the SEC referred to as “purported clients” to buy shares of Imagis stock, as well, further driving up the price.

“The Defendants’ illicit scheme artificially inflated the value of Indo Sakura’s Imagis stock, as well as the securities held directly by Pembridge and its purported clients,” according to the SEC.

Imagis spokesman Eric Westra said the company severed its ties to Pembridge some time ago, but that his understanding now is that “Pembridge was a sham. It was not even a bona fide offshore company, just a drop box in Boston.”

He said Imagis was “duped by someone who had duped others,” and that it had no comment on the charges filed by the SEC against Mr. Thomas. That’s different from what company executives told reporters who raised questions about Mr. Thomas in late 2002. Then they maintained they had conducted proper due diligence, and that Mr. Thomas was a good fit for the company’s board.

Questions Arise

Six weeks after Pembridge’s March press release announcing the proposal to take Imagis private, a website called Canada Stockwatch posted an exhaustive story that examined the offer and subsequent confusion about what it meant–even among Imagis executives. Some of the executives had said publicly they thought Pembridge Group’s letter constituted a buyout offer while others said it did not. The April 16 Stockwatch piece referred to Pembridge Group as “an obscure Boston-based investment firm.”

Subsequent stories by New York Post reporter Christopher Byron delved further into the murky world of Canadian penny stocks, including Imagis, and traced some of their funding to Middle East governments. The more Mr. Byron looked, the more curious he appeared to become with Mr. Thomas, whose past he described at one point as “questionable.”

Among the details Mr. Byron revealed in stories for the Post and for Red Herring magazine were that Mr. Thomas was a former Marine who served in Morocco, that his college transcripts from Virginia Polytechnic Institute had been sealed, that he had changed his name in 1998 from Tracey Lee Thomas, that he was a stockbroker for Kidder-Peabody in Atlanta, that he had at one point traveled the world using a passport that listed his gender as female and that while in Atlanta he ran a side business selling electrical equipment wholesale. The name of that business: Pembridge Group.

Later, according to published reports in the New York Post, Mr. Thomas had an affair with the wife of an Atlanta plastic surgeon, and the two eventually moved to Boston after the woman and her husband divorced.

Other published reports indicated that Pembridge Group operated out of Boston office space that could be leased by the day or week. This stands in apparent contrast to a number of press releases issued by Pembridge that indicate Mr. Thomas oversaw a staff of promising Ph.D. candidates, most of whom were products of Harvard or the Massachusetts Institute of Technology.

Registration information for www.pembridgegroup.com, the firm’s purported web site, indicated Mr. Thomas registered the site in 1998. Under the registrant information, he listed a P.O. Box 1651, Georgetown, Ky., but a Boston ZIP code, 02108. Under the administrative and technical contact sections, he put his own name, the 60 State Street address, the telephone number that rang busy on Thursday and Friday and the fax number that has been disconnected.

A representative for Equity Office Properties Trust, the management company for 60 State Street, said there was no record of either Pembridge Group or Mr. Thomas leasing space in that building. The representative did say it was possible Pembridge Group or Mr. Thomas subleased space from another tenant.

The Fabulist?

From P.O. Box 1651, it appears Mr. Thomas created an identity that fooled Imagis executives, some members of the media and possibly even Harvard University, where he apparently earned cum laude honors in 2002 from the school’s division of continuing education.

Harvard’s Extension School, in its Fall 2002 Alumni Bulletin, noted Mr. Thomas tied for first place in the competition for the Phelps Prize, which recognizes “academic achievement and character” among bachelor’s degree students at the extension school. In its blurb on Mr. Thomas, bulletin school noted he graduated at the top of his class with a 3.94 grade point average, and was “the founder of Pembridge Group LP, a successful private investment firm. . . .” The bulletin went on to note that he “took a sabbatical to experience an academic challenge in the liberal arts to match his business accomplishments.”

Among the more elaborate plugs for Mr. Thomas was a 3,000-word January 2000 press release from Pembridge Group that moved on Business Wire Inc. The piece quotes no one by name except Mr. Thomas, instead relying on sources identified as “people close to the situation,” “other portfolio managers,” “one limited partner,” “one chief investment officer in London” and “people around Boston.”

The lack of attribution seems not to have daunted the writer, who attempted to convey an almost superhuman quality to Mr. Thomas. Some excerpts:

• From an anecdote about Pembridge’s 1995 involvement with Sutton Resources Ltd. and its chairman, James E. Sinclair: “After doing extensive analysis on Sutton, Thomas remembers saying, ‘Let’s keep this simple, I’ll work for my firm’s expenses and significant equity in the deal. If I’m right and this company is undervalued and poorly managed, Pembridge will make more money than you would ever agree to today without going into cardiac arrest. If I’m wrong, my options will expire worthless and you’re out pennies.’ Sinclair smelled total commitment and said, ‘Done.’” Note: Sutton in 1998 issued a press release denouncing Mr. Thomas’ touting of his work with respect to Sutton. Apparently, according to the Sutton release, Mr. Thomas had posted news on web sites touting his achievements improving Sutton’s stock price in a way that made it look like the news was coming from Sutton. Claiming Mr. Thomas had made “no known contribution,” the Sutton release concluded Mr. Thomas’ actions were “unfortunate” and “distasteful.”
• “When the [Sutton] proxy battle was heading towards a settlement in 1997, Thomas astounded his investors again by saying he was going to take some time off. In itself, this came as no surprise to anyone–almost two years of 80?? 1/2 90 hour seven-day weeks and a huge payday warranted some play time. What astounded everyone was Thomas’ version of time-off. He informed them he had applied to Harvard Business School and was planning to spend the fall of 1997 in an intensive general management program for senior executives with a faculty of the most senior professors at the school.”
• “Thomas was so absorbed with the academic experience at [Harvard Business School], he returned to Harvard University the next Fall to enter a degree program with a field-of-study in Computer Science. Oddly, that’s when things accelerated again for Pembridge. Armed with wall street [sic] experience, insight garnered from the Socratic classroom debates in over 250 cases in the AMP program and with the technical acumen in his degree studies, as one limited partner put it, ‘Trey was able to see around corners in technology investing.’”
• “Thomas rises around 4:30 a.m. on Monday through Thursdays [sic], then ‘sleeps in’ to 5:30 a.m. on Fridays, and gets downright slovenly on the weekends with the alarm being set to 7:30 a.m. He begins his day by scanning his four Bloomberg flat panels for market data, then retrieves and answers his emails while listening to CNBC, followed by a quick read of the WSJ. He then takes the elevator down to possibly the only private indoor half-Olympic size lap pool in Cambridge, and begins a daily 45 minute swim, taking along more reading material for the sauna afterwards.” Note: A published report said Bloomberg LP removed its terminals from Mr. Thomas’ apartment in June 2001 because he owed the company US$12,000.
• “One Chief Investment Officer in London is fond of telling his investment committee, ‘Trey Thomas has the highest returns, and the lowest body fat of any outside managers we have.’”
• In a discussion of Mr. Thomas’ propensity for dropping bits of seemingly ageless wisdom: “Colleagues and professors say in addition to his intellect and capacity for work, Thomas is further emboldened by the belief he can overcome any obstacle, thus another perennial favorite, ‘If it is to be, it’s up to me.’”

Now, however, it may be up to the SEC. The commission is seeking to force Mr. Thomas to return money he earned from the Imagis deal, pay civil penalties, bar him from trading in penny stocks and permanently prohibit him from serving as an officer or director of a public company.

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Contact Bob Keane with questions or comments at: [email protected].