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Kott gets around. In 1976 he was convicted of stock fraud in Ontario and fined Can$500,000--believed to be the largest personal fine in Canadian history up to that time. In 1979 he was sentenced to four years in prison in another case, a conviction that was overturned on appeal. By the '80s, he had set out for Europe to help run an Amsterdam-based company called First Commerce Securities, which became mired in scandal. The operation was a classic boiler room--a brokerage firm that used high-pressure sales tactics to push dubious securities. Telemarketers dialed for dollars around the clock to all points of the globe.
First Commerce's main product was stock of an outfit called DeVoe-Holbein International, a company that boasted a very interesting technology: one that could essentially extract gold and other valuable minerals from wastewater and seawater. It was a lure reminiscent of the medieval alchemists who claimed to be able to transform base metals into gold, with equally unimpressive results. Dutch authorities raided First Commerce in 1986 and forced it into bankruptcy the following year. Thousands of investors lost money, including many Americans living abroad.
Although Kott told TIME he was only a consultant to First Commerce, Dutch prosecutor Jan Koers says he found overwhelming evidence that Kott owned the company and played a major role in running it. He accused Kott of fraud, tax evasion and various other crimes. The criminal investigation stalled because Kott could not be extradited from Canada. Kott settled the case against him and other operators of the boiler room for about $4 million. This was pocket change in comparison with what First Commerce collected. Prosecutor Koers estimates that investors lost a bare minimum of $100 million. Jan van Apeldoorn, the bankruptcy receiver, believes the total damage was as high as $400 million. Having been made unwelcome in the Netherlands, Kott, together with some of his associates, continued to push highly speculative stocks using brokerage firms in other countries, including Britain, Luxembourg and the U.S. One such outlet was Greentree Securities, a now defunct New York City firm run by Kott's son Michael, an alumnus of First Commerce. (Another son, Ian, is a senior official of JB Oxford.)
JB Oxford Holdings used to be called RKS Financial Group, and it was the parent company of a sketchy brokerage firm called Reynolds Kendrick Stratton. In the spring of 1993, Kott helped arrange for a group of investors to acquire a controlling interest in the brokerage company, and Kott was hired as a consultant. Reynolds Kendrick Stratton aggressively promoted Kott-related stocks, notably shares of a NASDAQ-listed company called Hariston Corp.