A Canadian jewellery manufacturer may fight a $1.3 million damages claim.

D. G. Jewelry Inc. is considering seeking a stay of enforcement of a judgment against the company following the joint FBI and Royal Canadian Mounted Police (RCMP) "Bermuda Short" sting operation and the resulting arrest of Mark Valentine (pictured).

It was reported last week that D.G. Jewelry Inc. which designs, manufactures, merchandises and distributes stone-set jewellery, had settled long standing litigation with Haymarket, a company with which Valentine had some involvement.

The company reported that final judgment had been entered against the company for damages in its litigation with Haymarket in the total amount of $1,371,696.03, inclusive of damages, interest and assessed costs.

In June, 2002, Mark Valentine, former chairman of Canadian broker-dealer, Thomson Kernaghan, was placed under suspension by the Ontario Securities Commission as the result of an investigation in which it is alleged that Valentine has been guilty of conflicts of interest, non-compliance with and breach of Ontario securities laws, and failure to deal honestly and in good faith with clients, including orchestrating "death spiral" or "toxic financing" transactions. On August 14, 2002, Valentine was arrested in Frankfurt, Germany, as the result of an FBI and RCMP sting operation.

The operation, "Bermuda Short", was into stock fraud and money laundering, in which at least 60 persons have now been charged.

Valentine has been charged with conspiracy to commit wire, mail and securities fraud, and with two counts of securities fraud.

The indictment also alleged Valentine caused securities brokers to receive kickbacks in return for helping to manipulate the market price of three companies by selling their stock to unsuspecting clients.

As these activities have similar overtones to the kind of market manipulation which D.G. Jewelry had alleged at trial had occurred in the trading of its stock, and, since Valentine and Thomson Kernaghan had played a key role with Haymarket in the trading of D.G. Jewelry's stock which Haymarket had received in the May, 1999 financing, D.G. Jewelry have said the company is now considering its options as a result of these recent developments, including seeking a stay of enforcement of the judgment as a result of new evidence that might have been or may be discovered in the course of these investigations, and/or seeking redress against those persons responsible for any illegal activities in relation to trading of its stock in that transaction either in New York or in the Canadian courts.