YBM Magnex International Inc. continues with its polymer-bonded magnet program as federal authorities conduct a criminal investigation of the Newtown, Pa., firm.
YBM said May 14 that officials from the U.S. Immigration Office, U.S. Customs Service, Federal Bureau of Investigation and Internal Revenue Service searched its Newtown office May 13.
Magnex has begun installing injection and compression presses at Newtown to mold mixtures of undisclosed polymer with magnetic materials to form small, powerful magnets used in automotive, appliance and other industries, said Vice President Guy Scala. The project is intended to capitalize on fast-growing markets dominated by the Japanese.
YBM said it is cooperating with federal officials but it denies it is associated with any criminal activity. Published reports suggest YBM's predecessor and affiliated companies were owned in part by Russian criminal syndicate heads Semeon Mogilevitch and Sergei Mikhailov and associates.
YBM conceded that Mogilevitch was one of its 31 original shareholders, but said he never controlled or managed the firm. It denied Mikhailov ever was involved with YBM.
The Toronto Globe and Mail reported that police in several countries suspect the men lead groups engaged in illegal activities such as arms and drug dealing, money laundering and extortion.
The firm also faces problems at the Toronto Stock Exchange, which suspended YBM share trading May 13 because it was not going to meet a May 20 deadline on providing audited 1997 financial results. The Ontario Securities Commission has called a June 12 hearing to decide when YBM shares can resume trading.
Scala said in a telephone interview that YBM probably will invest less than its original forecast of $14 million in the polymer-bonded plant because it will use an existing facility rather than build one. He said YBM plans to install about 20 presses within five years. It recently began producing sample magnets.
YBM reported unaudited 1997 sales of $137.8 million and profit of $25.6 million. In March it bought a British specialty magnet business from Philips Electronics NV.