BC bans 2, fines them $11M
Regulators in British Columbia have announced penalties totalling more than $11 million against two men and two companies in an alleged fraud involving the sale of securities in properties under foreclosure.
Besides the fines and administrative penalties, a panel of the British Columbia Securities Commission also permanently banned Theodore Ralph Everett and Robert H. Duke from trading in securities or from engaging in investor relations activities.
In an announcement Thursday, the BCSC said the panel found that Everett and Duke, along with Micron Systems Inc. and Independent Academies Canada, distributed securities to 126 investors for proceeds of $5.1 million without filing a prospectus, perpetrated a fraud by distributing securities to 55 investors for proceeds of $1.45 million, and traded securities in violation of a cease trade order.
In its decision, the panel found that Everett and Duke sold securities when they knew that the property they told investors would be developed with their money was in foreclosure.
"In fact, they raised some funds after the court had ordered the sale of the property," the commission said.
In its sanctions decision, the panel noted that Everett's and Duke's "deceitful conduct was directly responsible for the harm done to the IAC and Micron investors," and that they also "enriched themselves at investors' expense."
The panel ordered that Everett and Duke be permanently banned from trading in securities, purchasing securities or exchange contracts, and from becoming or acting as a director or officer of any issuer or registrant.
They are also permanently prohibited from becoming or acting as a registrant or promoter, from engaging in investor relations activities and from acting in a management or consultative capacity in connection with the securities market.
The respondents were ordered to pay to the commission the $5,433,189 obtained as a result of their misconduct and said that Everett and Duke are jointly and severally liable to pay an administrative penalty of $7 million.
IAC and Micron have been permanently cease traded.
A third respondent, Leonard George Ralph, was named in the original notice of hearing issued in January 2013 but subsequently entered into a settlement agreement with commission's executive director.
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