B.C. Regulator: Many Scam Victims Left Destitute After Being Conned By Dubious Investment Peddler Into Borrowing Against Their Homes To Buy Shaky Securities
In Vancouver, British Columbia, The Vancouver Sun reports:
- A Victoria-area financial adviser has been accused of illegally selling more than $65 million worth of high-risk securities to hundreds of investors, many of them seniors, leaving a trail of financial devastation.
In a notice of hearing Thursday, the B.C. Securities Commission alleged that from June 2007 to December 2010, David Michaels — doing business as Michaels Wealth Management — advised 484 clients to purchase more than $65 million worth of “exempt-market” securities without being registered to advise in securities.
The notice also alleges he defrauded investors by “repeatedly and falsely” claiming that he gave up his earlier registration as a stockbroker because he had lost faith in the stock market when, in fact, he had relinquished his licence in the face of an investigation.
The notice says he targeted retirees through monthly seminars, a weekly show on CFAX 1070 radio and one-on-one meetings, and that he promoted the securities as being less risky than publicly traded stocks and in some cases recommended that investors borrow against their homes to finance the purchases.
The securities were, in fact, extremely risky. They included investments in a couple of oil and gas start-up companies, a company that bought insurance policies at a discount from terminally ill people, and a long-term care facility development in Sidney.
For Michaels, it was a very lucrative business. According to the notice, he collected nearly $5.8 million in commissions and marketing fees from the issuing companies during the material period.
For investors, however, the investments were disastrous: “Almost all of the roughly $65 million invested by Michaels’ clients is now worthless, leaving many of them destitute while their home equity loans remain,” the notice alleges.
For the British Columbia Securities Commission press release, see BCSC alleges that Vancouver Island man illegally advised hundreds of people and perpetrated fraud.
For the formal charges, see Notice of Hearing: In re Michaels.