Investors who lost thousands, sometimes tens of thousands of dollars through an investment scheme deemed fraudulent by the B.C. Securities Commission, are advising Canadians to be wary of secretive financial ventures that sound too good to be true.
"The reason I'm here is just so that other people perhaps don't make the same mistakes that I did, and just to be a bit wary," Greg Dixon, a 51-year-old software designer who lost $6,000 in the scam, told CTV's Canada AM.
"I've been trying my best to forget about the whole thing."
On Friday, the B.C. Securities Commission found Hal Allan McLeod, Kenneth Robert McMordie, Dianne Sharon Rosiek and David John Vaughan guilty of fraud for conning about 800 people out of more than US$10 million through sham investments.
"They lied to them about the returns they would receive, they lied to them about how their money was going to be spent, and they used that money to enrich themselves," Lang Evans, director of the commission's enforcement division, told CTV British Columbia.
Jerry Schaab attended several meetings at a hotel in Surrrey, B.C., that were organized by McLeod and his three colleagues. Schaab provided $21,000 to the unregistered companies they ran: Manna Trading Corp Ltd., Manna Humanitarian Foundation, Legacy Capital Inc. and Legacy Trust Inc.
"I decided to [invest] because it was such a good deal," Schaab said, adding that he's learned "people who are in the scam business have no feelings."
The commission says the Ponzi, or pyramid scheme, started in 2005 as an "investment club," and drew in more than US$16 million before collapsing in June 2007. It paid back between US$3 million and US$5.6 million over that time.
Investors were told their money would be handled by experienced traders for a monthly return of seven per cent, resulting in compounded returns of more than 100 per cent, the commission said. They were also given ATM cards to withdraw cash with, but eventually the money dried up.
"The reality is that Manna was a Ponzi scheme," concluded the three-member panel that heard the case. "Manna fraudulently used the investments of later investors to fund the promised returns to earlier investors, to pay commissions to the affiliates and consultants, to invest in an online gaming business, and to buy real estate in Costa Rica."
The commission is seeking the maximum penalty, a $1 million fine for each of the four people convicted in the case, and a lifetime ban on trading in the province.
The RCMP has said it's looking in to the matter. If it launches its own investigation, the four could face jail time. But under the Charter of Rights and Freedoms, evidence gathered from the commission's investigation would be set aside as self-incriminating.
With files from The Canadian Press
