BCSC panel finds that five people and two companies illegally distributed securities

VANCOUVER, Feb. 27, 2017 /CNW/ - A British Columbia Securities Commission (BCSC) panel has found that SunCentro Corporation; John Leonard Carswell; Robert Thomas Helina; Donald Weiss; YDS Energy, Resources and Humanitarian Relief Corporation; Yawar Sattar Khan; and David Kenge Kato illegally distributed securities to investors without a prospectus.

SunCentro is a Nevada corporation that has never filed a prospectus under the Act. Carswell is a B.C. resident and is SunCentro's president, CEO, CFO, secretary, and treasurer. Helina is also a B.C. resident and is the chairman of SunCentro's board of directors. Both men are also directors of SunCentro and were not registered under the Act during the relevant time.

YDS is a B.C. company that entered into a business development agreement with SunCentro, authorizing it to provide marketing and financing services to SunCentro. Kato and Khan are both B.C. residents and directors of YDS and have never been registered under the Act. Kato is YDS's vice president and Khan is its president and CEO.

Weiss is a U.S. resident and is not a director or officer of either company and has never been registered under the Act. He referred investors to SunCentro and was paid commissions for his work.

The panel found that between 2011 and 2013, the respondents were involved with raising money for SunCentro by distributing securities to investors who did not qualify for prospectus exemptions. The panel made various findings of illegal distribution against the respondents:

• SunCentro with respect to distributions to 19 investors in the amount of US$165,500;
• Carswell with respect to distributions to 20 investors in the amount of US$171,500;
• Helina with respect to distributions to 19 investors in the amount of US$165,500;
• YDS with respect to distributions to 19 investors in the amount of US$165,500;
• Kato with respect to distributions to 19 investors in the amount of US$165,500;
• Khan with respect to distributions to 19 investors in the amount of US$165,500; and
• Weiss with respect to distributions to 6 investors in the amount of US$78,025.

In its decision, the panel noted that "the respondents, with respect to varying numbers of the investors, did not ensure that the requirements of the exemptions were met with the result that those investors were denied the protections intended by the Act."

The panel also found that as directors and officers of SunCentro, Helina and Carswell were liable for all 19 of SunCentro's illegal distributions in the amount of US$165,500. The panel also found that as directors and officers of YDS, Kato and Khan were each liable for all 19 of YDS's illegal distributions in the amount of US$165,500.

The panel also dismissed some allegations of illegal distributions against certain of the respondents on the basis that those respondents had a due diligence defence to those allegations.

For its misconduct, the panel has permanently cease-traded securities of SunCentro and permanently prohibited SunCentro from purchasing or trading any securities or exchange contracts. SunCentro has been ordered to pay a disgorgement of US$165,500.

The panel also ordered that YDS cease trading in and be prohibited from purchasing any securities or exchange contacts, and prohibited the company from becoming or acting as a registrant or promoter and acting in a management or consultative capacity in connection with activities in the securities market. YDS has been ordered to pay disgorgements of US$4,020 and $11,755 to the Commission. YDS and SunCentro are jointly and severally liable for these amounts. YDS's bans are to remain in effect until the later of the date that it pays its monetary orders and February 20, 2019.

The panel also ordered that Carswell, Helina, Kato, Khan, and Weiss resign any positions they hold as, and are prohibited from becoming or acting as, directors or officers of any issuers (with limited exceptions). They are also banned from trading in and purchasing any securities (with limited exceptions), becoming or acting as a registrant or promoter, acting in a management or consultative capacity in connection with activities in the securities market, and engaging in investor relations activities. In addition:

• Carswell has been ordered to pay an administrative penalty of $5,000. His bans are to remain in effect until the later of the date that he pays his monetary order and February 20, 2021.
• Helina has been ordered to pay an administrative penalty of $3,000. His bans are to remain in effect until the later of the date that he pays his monetary order and February 20, 2020.
• Kato has been ordered to pay an administrative penalty of $2,000. His bans are to remain in effect until the later of the date that he pays his monetary order and February 20, 2019.
• Khan has been ordered to pay an administrative penalty of $2,000. His bans are to remain in effect until the later of the date that he pays his monetary order and February 20, 2019.
• Weiss has been ordered to pay an administrative penalty of $2,000 and a disgorgement of US$5,000. His bans are to remain in effect until the later of the date that he pays his monetary orders and February 20, 2019.

In a dissenting decision, BCSC Vice Chair Nigel Cave found there was no evidence to suggest that SunCentro used the funds raised from the illegal distributions in any manner that is inconsistent with investor expectations. As a result, Cave would not have made a disgorgement order against SunCentro.

You may view the decision on our website www.bcsc.bc.ca by typing SunCentro Corporation, John Leonard Carswell, Robert Thomas Helina, Donald Weiss, YDS Energy, Resources and Humanitarian Relief Corporation, Yawar Sattar Khan, David Kenge Kato or 2017 BCSECCOM 58 in the search box. Information regarding disciplinary proceedings can be found in the Enforcement section of the BCSC website.

Please visit the Canadian Securities Administrators' Disciplined List for information relating to persons and companies disciplined by provincial securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).

About the British Columbia Securities Commission (www.bcsc.bc.ca)

The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:

• A securities market that is fair and warrants public confidence
• A dynamic and competitive securities industry that provides investment opportunities and access to capital

Learn how to protect yourself and become a more informed investor at www.investright.org

SOURCE British Columbia Securities Commission

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