VANCOUVER, June 14, 2013 /CNW/ - The executive director of the British
Columbia Securities Commission has issued a temporary order and notice
of hearing alleging that Rodney Jack Wharram and three companies for
which he is a director and president committed fraud. The notice
further alleges that Wharram made false statements to commission staff.
The executive director issues temporary orders in situations where the
length of time required to hold a hearing could be prejudicial to the
The notice alleges that Wharram, a B.C. resident since 2007, and two of
the companies in question raised funds under various offering
memorandums (OM), the majority of which were supposed to be used as
loans to a developer (the third company marketed and promoted the OMs).
BCSC staff maintain that less than half of the funds were actually
advanced to the developer, and that Wharram used investors' money for
personal purposes, thereby committing fraud. Wharram has never been
registered in any capacity to sell securities in B.C., and none of the
three companies have ever been registered or filed a prospectus in B.C.
The notice states that the Falls Capital Corp., an Alberta-incorporated
company, issued two separate OMs in October 2007 and October 2008. Both
OMs stated that the Falls Capital would lend the majority of funds
raised from investors to a developer who was intending to develop the
Falls Resort in Chilliwack, B.C. Staff allege that only $2.3 million of
the $5.4 million raised under the two October OMs was advanced to the
developer, while Wharram used at least $75,000 of investors' money
towards the purchase of his residence.
Staff further allege that after selling Falls Capital's creditor claims
against the developer (which had been granted protection from its
creditors in February 2011) for $63,779, Wharram used at least $47,500
of the proceeds for personal expenses, including payments to restore
his father's jeep and pay his mortgage.
Deercrest Construction Fund Inc., an Alberta-incorporated company,
issued one OM in March 2009 and an updated OM in March 2010. Both OMs
stated that Deercrest was raising funds to lend to a developer to build
the Deercrest townhomes and clubhouse located at the Falls Resort. BCSC
staff allege that only $1.6 million of the $3.95 million raised under
the two March OMs was advanced to the developer, while Wharram used at
least $130,000 towards the purchase of his residence, $240,000 to lend
to his wife to invest in a grocery store, and $24,000 to purchase a
diamond ring for his wife.
West Karma Ltd., an Alberta-incorporated company, raised money for the
Falls Capital and Deercrest by marketing and promoting their OMs. West
Karma also owned 40% of the voting shares of the Falls Capital.
In addition to the allegations of fraud against Wharram, the Falls
Capital, Deercrest and West Karma, staff are alleging that Wharram made
false statements to a commission investigator during interviews on
March 12 and 13, 2013. During the interviews, Wharram stated that he
had not raised any funds from investors in 2013, and was not currently
trying to raise funds from investors. Following the interviews,
however, staff discovered that Wharram raised approximately $50,000
from one person on March 8, 2013, and approximately $400,000 from
additional people later in March and April 2013.
These allegations have not been proven. Counsel for the executive
director will apply to extend the temporary order on June 26, 2013 at
The B.C. Securities Commission is the independent provincial government
agency responsible for regulating trading in securities within the
province. You may view the notice of hearing on our website www.bcsc.bc.ca by typing Rodney Jack Wharram, Deercrest Construction Fund Inc., West
Karma Ltd., The Falls Capital Corp., or 2013 BCSECCOM 220 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 Persons List for information relating to persons disciplined by provincial securities
regulators, the Investment Industry Regulatory Organization of Canada
(IIROC) and the Mutual Fund Dealers Association (MFDA).
Learn how to protect yourself and become a more informed investor at www.investright.org
SOURCE: British Columbia Securities Commission
For further information:
For media inquiries, contact Richard Gilhooley, media relations, 604-899-6713. For public inquiries, call 604 899 6854 or 1 800 373 6393 (toll free).