VANCOUVER, Jan. 17, 2019 /CNW/ - Investors defrauded by David Michael Michaels will get some money back after the British Columbia Securities Commission (BCSC) obtained money from the sale of Michael's Hawaiian property and a cash payment from Michaels.
The BCSC's court-appointed receiver, Grant Thornton Limited, holds about $1.1 million from Michaels to return to investors, about 20 per cent of the net amount Michaels obtained from the fraud. These payments will not affect the BCSC's ability to continue to collect against Michaels' outstanding sanctions.
Grant Thornton has sent a notice explaining the claims process to investors, most of whom are seniors living in or around Victoria. Each investor will receive a pro-rated share of the $1.1 million (minus the fee for the receiver) based on the money he or she lost.
A BCSC panel found in 2014 that Michaels committed fraud against more than 480 investors. It banned him from the securities industry and ordered him to pay $23.3 million in fines. When Michaels did not pay his fines, the BCSC started two lawsuits, relating to property in Hawaii and Victoria.
Michaels settled the lawsuits with the BCSC in June 2018, agreeing to hand over the Hawaii property and to pay $50,000. The Hawaii property was sold in December 2018, and the money given to the receiver.
"We've been persistent in our efforts to collect from Mr. Michaels, and we're now at the stage where we can return some money to the hundreds of investors who suffered losses because of their investments through him," said Doug Muir, Director of Enforcement for the BCSC. "To get money to people as quickly as possible, we obtained court approval for a simplified claims process that should be efficient and straightforward. We urge investors to respond to the receiver's notice, which is required for them to participate in the distribution."
The BCSC panel found that Michaels, a former mutual fund salesman who conducted weekly radio infomercials, illegally and fraudulently advised clients to purchase high-risk securities that were exempt from requirements to have a prospectus (a formal document that provides details of an investment). He also advised them to borrow against their homes to purchase these investments.
The panel said Michaels lied to his clients and betrayed their trust. It determined that at least $40 million of the $65 million his clients invested was lost; Michaels was paid $5.8 million in fees and commissions for those activities. In addition to banning him from most market activities, it ordered him to pay $5.8 million that he had been paid in fees and commissions, plus a $17.5 million administrative penalty.
Investors can find out more about the claims process by visiting https://www.grantthornton.ca/en/service/advisory/creditor-updates/#David-Michael-Michaels; additional inquiries can be sent to [email protected].
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
For further information: Media Contact: Brian Kladko, 604-899-6713; Public inquiries: 604-899-6854 or 1-800-373-6393 (toll free), [email protected]