A British Columbia Securities Commission (BCSC) panel has imposed a total of CAD $1.7 million in fines and lifetime securities trading bans on three British Columbia men and two Mortgage Investment Corporations (MICs) after finding them guilty of committing fraud.
At the time, David Scott Wright (Wright ), Donald Bruce Wilson (Wilson), and Patrick K. Prinster (Prinster) and the DominionGrand II Mortgage Investment Corporation (MIC II) and the DominionGrand Investment Fund Inc. (MIC III), were primarily engaged in the investment of capital in mortgages secured by real estate.
The panel had found that funds invested in MICs II and III had been diverted to companies related to the respondents, breaching section 57(b) of the Securities Act, RSBC 1996 (the Act).
Although most all of the $1.1 million raised from investors was lost, except for some funds paid back to investors as purported returns, the BCSC panel found no evidence that Prinster, Wright, or Wilson as individuals had personally gained by the diversion of the investment funds.
Additionally, while the panel found no evidence that the individual respondents beneficially owned the related companies or any evidence of what those entities did with the funds, it also noted that the three men had diverted the funds “despite warnings and concerns expressed to them from multiple sources.”
The panel cast aside assertions from Wilson, Wright, and Prinster that their misconduct was simply due to a failure to provide better disclosure to their investors.
In summation, the panel found:
• the DominionGrand II Mortgage Investment Corporation (MIC II) had breached section 57(b) of the Act, defrauding 19 investors for a total of $610,1341;
• DominionGrand Investment Fund Inc. (MIC III) had contravened section 57(b) of the Act, defrauding 21 investors for a total of $506,693;
• Wright, Wilson, and Prinster had contravened section 57(b) of the Act, for defrauding 19 investors each, for a total of $610,134, and both Wright and Prinster had breached section 57(b) of the Act, for defrauding 21 investors for a total of $506,693.
The panel also permanently banned Prinster, Wright, and Wilson from trading in or purchasing securities or exchange contracts; using the exemptions set out in the Act; becoming or acting as a registrant or promoter; becoming or acting as a director or officer of any issuer or registrant; acting in a management or consultative capacity in the securities market; and, engaging in investor relations. The three men were ordered to resign any position they may have held as officers or directors.
In addition, the panel also imposed fines of $561,479 on DominionGrand II Mortgage Investment Corporation, and $500,961 on DominionGrand Investment Fund Inc. Both companies also received permanent bans on trading in or purchasing securities or exchange contracts; using the exemptions set out in the Act; becoming or acting as a registrant or promoter; acting in a management or consultative capacity in the securities market; and, engaging in investor relations.
The link to British Columbia Securities Commission Securities Act, RSBC 1996, c. 418 Citation: Re DominionGrand, 2019 BCSECCOM 335, can be found on the website of the BCSC.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
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