A two-year investigation may end in a former financial advisor being brought down by his own brother – also a financial planner.
Financial advisor Daniel Reeve appeared in a Kitchener courtroom this week, with the Crown enlisting another advisor – his brother – to prove a $10 million swindle.
The investigation by Waterloo Regional Police into the advisor’s fraudulent dealings began in earnest in late 2009 culminating in charges being laid in July 2012. In custody since then, Daniel Reeve is accused of bilking 41 investors of $10 million.
David Reeve worked for his brother for a decade before being named president of DPR Financial in late 2007. Appearing before the court on Tuesday, David testified that he was a figure head with no real authority to run the business.
“Daniel made all the decisions,” David Reeve said. “I couldn’t look at the books. I couldn’t hire or fire anyone. I couldn’t even order paper-clips.”
Shortly after ascending the presidency the firm started to hemorrhage cash and David Reeve was forced to bail out the business by injecting $250,000 of his money to keep the employees paid and the hydro on.
David Reeve confronted his brother about the problems facing DPR Financial in the middle of 2008 and like a good con artist his brother had answers at the ready.
“My brother always smoothed things over, saying ‘We’re growing quickly’ or ‘I’m going through stuff with Cheryl,’” David Reeve said.
By October 2008, David Reeve had left DPR. His brother continued to sell financial products until a cease-and-desist order from FSCO was issued in May 2009.
The Crown details of the fraud allege that Daniel Reeve promised investors a 20% return on their private equity investments which included a hotel in St. Jacobs, Ontario. Investors didn’t see any return on their investment nor a return of capital.
“It was an incredibly painful experience dealing with the various insurance companies involved and also all of the regulators, from the Ontario Securities Commission, the Financial Services Commission of Ontario, to The OmbudService for Life & Health Insurance and even the Ombud of Ontario,” Toronto doctor Ira Bernstein, one of the victims said at the time of Daniel Reeve’s arrest. “I feel that regulation in Ontario and in Canada is virtually non-existent and once you lose your money due to bad practices, don’t expect any help from any regulatory body because they all pass the buck.”