An advisor was fired after referring or assisting at least five clients to invest in or loan a total of $75,000 to a retail clothing company.
Duke Mongare Ongechi worked for Investors Group Financial Services from March, 2010, to May, 2016, when he was terminated. The misconduct took place while Ongechi was working from its Pickering, Ontario branch.
An MFDA panel established four main allegations against him. These included: engaging in unapproved and undisclosed outside activity and/or an unauthorized referral arrangement; engaging in personal financial dealings with a client which created a conflict of interest or potential conflict of interest; failing to report to his member firm that he was named as a defendant in two civil claims commenced by clients; and providing false or misleading statements to IG and the MFDA.
Ongechi told clients that a retail clothing business known as “Ambrosia” was a successful company looking for prospective investors to provide “seed funding” for merchandise purchases, describing it as an alternative to mutual funds.
The MFDA said the investments or loans were generally held for a period of six months, with principal and interest payments to be paid to investors bi-weekly. At least one client was to be paid interest of approximately 10% per month or 120% per year. No client received any interest payments and only one received a partial return on their investment, in the amount of $5,000.
As a result, one client complained to Ongechi about the principal plus interest totalling $19,755 that they were owed, holding the respondent responsible. The former advisor, therefore, agreed and signed a promissory note outlining that he would pay the client the money back himself via six post-dated personal cheques. When they were deposited by the client, they were returned because of insufficient funds in Ongechi’s account.
In late 2015 and early 2016, two clients commenced two separate small claims court proceedings seeking damages relating to their investment in Ambrosia. In both instances, a Notice of Garnishment was issued against Ongechi, who had not informed IG about either case.
The MFDA added that submissions with respect to a penalty will take place on a date to be determined.
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