Canadians are advised to be suspicious of international investments that sound too good to be true; but the country’s squeaky clean reputation can also be used to defraud international investors, as a case by the Ontario Securities Commission illustrates.
The OSC has charged Sandy Winnick, Kolt Curry, Greg Curry, Andrea Lee McCarthy and others for schemes to defraud international investors by enticing them to invest in inactive Ontario-registered companies -- BMF and Liquid Gold -- through a fictitious Singapore investment bank.
“The BFM and Liquid Gold schemes I find to be entirely fraudulent,” Said OSC commissioner James Carnwath. “The activities of those involved in the Schemes include unregistered trading and illegal distributions.”
The investors came from countries including Israel, Denmark, the UK, Germany, Norway, Belgium, Sweden.The alleged fraud schemes were committed in Canada from 2009 through 2010.
The schemes came to light after Winick, Greg Curry and others were arrested in Bangkok, Thailand, in March 2011 for operating a “boiler room” telemarketing fraud. At that time files related to the operation of the boiler room were seized by the Thai Police who provided copies to a RCMP liaison officer in Bangkok. Following the arrests in Bangkok, a search warrant was issued for McCarthy’s residence in Ontario.
The OSC charges that from June 2009 through December 2010, at least 50 investors outside of Canada purchased shares in BFM, an Ontario company, through telephone salespeople claiming to represent an investment bank from Singapore called Denver Gardner Inc.
Although BFM never had an had an operating business, 28 investors wired more than C$360,000 into bank accounts in Ontario to purchase shares. The OSC said over 50% of those funds were withdrawn in cash, transferred to accounts held by Winick or McCarthy or used to pay personal credit card bills.
In addition, the OSC alleges that from June 2009 through November 2010, at least eight investors outside of Canada purchased shares in Liquid Gold in a similar telephone scam. Liquid Gold received approximately US$2.6 million during the scheme, of which approximately US$85,000 was from the sale of its shares to investors, the OSC charges, and over 98% of the funds were disbursed on expenses unrelated to the company’s alleged business of the company, including payments to credit cards in Winick’s name.
From May 2009 through August 2010, at the direction of Winick, Curry and others sent correspondence from an Ontario company, AHST Ontario, and a Nevada company, AHST Nevada, to approximately 10,000 people enclosing share and warrant certificates in Nanotech, an inactive Wyoming company.
The recipients of the letter included both BFM investors and Liquid Gold investors. The Nanotech Letter stated that the recipient was entitled to an unpaid dividend in the form of shares and purchase warrants and further claimed that the warrants could be exercised at a price substantially lower than the price at which Nanotech was currently trading. The OSC alleges that this statement was false.
A hearing to determine sanctions on Winick and Gregory Curry will be held at the OSC on 12 September, it said in a notice.