Alberta panel orders $719k in penalties for fraud and unlawful distribution of securities
Over $462,000 raised from investors was never used for the promised investments.
Instead, funds were redirected to pay personal expenses, make luxury purchases, repay unrelated debts, and service other investors in a Ponzi-like structure, according to the Alberta Securities Commission (ASC).
In a decision released July 9, the ASC sanctioned Raymond Cawaling and RTAX Financial Corp. (the Respondents) for illegal distribution of securities and fraud.
The panel found that the Respondents' misconduct resulted in significant harm to investors and the broader Alberta capital market.
The Respondents raised funds between October 2016 and November 2019 under the premise of investing in ventures, including a mining project through Chimera Corporation and a ruby monetization deal with Definitely Green Investments.
However, ASC records showed that only a small portion of the funds actually reached those projects.
The rest was used for unauthorized purposes such as utility bills, property taxes, luxury car payments, gambling, and payments to unrelated third parties.
The ASC panel ordered the Respondents to jointly pay $462,421 in disgorgement, a $175,000 administrative penalty, and $81,755 in investigation and hearing costs.
Cawaling received a permanent ban from trading or advising in securities and derivatives, acting as a director or officer, and engaging in investor relations.
RTAX also received permanent trading and advisory bans, and all trading in RTAX securities must cease.
According to the panel, “consequences must also fall on those who illegally distribute securities and deprive investors of the protections our regulatory system is intended to provide.”
Investors were promised outsized short-term returns — as high as tenfold within 90 days — and many were shown a stand-by letter of credit allegedly issued by Santander Bank.
ASC evidence revealed that Cawaling continued raising funds even after suspecting Chimera might be a Ponzi scheme and learning that the letter of credit was a forgery.
The decision also referenced the impact on investors, some of whom testified to losing house down payments, retirement savings, and experiencing ongoing financial and emotional stress.
In several instances, funds used to repay earlier investors came from new ones, further contributing to the Ponzi-like nature of the scheme.
Cawaling, a former licensed financial advisor and insurance broker, did not dispute the ASC’s findings and did not participate in the sanction phase of the proceeding.
