The regulator's panel finds advisor named himself sole heir to client's estate
An Ontario couple who managed a client's retirement savings took $1m of his money, named themselves his beneficiaries, then lied to their firm about it.
A CIRO hearing panel found Paul Vincent Ongcapin Encarnacion and Mari Sophia Mendoza Encarnacion guilty of three rule violations following a disciplinary hearing held December 1–3, 2025.
The panel issued its reasons on April 16.
According to the decision, Re Encarnacion 2026 CIRO 13, the client — identified only as PK — was 85 years old, living alone in a retirement home, and had no family in Canada.
Paul had serviced PK's accounts at PFSL Investments Canada Ltd. in Mississauga since PK's retirement around 2013 or 2014.
In March 2023, Paul processed nine redemptions of substantially all the mutual funds in PK's Tax-Free Savings Account and non-registered account, producing net proceeds of $987,562.
Paul then helped PK set up a new email address used to execute the redemptions via DocuSign.
Days later, PK signed two cheques — filled out by Paul — for $925,000 and $75,000.
Paul deposited the $925,000 cheque into his personal bank account, which carried a balance of -$5.45 before the deposit.
He invested $600,000 in mutual funds, naming himself the approved person of record, and earned $39,060 in commissions.
Sophia invested a further $200,000.
Between April and August 2023, the panel found, the couple spent approximately $112,000 of the remaining $125,000 on personal expenses, including over $50,000 on credit card payments and loans.
Paul's defence was that PK wanted to gift him the money, with the sole condition that Paul cover PK's living expenses for the rest of his life.
The panel found no evidence to support that framing and noted that Paul himself admitted knowing the arrangement was a conflict of interest.
The financial transfer was not the only conflict.
According to the decision, Paul helped PK draft a new will in March 2023 through a Pre-Paid Legal service — a referral service approved by PFSL — after PK expressed concern that a previous 2022 will, which had cut out the Encarnaciones entirely, was the result of manipulation by a third party.
The new will, signed March 31, 2023, named Sophia executor and Paul the sole beneficiary.
Paul admitted at the hearing that he recognised at the time this was a conflict of interest.
He did not disclose it to PFSL.
The panel cited the 2022 Ontario Capital Markets Tribunal decision in Marrone (Re), which established that an approved person named as a beneficiary of a client's estate is in an actual or potential conflict of interest that must be reported and addressed.
When PFSL launched an investigation following a client complaint, the panel found the respondents compounded the misconduct.
During a July 2023 interview, they disclosed the $925,000 cheque but not the $75,000 one.
When the firm followed up in August asking the couple to account for the $125,000 that had not been invested, Sophia told PFSL the balance sat in their bank account, held for PK's expenses.
The panel found that statement false: the couple had spent nearly all of it on themselves.
Paul argued he never directly communicated the false information to PFSL.
The panel rejected that defence, ruling that his silence in the face of a misleading response directed at both respondents constituted a breach of his disclosure obligations under Mutual Fund Dealer Rule 2.1.1.
The panel found all three contraventions established on a balance of probabilities — Contraventions 1 and 3 against both respondents, Contravention 2 against Paul alone.
Neither is currently registered in the securities industry.
A separate hearing will determine sanctions.
