Court dismisses appeal in $65-million fraud case targeting B.C. seniors

Victoria financial adviser loses bid to have case overturned

VANCOUVER — B.C.’s top court has refused to overturn the case of a former mutual funds salesman who defrauded hundreds of seniors by selling them $65 million in exempt securities.

David Michaels appealed a $17.5-million fine imposed by the B.C. Securities Commission, which found he illegally and fraudulently advised 484 people without being properly registered to sell securities.

The commission also ordered him to pay back the $5.8 million he earned in commissions and marketing fees for securities by advising seniors to sell their stocks, bonds and mutual funds to buy high-risk exempt market securities, which can be sold without filing a prospectus, and insurance-based investment products.

The B.C. Court of Appeal has upheld the commission’s findings of fraud and misrepresentation and the imposition of the fine in separate decisions for Michaels’ activities between 2007 and 2010.

Michaels promoted his business through 45-minute weekly infomercials titled “Creating Wealth with David Michaels” on a radio station in Victoria, saying he loved helping seniors make money.

However, the court says almost all the investments are now worthless and that many of Michaels’ clients have had their financial futures ruined.

“He told his listeners that the average age of his clients was 72,” the decision says, adding Michaels also held seminars in hotels and that his brochure described opportunities to earn an income without any stock market risk.

He also said clients could build their wealth by owning real estate, double their retirement savings every six years and have a guaranteed income that would last the rest of their lives.

In an August 2014 decision, the commission described Michaels’ actions as a textbook case of improper sales practices “that so violate the principle of investor protection and so seriously damage the integrity of our markets.

“Michaels preyed on clients by frightening them and misleading them into leaving the comparative safety of traditional capital markets for the far riskier part of the exempt market.”

The Vancouver Island man’s actions damaged the confidence of investors in both traditional and exempt markets because he portrayed himself as an experienced insider but operated on deceit, the commission said.

Spokesman Richard Gilhooley said Michaels has not paid the commission any of the $5.8 million he earned by bilking clients, nor has he paid the $17.5 million fine.

Gilhooley said the commission has the option of pursuing the money through B.C. Supreme Court but has not yet decided whether it will do so.

Investors would split any money the commission receives, he said.

Just Posted

Bylaw rescinded after vacation rental owners express concerns

Concerns included a lack of consultation

Get ready for a week of sunshine across Vancouver Island

Environment Canada is forecasting temperatures in the high teens all this week

B.C. students send books to displaced students of Hornby Island school fire

Maple Ridge elementary school teacher says students learned about acts of kindness

North Island Tour De Rock rider Benjamin Leah leads team to Port Hardy

“You don’t have issues and problems when you look at these kids and how much they’re going through.”

Denman Island awash with plastic debris

After 14 years of Community Beach Cleanups, the little Gulf Island of… Continue reading

United loses 3-1 to Mariners

Comox Valley United lost 3-1 to the Mid Isle Mariners in a… Continue reading

Trudeau urges leaders to follow Nelson Mandela’s example at UN tribute

Peace summit in New York marks 100th birthday of former South African president

Senate seats filled in B.C., Saskatchewan

Canada’s newest senators are the first woman to lead the RCMP and a Cree Metis businessman

Newfoundland’s popular ‘merb’ys’ calendar is back

The calendar of burly, bearded mermen posing against scenic backdrops for charity returns

Cap rent increases at inflation rate, B.C. task force recommends

MLAs say drop annual increase that would allow 4.5% rise next year

Nanaimo woman envisions Vancouver Island’s first cat café

Business idea still in early planning stages and hopes to be open next year

School, church, old mining site make Heritage BC’s first ‘watch list’

The list includes sites in need of protection to maintain B.C.’s culture and history

Yowza! Twerk, emoji and facepalm are added to Scrabble dictionary, OK?

Merriam-Webster has announced 300 new words have been added to the spelling game

LGBTQ activists, allies in Victoria counter anti-SOGI protest with rally of their own

Lower Mainland activists plan to protest SOGI on legislature lawn, Sept. 29

Most Read