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

YANA Ride in Comox raises thousands for families with medical needs

In its seventh year, the event attracted the maximum 600 riders on Sunday

Cycle tour for African Grandmothers coming through the Comox Valley

On Sept. 6, 35 women, aged between 56 and 75, will be… Continue reading

Ferries employees participating in Denman Island cleanup for plastic-shedding ferry

The cleanup comes a few weeks after one organized by residents of the Island

Gallery accepting applications for Youth Media Project

The Comox Valley Art Gallery is accepting applications for the Youth Media… Continue reading

VIDEO: Canadian zoos’ captive breeding programs help preserve endangered species

Programs considered last-ditch effort to prevent local extinctions of turtles, butterflies and more

B.C. log export rules killing us, northwest harvester says

NorthPac Forestry says Skeena Sawmills has plenty of timber

Injured owl begins recovery at MARS

Western screech owl was showing signs of a head trauma

Vancouver man arrested after pregnant woman’s SUV stolen, then crashed

Police are recommending charges against a 22-year-old Vancouver man

Environment groups warned saying climate change is real could be seen as partisan

Talk of climate change could be viewed as advocating against Maxime Bernier, the leader of the People’s Party of Canada

Search crews find 4-year-old boy who went missing near Mackenzie

George went missing early Saturday afternoon

15-year-old boy drowns after midnight jump into Okanagan Lake

The RCMP and BC Coroners Service are investigating the drowning.

PHOTOS: Cumberland Wild embraces diverse musical talents

Day 1 of the two-day music festival took place Saturday

Most Read