The British Columbia Securities Commission (BCSC) has levied $15-million fines and lifetime bans from being involved in the securities industry against Michael Patrick Lathigee and Earle Douglas Pasquill for “perpetrating frauds,” the BCSC announced March 27.
A BCSC panel established that the two men jointly directed and controlled a group of companies called the Freedom Investment Club (FIC Group). The FIC Group included FIC Real Estate Projects Ltd., FIC Foreclosure Fund Ltd., and WBIC Canada Ltd.
In July 2014, a commission panel found that between February 1, 2008 and November 15, 2008, Lathigee and Pasquill fraudulently raised a total of $21.7 million through the sale of securities to 698 investors without telling the investors important facts about the financial condition of corporate respondents FIC Group and FIC Foreclosure.
The panel found that Lathigee and Pasquill knew when they were distributing the securities that FIC Group had severe cash flow problems, including an unfunded $8 million cost overrun on the company’s biggest project.
The panel also found that Lathigee and Pasquill used most of the $9.9 million raised from 331 investors in FIC Foreclosure to make loans to related companies, instead of investing the funds in foreclosures of residential properties in the United States, which was supposed to be the purpose for which the funds were raised.
“The magnitude of the fraud perpetrated in this case is among the largest in British Columbia history,” the panel wrote.
“The respondents raised $21.7 million from 698 investors without telling them that the FIC Group had a severe cash flow problem.”
The panel ordered Lathigee to pay a $15 million administrative penalty to the BCSC and to resign any position he holds as an officer of a director of an issuer or registrant. It also ordered that Lathigee be permanently banned from trading in securities, purchasing securities or exchange contracts and from becoming or acting as a director or officer of any issuer or registrant.
He is also permanently prohibited from becoming or acting as a registrant or promoter, from engaging in investor relations activities, and from acting in a management or consultative capacity in connection with the securities market.
Pasquill was also ordered to pay a $15 million administrative penalty to the BCSC and to resign any position he holds as an officer of a director of an issuer or registrant. The panel ordered that he be permanently banned from trading in securities, purchasing securities or exchange contracts and from becoming or acting as a director or officer of any issuer or registrant.
Pasquill is also permanently prohibited from becoming or acting as a registrant or promoter, from engaging in investor relations activities, and from acting in a management or consultative capacity in connection with the securities market.
The panel also ordered the respondents to provide the BCSC with any proceeds of their misconduct.
That includes:
•$9.8 million in distributions relating to FIC Projects;
•$9.9 million in distributions relating to FIC Foreclosure; and
•$2 million in distributions relating to WBIC.
