Three B.C. residents and their companies committed fraud when they continued to sell shares in a Vancouver Island investment while the property was in foreclosure, the BC Securities Commission (BCSC) alleges.
A notice of hearing has been called for Theodore Robert Everett, Leonard George Ralph, Robert H. Duke and two B.C. companies to answer charges that they committed fraud and illegally distributed securities.
The BCSC also alleges Everett, Ralph, Duke and one of the companies contravened a BCSC cease-trade order.
Between 2002 and 2011, one of the companies – Independent Academies Canada (IAC) – raised $7.3 million from about 150 investors, the BCSC stated in a press release.
The investment was for a combined sports, educational and residential complex in Comox on Vancouver Island. Everett, Ralph and Duke are IAC directors.
The company filed 36 exempt distribution reports for at least 122 of the investors, claiming they qualified for exemptions from prospectus and registration requirements. But the BCSC staff found that only 15 of the investors qualified for an exemption, "thereby rendering much of the distribution illegal."
In November 2009, foreclosure proceedings were started against the property. The BCSC alleges the company continued to market IAC securities without disclosing that the property was under foreclosure. The property was ordered sold by the courts in September 2012.
The BCSC also alleges Everett, Ralph, Duke and Micron Systems Inc. – IAC's parent company – breached a cease trade order that had been issued against the company on July 19, 2011.
IAC provided written updates to investors informing them the company was restructuring into a new entity called ISE, but neither IAC nor Micron filed a prospectus in B.C.
A hearing has been set for January 30, 2013, at 9 a.m. BCSC's allegations have not been proven.
