David Michael Michaels, a former mutual fund salesperson and infomercial host, defrauded 484 clients – many of whom were seniors – of a total of $65 million, the British Columbia Securities Commission has ruled.
Between June 2007 and December 2010, Michaels fraudulently advised clients to purchase more than $65 million worth of exempt market securities. During this time, he was not registered as would be required for an adviser. Michaels collected $5.8 million in fees and commission for the sale of these securities.
Michaels conducted infomercials on Victoria’s CFAX 1070 radio in a regular weekly slot called “Creating Wealth with David Michaels.” On this show, which Michaels claimed had 20,000 listeners a week, he drew clients in to appointments in his office, as well as to investment seminars that he held in Victoria and Vancouver.
He then advised clients to sell their stocks, bonds and mutual funds and purchase high-risk exempt market securities instead, telling them to borrow against their homes. The BCSC said that in doing this, Michaels make misrepresentations to his clients, deceived them and betrayed their trust.
“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 BCSC panel stated in its ruling.
“As a consequence, his clients have suffered grievous deprivation, and he was greatly enriched.”
According to Michaels, the average age of his clients was 72. At least $40 million of the total investments is completely lost, said the BCSC.
Sanctions against Michaels have yet to be set out.
