The U.S. Securities and Exchange Commission has added to its growing list of monetary orders against several British Columbians found liable of committing a involving hundreds of millions of dollars’ worth of shares in American companies.
In total, in Canadian dollars at today’s exchange rate, the commission now intends to take at least $168.9 million out of the pockets of those residing in B.C., should the regulator’s most recent repayment and penalty orders be approved by a federal court judge in the District of Massachusetts.
Last month, the commission demanded US$68.1 million total from five Lower Mainland residents found to have committed fraud in civil judgments in fall 2023: Courtney Kelln of Surrey; Paul Sexton of Anmore; Yvonne Gasarch of Richmond; Jackson Friesen of Delta; and Mike Veldhuis of Vancouver.
The demands are in addition to three previously secured monetary judgments totalling US$68.3 million against two other B.C. residents and one former B.C. resident now residing in California: is to pay the commission US$5 million after reaching a settlement in January 2023, in which he neither admitted or denied the allegations against him; Avtar Dhillon, a former B.C. resident who now resides in Long Beach, Calif. owes US$10.4 million after admitting to fraud. Dhillon now faces wherein he's been found guilty.
The largest final monetary order, for US$52.9 million, is against West Â鶹´«Ã½Ó³»resident Fred Sharp — the man the commission claimed was the “mastermind” of the “sophisticated, multiyear, multi-national attack on the United States financial markets and retail United States investors."
The commission filed , that collectively outlined a scheme involving over $1 billion worth of stock trades in over 100 public companies between 2012 and 2020.
Sharp, who faces a criminal indictment for his part, administered multiple networks of people in control of public companies, or “control groups,” who set off to defraud investors by manipulating shares of those companies by heavily marketing them to investors, the commission alleged.
The so-called “Sharp Group,” led by Sharp and administered by Kelln and Gasarch, sold the shares via offshore trading platforms.
The administrative services included creating a global network of offshore shell companies to conceal beneficial ownership of stock, arranging stock transfers and money transmittals, and providing encrypted accounting and communications systems, the commission noted in its various complaints.
Sharp dubbed himself “Bond” in an encrypted communication system called “Q” that used “X phones.”
In one example the commission had alleged Sharp moved accounts under the name of his wife's tennis coach.
The commission's complaints suggest B.C. lawyers played a prominent role in the transactions.
In addition to freezing the brokerage and bank accounts of these individuals to recover the illegal trading profits, the commission has also launched forfeiture claims against assets here in B.C.
The five recent draft monetary orders have yet to be signed off by a judge who has granted some individuals with an extension to respond to the court.
The orders also include permanent bans against the individuals from participating in penny stock trading and business activity.
The proposed monetary orders are as follow (U.S. dollars):
Paul Sexton: $24,802,222
Disgorgement: $17,367,474
Prejudgment interest: $5,872,145
Penalty: $1,562,603
The largest monetary order of the five is for Sexton, who was party to the “Veldhuis Control Group” which worked closely with companies controlled by Dhillon, among others.
Sexton had accounts with TD Canada Trust and Cannacord Genuity Corp. frozen, including accounts under Nova Trek Capital Inc., Westwood Ventures Inc. and Solito Capital Corp.
Mike Veldhuis: $19,166,531
Disgorgement: $13,289,897
Prejudgment interest: $4,314,031
Penalty: $1,562,603
Veldhuis was part of what the commission dubbed the “Veldhuis Control Group” with Sexton and Friesen. Together, they controlled much of the stock in several companies they fraudulently manipulated.
The commission had alleged one of the group’s primary conduits was a Swiss-based asset manager called Wintercap SA.
Veldhuis had accounts at PI Financial, Cannacord Genuity and TD Canada Trust frozen, including for companies Avonhurst Capital Corp., Blackstone Capital Corp.and Blackstone Capital Partners Inc.
Veldhuis faces criminal charges in a parallel charge brought by the Federal Bureau of Investigation.
Jackson Friesen: $17,466,516
Disgorgement: $11,846,176
Prejudgment interest: $4,057,737
Penalty: $1,562,603
Friesen worked with Sexton and Veldhuis as one control group working with the Sharp Group.
Friesen had several accounts at PI Financial and Bank of Montreal frozen, including those associated to his companies Ardent Strategies Corp., Ferrous Capital Corp., First Avenue Corp., MGF Strategies Corp., Valley Drive Estates Inc., Boundary Bay Strategies Corp. and Westside Partners Inc.
Zhiying Yvonne Gasarch: $3,726,805
Disgorgement: $2,522,367
Prejudgment interest: $646,366
Penalty: $558,072
The commission had alleged Gasarch transferred sales proceeds to control persons and was dubbed “Wires” in the “Q” system.
Gasarch had accounts with Sun Life Assurance, Canacord Genuity Corp., G&F Financial Group and Wells Fargo frozen by the commission and is ordered to empty those funds to the commission
Courtney Kelln: $2,947,551
Disgorgement: $1,582,785
Prejudgment interest: $460,688
Penalty: $904,078
Kelln was found to have administered tasks associated with obtaining, allocating, and distributing blocks of shares across multiple nominee shareholders in a manner designed to conceal who controlled the stocks being traded.
Kelln had TD Canada Trust accounts frozen, including one belonging to Evervest Equity Inc.
Kelln faces criminal charges in a parallel charge brought by the Federal Bureau of Investigation.
