By Rumina Daya and Yuliya Talmazan Global News(BC)
A Vancouver Island man has been found guilty by the British Columbia Securities Commission of perpetrating a massive fraud, affecting hundreds of British Columbians, many of them seniors.
The Commission panel has found that David Michael Michaels advised 484 clients to purchase over $65 million of exempt market securities.
Exempt market securities are securities sold under exemptions from prospectus requirements.
Michaels was allegedly paid $5.8 million in fees and commissions for his sales.
The panel also found that Michaels advised his clients to sell their stocks, bonds and mutual funds and purchase high-risk exempt market securities instead.
He also advised his clients to borrow against their homes.
The panel found that in giving this advice, Michaels made misrepresentations to his clients, deceived them and betrayed their trust.
The Commission panel says Michaels acted as an adviser without being registered.
He is a former mutual fund salesperson.
It is alleged that Michaels illegally advised his clients between June 2007 and December 2010.
Teresa Mitchell-Banks, the Director of Enforcement with BC Securities Commission, calls it a significant case and says what Michaels did was ‘despicable’ because he knew the risk.
“Mr. Michaels deliberately targeted senior clients. He said that the average age of his clients was 72,” says Mitchell-Banks. “This is a retired population. We consider them to be vulnerable. He put them in high-risk securities after persuading them that their traditional investments were unsafe.”
Michaels also held weekly infomercials on CFAX 1070 radio in Victoria.
The panel says Michaels testified that he used the C-FAX program to draw the public to investment seminars that he hosted in Victoria and Vancouver.
It is alleged the C-FAX programs drew 20,000 listeners a week.
Michaels claimed in the hearings that his clients were fully aware of what they were getting themselves into.
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