ASC Finds Fraud

One of the burdens a company takes on when it accepts money from the public is to use the money for the projects it’s soliciting the funds for. If the charter is to build schools, then the funds can’t be used to build churches. If the charter is to engage in low-risk investments, that rules out playing the junk-bond market. If the funds are solicited for developing a particular plot of land, those funds can’t be used to develop a different project – regardless of how viable or profitable the alternate opportunity may be.

In this item I picked up from the ASC news feed the reported facts of this case sounds suspiciously familiar – in particular the defense of “..he did not intend to commit fraud or to have investors lose their money.” The ASC found the action fraudulent and the “I didn’t mean to!” defense completely irrelevant.

From the ASC Document on the case:

. . . Many frauds are perpetrated by people who think there is nothing wrong in what they are doing or who sincerely believe that their act of placing other people’s property at risk will not ultimately result in actual loss to those persons. . .

The ASC document is quite long – here’s the ASC’s Press Release on the case:

Panel finds that Aitkens perpetrated fraud by diverting funds raised from investors to other entities he controlled, among other violations

CALGARY – February 20, 2018 – The Alberta Securities Commission (ASC) has found that Ronald James Aitkens, Roy Juergen Beyer, Foundation Group Capital Trust (the Trust), 0865701 B.C. Ltd. (0865701), Harvest Capital Management Inc. (HCMI), Stoney View Crossing Inc. and Harbour View Landing Inc. breached Alberta securities laws.

Specifically, an ASC panel’s findings included that:

• Aitkens, Stoney View Crossing and Harbour View Landing perpetrated a fraud on investors when they caused these companies to misuse money raised from investors by diverting it to other entities with common ownership or management; and
• Aitkens, Beyer, the Trust, 0865701 and HCMI made materially misleading omissions in certain Trust offering memoranda.

In issuing its decision, the panel noted that: “…we conclude that Aitkens knew or ought to have known that the transfers from [Stoney View] Crossing and the [Harbour View] Entities resulted in deprivation to others by placing their pecuniary interests at risk because he knew that such funds were ultimately being used for other projects and purposes, not for the development of the [Stoney View] Land and the [Harbour View] Land. The legitimacy of such other projects and purposes was irrelevant. Aitkens’ contention that he did not intend to commit fraud or to have investors lose their money was also irrelevant.”