ASC: “Go Directly to Jail,Do Not Pass Go, Do Not Collect $200”

In the board game “Monopoly” the objective is to roll a pair of dice, move your token around a board, purchase and develop various properties, charge rent to people that land on your properties, eventually bankrupt them, and in the end own all the assets in the game.612bhhmyryql

One of the squares in the game is a “Chance” square – which looks like this:


If a player lands on this square,  the player draws a card from the top of the “chance” deck, reads it, and does what it says.

Sometimes the “chance” card has good news:


and sometimes it doesn’t:


This has led to the expression when someone makes a major mess of things “Go directly to jail, do not pass go, and do not collect $200!” When a child makes a mistake, this can be said in jest – for an adult, this generally reflects something a bit more serious.

For the subject of today’s article, the matter for the accused and the people he defrauded are serious indeed, particularly since it involved people’s life and retirement savings.

A reported in the Edmonton Journal:

When Jay Peers’ business empire collapsed in December 2010, scores of investors across Western Canada saw roughly $80 million of their money disappear in what was subsequently exposed as an elaborate securities fraud.

The bankruptcy filings of his companies — Edmonton-based Federal Mortgage Corp. and Peers Foster Kristiansen — cost some elderly investors their life savings. One Calgary investor is believed to have committed suicide.

This case has striking similarities to the CEF / DIL mess. Alberta Venture reports that Jeremy Peers

  • was from a long-established line of well-known businessmen and community leaders that went back nearly a century,
  • was implicitly trusted by his friends,
  • convinced people to invest their life savings with him, including funds that were set aside to fund people’s retirement

Some quotes from Alberta Venture may sound familiar:

  • “‘You know, they’ve got a company that’s been in business for 100 years and they’ve never missed a beat,’” 
  • …for two or three years, the statements hadn’t been audited. “I don’t think any of us ever clued in to the fact that maybe there’s a reason why there are no audited financial statements,” 

The ASC press release of this case may provide an indicator of how the ASC / BSC regulators will proceed. I’ve underlined places where this case appears similar to CEF/DIL:

Jeremy (Jay) Peers has been sentenced to three and a half years imprisonment after pleading guilty to fraud, misrepresentations, and dealing and advising in securities without registration under the Securities Act (Alberta), in relation to Federal Mortgage Corporation and related entities.

In an Agreed Statement of Facts (ASF) filed with the Court, Peers admitted to a number of violations involving securities in Federal Mortgage Corporation and related entities. According to the ASF, Peers acted as a dealer and adviser to investors without registering under the Securities Act. He was a director of Federal Mortgage Corporation and made misrepresentations regarding the Corporation and its related entities. Further, he authorized or directed the use of investor funds to pay interest and returns to new investors and to provide cash to entities operated by family members.

Jay Peers preyed on innocent investors that included close friends and family, betraying their trust,” said Cynthia Campbell, Director of Enforcement. “Not only will Jay Peers be incarcerated and permanently removed from Alberta’s capital markets, but this sentence sends a clear message to others that behaviour of this nature will not be tolerated.”

With respect to the timeline between when Jeremy’s companies went bankrupt and when he was charged – Alberta Ventures reports:

  • Dec 9, 2010 – FMC / PFK files for bankruptcy
  • Jul 12, 2012- ASC charges Jay and other people with 34 counts of securities fraud

The Price-Waterhouse, Coopers bankruptcy webpage reports on the dissolution of the businesses and properties operated by Jeremy Peers and others. From the Alberta Ventures report:

According to PwC, FMC had $46.4 million of liabilities when it went bankrupt, but just $12 million in assets. PFK, with similar ­liabilities, had assets of less than $3 million.

This video from Alberta Ventures documents the fall of the storied house of Evans and where some of the money went:

A filing for the class action lawsuit that details what is alleged to’ve happened is here.

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