In 2008/2009, the Respondents took $75,000 out of the FCC bank account which went towards a down payment on a residence they were building in Chilliwack, BC.
They moved into the home on August 9, 2009 and immediately began the process of obtaining a second mortgage on the home with the FULL intent of replacing the $75,000. After being denied a second mortgage by a few different lenders, he was finally approved in December 2009 for a mortgage amount (after fees and expenses) of $82,279.40 which was placed into the WKL bank account. Understanding that the WKL, FCC, and DCF bank accounts were very much intertwined (WKL paid many of the bills associated with the companies), there are several instances were funds (from the $82,000 deposit) went to pay bills for the FCC and DCF offerings.
This would make the amount of $75,000 inaccurate! Despite this, the Respondents have been ordered to repay the FULL $75,000 as part of the disgorgement/restitution ordered by the BCSC. Despite having the onus to bring “clear and compelling” evidence to the hearing, Staff did not and as a result we know have numbers that are not factual! Bringing these allegations and then NOT determining the correct number is NOT clear; not is it compelling.
The fine issued by the BCSC to the Respondents (the $500,000) is derived directly from the amounts of wrongdoing the Respondents commit. This multiplier has been used in many decision by the BCSC Panels in recent years and range from a small percentage to OVER 300% in some cases. The Respondents feel this number should be as accurate as possible and in our case, the numbers are skewed dramatic because Staff NEVER came into the hearing with accurate numbers because the relied on summary (and sloppy) investigative work. This is not “fair” as promised on the BCSC’s website.
As a small example, immediately after the $82,000 hits the WKL bank account, 2 cheques totaling nearly $4,900 are written to SBS Langley Ltd. (a company that located investors for the DCF project) for commissions earned.
To be clear, we are NOT down playing our actions of taking funds out of the accounts to put the deposit down on the home. Again (and as you will see in other posts), we were under the impression that we had lent a lot of money to the companies as shareholder loans and were owned funds as a result. In hindsight, we understand we should NOT have written cheques from that account but at NO time did we intentionally commit the act of fraud – for the BCSC to have proved their case they had to prove the act AND the intent to commit the act on the balance of probabilities. We argued that a person that borrows funds and then immediately begins the process of repaying them BEFORE the BCSC even began their investigation would lead one to believe that they are not intentionally committing the act of fraud. On the other hand, if $75,000 was taken and a home was purchased with funds not being paid back then maybe that would show willful intent.
We fully submit that if the Respondents have properly entered evidence (through a lawyer) we would have had many of the allegations dropped by the Panel or even avoided an expensive hearing altogether.