QUESTION:
WHY DID YOU JEOPARDIZE YOUR ENTIRE BUSINESS (AND SUBSEQUENTLY YOUR LIVELIHOOD) TO BUY YOUR WIFE A RING AND GROCERY STORE?
ANSWER:
In 2006 (the year I started West Karma Ltd.), I sold my home in Calgary for a $400,000 profit and placed over $300,000 of it directly into starting the business. Starting from scratch, money was spent on travel, a photocopier, staff wages, seminars, and office space in downtown Vancouver. During this time, after discussions with both my accountant and lawyer, it was decided that this shareholder loan would be taken back out of the company once it started showing a profit.
In 2010, I went into a jewelry store and spent time picking out a ring for my wife. I had just received a new credit card and was planning on using it to purchase the ring. As I went to pay for the ring the card was rejected (due to it being new) and I ran to the bank across the street and had a certified bank draft issued. A while later when I was doing my income taxes with my accountant the subject of the bank draft came into play. She asked whether the expense was business or personal and we marked it down as personal. I am not sure if it was considered a repayment of the shareholder loan or earned income but I assure you it was accounted for as a suspense item in the 2010 Income Tax preparation prepared by my bookkeeper.
I declared the $24,000 for the ring (along with another $140,599.27 as personal items) but the BCSC investigators (and Executive Director) sensationalized the fact I bought my wife a ring. We need to ask ourselves why they didn’t even have one bit of concern over the other $140,000 – just the ring. It is our personal belief that the BCSC love to sensationalize certain items as it helps build their case in the public domain.
With respect to the grocery store and the newspaper headline, “Wharram Buys Wife Grocery Store” (that was written by a complete ass of a reporter), I did not buy my wife a grocery store. My wife was a shareholder in a grocery store with two other individuals. The two other individuals are part of the head ownership of the Nature Fare grocery store chain that has been in business for many years.
The store was new and they needed a loan to get things going. At NO TIME did I just give money directly to my wife for the grocery store – the cheques were always written to the corporation directly and were written with the intent to make money for the Deercrest fund. At the time the funds were lent to the store, the project Developer was waiting for a closing to occur on some of the Deercrest units and we were concerned there would not be sufficient funds to pay the interest to the DCF investors. The ONLY reason the Respondents originally invested into the grocery store was to make money for the fund. If the Respondents thought for one moment that lending investor funds to a well-established entity in an attempt to make money for the DCF was fraud, he would have declined to make the loan or used his own personal funds.
It is very important to know that 100% of the money was returned into the Respondents bank accounts BEFORE the investigation by the BCSC. This is something the BCSC does not tell in their account of the events as I don’t think they would want the public to know that. The return of the money can be proven by looking at the testimony of one of Staff’s witnesses who is the owner of the entire chain of grocery stores. He was asked during cross examination if 100% of the funds were returned and he replied, “Yes”. Yet, the Panel includes these funds ($240,000) as part of the $515,500 in disgorgement/restitution it has ordered the Respondents to pay.
Facts of the matter are – I would NOT have jeopardized my company over buying my wife a ring for $24,000 or investing in a grocery store. This does not make any sense to anyone who truly knows me – I had a far greater pay day coming down the road getting things accomplished and the project to the finish line.
I am not downplaying my actions – I am simply saying that when you only show a very little of the overall story, it is very easy to allege intentional actions of a person. Its only after the ENTIRE story is told that one can (and should) form an opinion, or in this case, bring concrete allegations to the table. The BCSC does not tell the entire story in this case because it does not sensationalize their theory of the events.