Court dismisses appeal in $65-million fraud case targeting B.C. seniors

Victoria financial adviser loses bid to have case overturned

VANCOUVER — B.C.’s top court has refused to overturn the case of a former mutual funds salesman who defrauded hundreds of seniors by selling them $65 million in exempt securities.

David Michaels appealed a $17.5-million fine imposed by the B.C. Securities Commission, which found he illegally and fraudulently advised 484 people without being properly registered to sell securities.

The commission also ordered him to pay back the $5.8 million he earned in commissions and marketing fees for securities by advising seniors to sell their stocks, bonds and mutual funds to buy high-risk exempt market securities, which can be sold without filing a prospectus, and insurance-based investment products.

The B.C. Court of Appeal has upheld the commission’s findings of fraud and misrepresentation and the imposition of the fine in separate decisions for Michaels’ activities between 2007 and 2010.

Michaels promoted his business through 45-minute weekly infomercials titled “Creating Wealth with David Michaels” on a radio station in Victoria, saying he loved helping seniors make money.

However, the court says almost all the investments are now worthless and that many of Michaels’ clients have had their financial futures ruined.

“He told his listeners that the average age of his clients was 72,” the decision says, adding Michaels also held seminars in hotels and that his brochure described opportunities to earn an income without any stock market risk.

He also said clients could build their wealth by owning real estate, double their retirement savings every six years and have a guaranteed income that would last the rest of their lives.

In an August 2014 decision, the commission described Michaels’ actions as a textbook case of improper sales practices “that so violate the principle of investor protection and so seriously damage the integrity of our markets.

“Michaels preyed on clients by frightening them and misleading them into leaving the comparative safety of traditional capital markets for the far riskier part of the exempt market.”

The Vancouver Island man’s actions damaged the confidence of investors in both traditional and exempt markets because he portrayed himself as an experienced insider but operated on deceit, the commission said.

Spokesman Richard Gilhooley said Michaels has not paid the commission any of the $5.8 million he earned by bilking clients, nor has he paid the $17.5 million fine.

Gilhooley said the commission has the option of pursuing the money through B.C. Supreme Court but has not yet decided whether it will do so.

Investors would split any money the commission receives, he said.

Just Posted

Family Literacy Week in Campbell River a chance to celebrate play

A few additions to the itinerary from previous years, week-long event ‘shaping up to be super great’

Vancouver Island amateur radio operators now better equipped to help in an emergency

More courses starting soon for those interested in helping SRD communicate after a major event

Campbell River-area First Nation chief steps down due to health

After serving five terms as Chief of the Wei Wai Kum Nation,… Continue reading

Report: City of Campbell River needs a maintenance plan for Nunns Creek Nature Trust

Extensive ecological inventory shows both the good and the bad of city-leased lands downtown

Campbell River Fire Department douses truck fire on Inland Island Highway

A driver pulled over when the engine in his truck started smoking… Continue reading

WATCH: Giant waves smash Ucluelet’s Amphitrite Point

Folks made their way to Ucluelet’s Amphitrite Point Lighthouse on Thursday, Jan.… Continue reading

Train derails in Northwest B.C.

CN reports no injuries or dangerous goods involved after coal train derailment.

Double-doubles and demonstrations: Employees rally outside Tim Hortons

Protests held in response to Ontario franchise owners cutting employee benefits and breaks

Las Vegas shooter acted alone, exact motive still undetermined: Sheriff

Stephen Paddock was behind the gunfire that killed 58 people including two Canadians

Botox, bomb shelters, and the blues: one year into Trump presidency

A look into life in Washington since Trump’s inauguration

Christopher Garnier appealing murder conviction in death of off-duty cop

Jury found Garnier guilty in December, rejecting his claim she died accidentally during rough sex

Transportation watchdog must revisit air passenger obesity complaint

Canadian Transportation Agency must take new look at Gabor Lukacs’ complaint against Delta Air Lines

Gas plants verdict coming down today; ex-premier’s top aides to learn fate

Verdict to be delivered on senior staff to former Ontario premier Dalton McGuinty

WestJet appeals lost bid to scrap harassment lawsuit

Airline argues judge was wrong to have dismissed the company’s application to strike the legal action

Most Read