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

Oak Bay skaters bound for BC Games in Kamloops

Saanich resident aims for second gold

Victoria police pay special attention to domestic violence

Workshop for officers and others shows how domestic abuse trauma impacts for a long time

Panthers ready for the Storm in opening playoff series

Peninsula Junior B hockey club hands out its annual awards

Experts to capture and collar 20 female deer in Oak Bay starting this month

Does sedated, examined, collared and ear tagged in latest phase of deer management plan

Cherry blossom map points to where spring has sprung in Victoria

City released a handy guide to find the most beautiful buds

Monterey offers free stroke survivor program

Stroke survivor shares resources in seven week Heart & Stroke course

How to keep local news visible in your Facebook feed

Facebook has changed the news feed to emphasize personal connections. You might see less news.

No charges for B.C. Mountie in car wash shooting

A report found the Salmon Arm officer fired 14 bullets at the man’s truck

Tahsis mayor Jude Schooner succumbs to sudden heart attack

Flags are flying at half mast in the Village of Tahsis after… Continue reading

Victoria needs a neighbourhood ombudsperson to work on their behalf

City’s planning department not taking residents’ concerns into account: Rockland resident

VIDEO: B.C. deer caught obeying traffic signs

A herd of deer in Fernie, B.C. is getting attention online after stopping for a stop sign

Petition wants fundraiser dropped for family of man cleared in Boushie’s death

Group says GoFundMe is profiting from the young Indigenous man’s death

Porch lights turn on for Canadian teen behind #BeccaToldMeTo movement

New Brunswick’s Rebecca Schofield had asked her Facebook followers to perform random acts of kindness

B.C. files challenge to Alberta wine trade ban

First formal dispute under Canadian Free Trade Agreement

Most Read