A Sooke man defrauded an investor out of $1 million by “lying” and being “deceitful” about the ownership of a well-known Vancouver Island hotel, a B.C. Securities Commission panel has ruled.
But it’s unclear what sanctions may be imposed on Timothy Craig Durkin, a director of SHH Holdings Limited, as all parties involved still have to make submissions.
And the $1 million has not been recovered.
SHH raised the funds from the investor through a distribution of securities in the company between December 2015 and March 2016, according to the BCSC ruling.
“Durkin told the investor that SHH owned all of the shares of the Sooke Harbour House hotel through a subsidiary, and that by buying 40 per cent of its shares, the investor would obtain a 40 per cent ownership interest in the hotel,” reads a statement by the BCSC.
“In reality, at that time, SHH did not own any of the shares in the corporation that owned the hotel.”
The investor is a Chinese citizen who was trying to immigrate to Canada, according to the BCSC.
The woman had already invested in a spa business in the Sooke area and was considering broadening her investments in the region.
“In emails with the investor’s accountant, Durkin chose not to correct erroneous information and misunderstandings about the ownership of the hotel’s shares,” said the BCSC.
“Based on misleading or false information, the investor’s company signed an agreement with SHH and advanced $1 million to purchase the shares. The funds were spent and have not been recovered.”
In its decision, the BCSC panel concluded that on three occasions, SHH and Durkin made false statements about the hotel’s ownership, knowing that they would be taken as an accurate representation of its current financial situation, and not its status after the transaction closed.
“The panel determined Durkin’s conduct was deceitful and that he misled the investor through her advisor,” said the BCSC.
The hotel remains closed and under renovation with no clear timeline for reopening, according to a message on its website.