The Ontario Securities Commission (OSC) has settled securities fraud allegations against several firms and their president and CEO.
The OSC announced today that it has settled with several firms, Colby Cooper Capital Inc. (CCCI), Colby Cooper Inc. (CCI), Pac West Minerals Ltd. (Pac West), and their president and CEO, John Douglas Lee Mason, over allegations that they raised about $4.8 million from investors by selling shares in CCI and Pac West. In doing so, it says that they breached securities laws by making misrepresentations to investors, misappropriating investor funds, and trading without registration, a prospectus or an appropriate exemption.
Under the terms of the settlement, the respondents are to disgorge about $6 million, pay a $500,000 penalty, $100,000 in costs, along with permanent trading and registration bans.
The settlement indicates that the respondents “adopted a high pressure sales approach” that included making misrepresentations, such as that the funds would be used to develop oil and gas properties in Texas and Alberta. However, only approximately $50,000 of the $4.8 million raised were invested in acquiring two very minor working interests in Texas that resulted in no returns on investment. And, the settlement says that they made misrepresentations about a possible stock exchange listing.
Additionally, the settlement says that at least $1 million went to Mason to pay for personal expenses including personal taxes, credit card bills, cash withdrawals, payments to family members, groceries and condo rent; and, the balance was spent on purported business expenses including commissions to qualifiers, sales persons, administration staff, payments to oil and gas consultants, office rent, advertising, and marketing.
The settlement also indicates that the securities sales were illegal distributions, and that the respondents failed to keep proper books and records.