A British Columbia Securities Commission panel has fined and permanently banned two directors of a B.C. company who breached securities laws by selling securities without being registered.

In August 2012, a commission panel found that between July 2006 and January 2009, Ingram Jeffrey Eshun, Maisie (aka Maizie) Smith, and JV Raleigh Superior Holdings Inc. traded and distributed securities without complying with the registration and prospectus requirements of B.C.’s securities laws.

The panel found that the respondents illegally entered into loan agreements with 81 investors, raising approximately $5.7 million. Under the loan agreements, JV Raleigh was to borrow money from investors to purchase “consumer secured notes receivable”, which JV Raleigh described as “a form of factoring” with typically “high yields.” There is no evidence that the company used any of the funds for this purpose.

In its sanctions decision, the panel noted that, “the respondents raised $5.7 million and produced no records to show how it was spent”, and suggested that “it appears that investors’ funds were withdrawn from JV Raleigh and given to companies of which Eshun and Smith were directors and officers.”

Approximately $4 million was transferred out of JV Raleigh’s accounts, including:

  • $1.9 million to Trem DY Group Inc, of which Eshun is president and a director;
  • $1.5 million to DSC Lifestyle Services, of which Eshun is president and a director;
  • $370,000 to 0747940 BC Ltd, of which Smith is sole director (the payments included those related to shareholder loans and management fees); and
  • $234,426 to Siboco Marketing Inc, of which Eshun and Smith are sole directors.
  • Furthermore, Eshun signed four cheques made payable to himself totalling $150,000.

In its decision, the panel stated that Smith and Eshun, “pose a serious risk to our capital market.” Consequently, Eshun is permanently banned from trading in securities, purchasing securities or exchange contracts and from becoming or acting as a director or officer of any issuer or registrant. He is also permanently prohibited from becoming or acting as a registrant or promoter, from engaging in investor relations activities, and from acting in a management or consultative capacity in connection with the securities market.

Smith is permanently banned, with limited exceptions, from trading in securities, purchasing securities or exchange contracts and from becoming or acting as a director or officer of any issuer or registrant. She is also permanently prohibited from becoming or acting as a registrant or promoter, from engaging in investor relations activities, and from acting in a management or consultative capacity in connection with the securities market.

The panel also ordered the respondents to pay to the commission the $5.7 million obtained as a result of their misconduct. Furthermore, Eshun must pay an administrative penalty of $750,000, while Smith must pay an administrative penalty of $500,000. JV Raleigh has been permanently cease traded.