A former mutual fund rep has been fined and permanently banned after regulators found that he misappropriated more than $1 million from investors in a phony investment scheme.

A hearing panel of the the Mutual Fund Dealers Association of Canada (MFDA) ordered that Christopher Martin Alfred Lee, a former mutual fund rep with with Quadrus Investment Services Ltd. and an insurance advisor with London Life Insurance Co. in Nepean, Ont., should be permanently banned, fined $1.46 million and ordered to pay $13,100 in costs, after it found that he violated MFDA rules by misappropriating $1.36 million from clients and other investors.

Following a hearing, the panel handed down its sanctions, but has not yet published its reasons.

According to the allegations against Lee, beginning in 2012, he offered investors a “special investment opportunity,” which promised guaranteed returns.

“[Lee] represented to the investors that the funds they were providing were being invested in the special opportunity, when in fact [he] used the monies to pay his personal expenses,” the MFDA alleged.

The allegations note that investors who sought to redeem their funds were paid with money misappropriated from other investors. In total, he repaid $22,750 to investors, leaving $1.36 million unaccounted for.