The promise of a quieter dental drill may have lured investors, but the pitch was ultimately a fraud, an Alberta Securities Commission (ASC) panel has ruled.
An ASC hearing panel issued a decision, which concluded that New Wave Innovations Ltd. (NWI), its founder, Allan Robert Magneson, and a numbered company he controlled defrauded investors ostensibly to finance the development of a quieter dental drill that Magneson invented, but he instead diverted much of investors’ money.
The panel found that, between 2011 and 2016, Magneson raised as much as $7 million from investors, “who understood their investment funds would be used to develop a new type of dental drill that uses air-bearing turbine technology and does not emit a high-pitched whine like a standard dental drill.”
Instead, it found that at least $5.8 million of the investors’ money went to Magneson and his family.
In its decision, the panel said, “Although Magneson may have considered his compensation and expenses part of the total cost of research and development of the drill, by his own admission he did not explain that to the investors.”
Even if he was owed these funds by the company, that fact wasn’t disclosed to investors, the panel found.
“It may be that Magneson did not think there was anything wrong with raising funds on false pretences because he was entitled to the money and expected that the drill would be such a success that everyone would soon make their money back plus a return,” the panel said.
“However, his efforts to conceal his compensation, the repayment of purported debts, and whether he or NWI would receive the proceeds from the sale of his personal shares could also be interpreted as full consciousness of guilt,” it noted.
The ASC said that a management session to outline the process for a future sanctions hearing will be held on Aug. 25.