An accountant who defrauded clients of more than $100,000 has been permanently banned and fined by the Alberta Securities Commission (ASC).
In June, a regulatory hearing panel found that Paul Lackan — who provided bookkeeping and accounting services through his company, Paul Lackan Consulting Inc. — perpetrated a fraud on investors when he raised more than $150,000 from them, purportedly to invest in a medical business, ACT Medical Centres Inc. (ACT), but misappropriated $115,378 of that money for other purposes.
Now, the panel has handed down sanctions in the case, ordering that Lackan be permanently banned from the capital markets, ordered to disgorge $115,378 and to pay a $60,000 penalty and $47,009 in costs.
In its Dec. 2 decision, the panel said that “Lackan acknowledged spending most or all of the investors’ money on personal expenses or on business expenses unrelated to ACT.”
It also concluded that he never intended to use investors’ money for ACT.
“He did not tell investors his true intentions, including that he considered their money to be his salary — convincing them instead that he would use their money to acquire or invest in ACT,” the decision said, adding that Lackan also gave several investors falsified share certificates and told some of them that ACT would be going public.
As a result, the panel concluded that Lackan perpetrated a fraud.
“Although intention is irrelevant to making a finding of fraud, intention is relevant for sanction,” the panel said.
“We are satisfied that Lackan’s misconduct — lying to investors and spending their money on himself — was planned and deliberate,” it added. “Lackan’s misconduct was serious, intentional, and caused actual harm. This calls for significant sanctions.”
The panel found that there were no mitigating factors in the case, but “taking advantage of bookkeeping clients and lying to [ASC] staff during the investigation” represented aggravating factors.
It ruled that “broad permanent market-access bans are required so that Lackan will never again be allowed to raise money from investors or otherwise jeopardize our capital market.”
The panel also said that, while a larger monetary penalty would be justified in the case, ASC staff only sought a $60,000 penalty, citing Lackan’s impecuniosity. According to the decision, Lackan filed for personal bankruptcy in June 2018 and has not yet been discharged, his home was sold through a court-ordered process, and he had no property or vehicles registered in Alberta.
“Had we imposed shorter market-access bans and had Lackan not been impecunious, a larger administrative penalty would have been necessary for deterrence,” the panel said.