A B.C. Securities Commission (BCSC) hearing panel has ruled on Friday that ruled that Alfredo Miguel “Michael” Yong and his two companies (Inverlake Property Investment Group Inc. and Wheatland Business Park Ltd.) distributed securities illegally when they raised money from investors in British Columbia to acquire real estate in Alberta. However, the panel found that allegations of fraud against them were not proven.
The BCSC hearing panel ruled found that Yong and Inverlake distributed more than $900,000 worth of securities illegally to 23 investors and that Yong and Wheatland made illegal distributions to 15 investors for more than $1 million.
“The Inverlake investors have lost all of their money, while the current status of the investments in Wheatland are unknown,” the BCSC hearing panel noted.
However, the panel found that the allegations of fraud against them were not proven at the hearing. BCSC staff accused Yong of lying to investors about the purchase price of land that Inverlake acquired and that he failed to inform investors about a subsequent foreclosure on that land.
The panel dismissed both of those allegations, concluding that BCSC staff did not prove that Yong misrepresented the purchase price of the land.
“Overall, the evidence is not sufficiently clear, convincing and cogent that Inverlake’s purchase price was $3.223 million. As a consequence, the executive director has not proven the element of deceit for this fraud allegation, and therefore we dismiss it,” the hearing panel said.
As for whether failing to tell investors about the foreclosure of the land amounts to fraud, the hearing panel found that “it was Inverlake’s obligation to tell investors of a foreclosure … There is no evidence that Yong had any obligation to tell the Inverlake investors about the foreclosure or that in failing to do so he committed a deceit.”
The hearing panel also questioned whether this allegation involved securities: “We do not agree that the meaning of ‘conduct relating to securities’ can be stretched as broadly as the executive director suggests. This deceit occurred years after the investment in securities by the Inverlake investors and it relates to the conduct of Inverlake’s business, not to the distribution or other aspects of its securities. We therefore find it is not conduct relating to securities.”
But while the two fraud allegations were dismissed, all three respondents still face penalties in connection with the illegal distributions. This will be decided after a further hearing. The hearing panel directed both sides to make submissions on sanctions.