The New Brunswick Securities Commission has issued a warning for investors to be aware that a business operating under the name Groupe Financier CTIC (CTIC), is not registered to sell securities in New Brunswick.

CTIC, a related shell company, CITCAP Groupe Financier Inc. (CITCAP), and Patrick Gauthier have been served with a notice of hearing of motion issued Thursday by the NBSC. The notice schedules a preliminary hearing for April 15.

In its motion materials, NBSC staff allege that CTIC did not comply with the disclosure or registration requirements under N.B. securities law and that CTIC did not meet the criteria for exemptions with respect to sales of securities to N.B. residents.

NBSC staff allege that CTIC raised money mainly from investors in Edmundston and Grand Falls and also from investors in the Acadian Peninsula, Moncton, Saint John and Fredericton. The NBSC staff’s investigation revealed that securities sold in 2006, 2007 and 2008 involved 109 trades by 63 individuals and raised more than $5.7 million in New Brunswick alone.

Allegations state that the securities being offered by CTIC are loans packaged as investments, purportedly used to conduct factoring, which involves purchasing accounts receivable from businesses. These investments appear to provide a 24% return per year divided between the investor as interest and the salesperson as commission and that most investors earned interest of 12% to 14%.

The NBSC staff are concerned about the information provided by CTIC. The NBSC staff allege that the offering memorandum filed by CITCAP on January 23 did not contain adequate information for the investors to make an informed decision.

NBSC staff allege that Pierre Emond, Armel Drapeau, Jules Bossé and Robert St. Onge were engaged by CTIC to solicit investors and sell its securities in New Brunswick. These individuals are not currently named in this matter.

At the preliminary hearing, NBSC staff will request that appropriate interim sanctions be imposed upon CTIC, CITCAP and Gauthier.

IE