An investment fraudster has been banned and fined by the British Columbia Securities Commission (BCSC) in connection with an alleged real estate Ponzi scheme.
Earlier this year, a BCSC hearing panel found that Cherie Evangeline White, and her company, KingdomInvestments2015 Inc., defrauded investors in a real estate scheme that promised high returns in exchange for financing a residential flipping venture meant to help fund social housing.
“Instead, the respondents used the investors’ funds to repay earlier investors, which the panel determined ‘is consistent with a Ponzi scheme.’ Some of the funds also went toward paying back a personal loan from White’s stepfather,” the panel said.
In its previous hearing, the tribunal found that White committed fraud, illegally distributed shares in her company, and obstructed justice by failing to cooperate with the regulator.
Now, following a hearing on sanctions, the BCSC has permanently banned White, fined her $350,000, and ordered that she and her company pay a total of $275,771 in disgorgement.
“Any money collected by the BCSC toward that [disgorgement] amount can be made available to the victims,” the regulator said.
According to the panel, the company illegally distributed almost $1.2 million worth of securities to investors without a prospectus, and that investors lost approximately $776,000 as a result of the scheme.
“The damage done to the investors in this case cannot be overstated,” the panel said.
“In many cases, these losses amounted to life savings. We heard raw testimony from investors about the financial, emotional, physical and mental impacts the losses have had on them and their families. Investors shared their anger, remorse for trust lost and shed tears while speaking of feelings of violation, disappointment, self-doubt, shame, regret, guilt and failure,” it said.
The panel also noted that White preyed on the religious beliefs of certain investors “by projecting shared spiritual values and by carefully building trust through representations about her family’s alignment with the Salvation Army Church and common dreams and aspirations, and through her calculated use of faith-related institutional logos on investment-related materials.”
BCSC enforcement staff sought a $500,000 penalty against White in the case, along with the permanent ban and disgorgement that was ordered by the panel.
However, the panel noted that it was not provided with any evidence that White set out to distribute securities illegally, defraud investors, and obstruct justice from the start.
“Our willingness to make such distinction is not to be seen as an attempt by this panel to render the harm suffered by investors, by virtue of the impugned acts or omissions of the respondents, any less relevant or material,” it said, as it imposed its $350,000 penalty.