A33-year-old vancouver man who falsely portrayed himself as a hotshot commodities trader has inflicted heavy financial damage on residents of the Slocan Valley in the British Columbia interior.

Kevin J. Steele — who is not registered in any capacity — has been ordered by the U.S. Federal District Court in Chicago to pay US$7.4 million in restitution to his 230 victims, most of whom live in the Slocan Valley. But it is unlikely they will recover any money. According to a complaint filed by the U.S. Commodity Futures Trading Commission, Steele lost US$4.3 million on trades and misappropriated the remaining US$3.1 million. By the time his trading accounts were frozen, there was only US$240,000 left.

RCMP Cpl. Kerry Heidema — who is stationed in New Denver, B.C., a little town in the heart of the valley — says the multimillion-dollar losses are bound to have some impact on the local economy: “People who might otherwise have spent money are probably thinking twice.”

The commission says in its complaint that, starting around January 2003, Steele “convinced others that he was a successful commodity futures trader by showing them false statements.” He bolstered that image by spending lavishly: he drove a Porsche Cayenne SUV and a Mercedes-Benz coupe, lived in a waterfront townhouse in Vancouver and happily described himself as a “watch whore” because of his Cartiers and Rolexes.

The commission says he enlisted the help of David Shannon and David Fulcko of Victoria to solicit investors. Fulcko enlisted his father, Walter, a resident of New Denver, who soon created a daisy chain of investors in the area. “Wally would stop by my place and badger me about this wonderful investment his son was in,” recalls Thomas Taylor, 72, a neighbour of the elder Fulcko. Taylor says the investment struck him as a “little flimsy,” but it had been running for two years, and friends and neighbours who had invested were boasting large returns — they even had the statements to prove it.

In January 2005, Taylor bowed to the pressure and wrote a US$40,000 cheque. Initially, the investment looked like a winner. Statements showed that by the end of April — a period of only four months — it had grown to $50,790, a return of 27%. But the statements were false. Steele was actually losing money at a rapid rate. In fact, over a two-day period in May, he incurred more than US$2 million in trading losses, the commission says.

The scheme started unravelling on May 19, when an investor contacted Interactive Brokers LLC — the Chicago brokerage firm that Steele used — to ask about his account. The commission found that of the US$7.4 million Steele had solicited from investors, he had lost US$4.3 million and misappropriated the balance.

“Steele spent more than US$1.3 million on personal luxuries for himself and his girlfriend,” the commission says. Those luxuries included cruises, gambling, art, jewellery and vacations. He also used investors’ funds to pay his girlfriend’s credit card bills.

The Vancouver RCMP’s integrated market enforcement team, which assisted the commission in its investigation, has filed a criminal brief to the provincial Crown. If a charge is approved, it will be the first charge the team has generated since it was inaugurated two years ago.

Steele could not be reached for comment. It is believed his lawyer is trying to work out a deal to mitigate prospective jail time. IE