Quebec’s financial regulator has lowered the boom on a former evangelical pastor turned investment advisor who is alleged to have sold illegal investments to members of his church congregation.
The Autorité des marchés financiers has received 73 complaints against advisor Rocco Di Stefano, many of them from members of the Fabre Street Pentecostal Church in Montreal.
The AMF alleges Di Stefano offered his clients promissory notes bearing high interest rates issued by obscure private companies registered in Quebec or in Caribbean tax havens, including Eurovision Financial Services Ltd., Zema Finances Inc. and Sodexin Capital. The AMF also alleges Di Stefano even solicited funds from widows whom he knew had come into life insurance money through his work as an insurance agent.
The value of the investments runs into the millions, and Di Stefano’s clients are facing heavy losses on the notes.
At the request of the AMF, the quasi-judicial Bureau de d»cision et de r»vision en valeurs mobiliÀres has ordered that Di Stefano be prohibited from selling securities or acting as a securities advisor.
In its decision, the BDRVM says it made the order on the basis of allegations that Di Stefano, 48, had assisted a series of companies in offering investments without an approved prospectus; he is also alleged to have acted as a securities broker without being registered to do so.
The BDRVM says it was concerned by allegations and facts presented by the AMF, including that Di Stefano was a former pastor and “used his reputation to solicit investors”; that Di Stefano represented the investments as guaranteed and safe; that he had a client issue a cheque for an investment in his own name; and that he “benefited from his stature as an insurance representative to contact the widows of insured people and offered to invest their insurance money in Zema Finances Inc.”
Di Stefano, who is licensed to sell mutual funds and insurance, was a prominent member of the Fabre Street Pentecostal congregation. He left the church after being publicly admonished by the church’s pastor in 2006 over soured investments sold to congregation members.
The investments had become a scandal in the tightly knit, mostly Italian-Canadian congregation, of which Di Stefano had been a member since his childhood. He led his own congregation as a Pentecostal pastor in Windsor, Ont., before returning to Montreal and entering the financial services industry in the mid-1990s.
One of the private companies in which Di Stefano’s clients invested, Eurovision, was an offshore outfit that was alleged to be a fraud in bankruptcy proceedings brought by two of the investors. Total investor losses in the company, which was registered in the Caribbean tax haven of Anguilla, reportedly ran to at least $15 million following the company’s collapse in 2003.
Zema Finances, for its part, has a convicted fraud artist as its president. This past summer, the company left the tiny office in a Montreal suburb that apparently had been its temporary headquarters. It’s unclear from what location the company operates now.
A third group of companies, known collectively as Sodexin, is mired in financial troubles and the company’s president told Montreal’s The Gazette that inves-tors shouldn’t expect to recover their capital for at least three years.
Di Stefano has also been sued by two former clients seeking to recover their investment losses.
One of the lawsuits was brought by Daniel Colantonio, a 74-year-old retired pattern cutter and Di Stefano’s second-cousin. Colantonio and his wife Christine say they trusted Di Stefano because of the family connection and, in 2004, were persuaded to invest $164,000 in a 90-day Zema Finances note.
The money came from the sale of the family home and represented much of the couple’s life savings. They had intended to park the money in the note until construction was finished on a new, smaller home. They insist Di Stefano had promised them the investment was safe.
When the note came due, Zema Finances failed to pay up. Eventually, the company did cough up $59,000 in three payments, but then the money stopped. The couple sued Zema Finances and Di Stefano in May 2006, winning a Superior Court judgment ordering the defendants to pay $117,919 plus accrued interest.
The Colantonios registered a lien on Di Stefano’s half of the house that he owns with his wife, but the couple had taken out a $229,500 mortgage in March of 2005. The house is valued on the city’s 2007 role at $183,200. The Colantonios have found no other assets to seize.
@page_break@Christine Colantonio says the loss of their money took a heavy toll on the couple. “You go watch the TV or sit in the living room and you watch the hours pass by,” she says. “And sleep just won’t come because you just think: how did this happen to us? How are we in this predicament?”
Di Stefano maintains he has not put one cent of his clients’ savings into his own pocket and holds out hope his clients will get their money back. He insists that if he had scammed his clients, he would have run away. His presence attests to his intentions, he says.
He claims two of the companies — Zema Finances and Sodexin — are getting back on their feet and will pay off their obligations to investors, including the Colantonios. He even holds out hope that inves-tors may recover their money from the bankrupt Eurovision.
Di Stefano sold the promissory notes because clients were looking for investments that paid fixed rates of return after the stock market decline in the early part of the decade. “No one held a gun to any client’s head,” he says.
Besides the AMF action, Di Stefano faces a disciplinary hearing in March before the Chambre de la securit» financiÀre, the self-regulating body for Quebec mutual fund and insurance reps. IE
Former pastor turned advisor disciplined by AMF
- By: Don Macdonald
- February 1, 2008 February 1, 2008
- 19:44