A former notary public in Vancouver masterminded a Ponzi scheme that raised $83-million from 218 investors who were told their money was being invested in a financing deal with a high-end winery, the British Columbia Securities Commission alleged Wednesday.
But in an unusual twist, the B.C. regulator said Mark Anthony Group Inc., which owns the Mission Hill Family Estate winery in Kelowna, did not know its name was being used in the investment scheme and had no involvement in a financing deal with Vancouver notary Rashida Samji.
The securities regulator said Ms. Samji promised investors a “secure investment” that would provide loan collateral to wineries and would earn between 12 per cent and 30 per cent annually. She pledged their money would be held in a trust account and not paid to any party.
In reality, the BCSC alleges, Ms. Samji had no notary trust account and deposited the money into two personal bank accounts in the name of two companies she created. Much of the money has been lost, although $63-million was paid in interest to investors over the 10 years the investment scheme was operating.
The BCSC alleges that Ms. Samji told investors their money was financing a complex loan arrangement with wine-and-beer importer Mark Anthony Group, although the company says it had no business arrangement with the notary.
Mark Anthony Group spokesman Ian Galbraith said Wednesday that the company has no idea why Ms. Samji used its name in her scheme and never had any business dealings with her.
“We were unaware of this transaction, and we were contacted by the police and are co-operating fully with them,” he said.
Ms. Samji allegedly arranged with an investor to lend $300,000 to finance a house mortgage for an executive of Mark Anthony Group. The executive had no knowledge of the transaction and no mortgage actually existed, the regulator said, even though Ms. Samji purportedly “renewed” the mortgage five times between 2002 and 2011.
The BCSC said Ms. Samji took the money and created fake mortgage documents by cutting and pasting information from a real land title office document and faking the alleged borrower’s signature.
Many of the investors in the Ponzi were allegedly referred to Ms. Samji by a financial planner who previously worked at Coast Capital Savings in Vancouver, the BCSC said.
The regulator said Wednesday it has reached a settlement agreement with Arvindbhai (Arvin) Patel, a former mutual fund salesman and financial planner at Coast Capital, who admitted that he encouraged 90 people – including family members, colleagues and clients – to invest $29-million with Ms. Samji.
Mr. Patel has been permanently banned from trading securities in the province, and from working in the securities or investor relations field.
The BCSC said Mr. Patel, who is unemployed, voluntarily transferred his legal interest in five properties to a court-appointed receiver, but was not assessed an additional fine because he has substantial debts and “no reasonable prospect” of being able to pay an additional amount.
The commission said Mr. Patel personally invested $600,000 with Ms. Samji, of which $350,000 was lost. His family invested $1.6-million and lost $1.4-million.
A lawyer for Mr. Patel said he could not comment while a lawyer for Ms. Samji could not be reached for comment.
Ms. Samji and Mr. Patel are also facing lawsuits, including a class-action suit, launched by investors. The class-action suit also names Coast Capital Savings.
Investor Lawrence Jer, a postal worker from Delta, B.C., and his wife Jun Jer, a piano teacher, are the lead plaintiffs on the class-action suit, claiming Mr. Patel was their financial adviser for 17 years and recommended the investment with Ms. Samji. The couple invested $350,000 and received interest payments totalling $156,000 from 2007 to 2011.
The couple alleges they were told their money was being invested in a “Mark Anthony Investment” product and would be held in trust. They allege their interest payments were made via a bank draft “to conceal the identity” of the accounts the money came from.
The BCSC said the Society of Notaries Public of B.C. suspended Ms. Samji on Feb. 7 and obtained a court order appointing a custodian over her practice. She resigned from the society on March 6, the regulator said.