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Quebec securities regulators have filed 258 charges against two people involved with the Fer de Lance Foundation, a not-for-profit organization claiming an ambitious mission to "enhance the well being of the human race."
The Autorité des marchés financiers said Tuesday it has launched proceedings in Montreal court, seeking prison terms of five years less a day for both trustee executor Paul Gélinas and lawyer Jean-Pierre Desmarais, who was a legal adviser to the foundation. The AMF said it is also seeking fines totalling $3.7-million against the two men.
The men are accused of illegally acting as securities dealers or advisers and with aiding with illegal distributions of securities.
The AMF said investors were approached by recruiters to make donations and were invited to a lawyer's officer in Montreal to meet with Mr. Gélinas, where they signed documents and provided bank drafts for deposit into a trust account for the foundation. The investors felt "reassured by the presence and actions" of the lawyer, Mr. Desmarais, the AMF said.
The AMF announcement Tuesday did not describe the type of securities the men are accused of distributing to investors, but said the foundation was prohibited from distributing investment contracts in 2009, and the regulator froze its assets at the time.
Investors were promised profits of 24 per cent to 60 per cent of the capital invested, but no one interviewed by investigators had received any profits despite repeated requests to be paid, the AMF said in its 2009 application for cease trade and freeze orders before Quebec's Bureau de décision et de révision en valeurs mobilièrs (BDRVM).
The AMF said it was concerned that Fer de Lance was distributing investment contracts that were considered a form of securities without providing a prospectus to investors.
The BDRVM also froze assets of a related Fer de Lance Turks and Caicos Foundation. The foundation, which is not a registered charity with the Canada Revenue Agency, was created as a not-for-profit organization, and promoted a vague promise to help "enhance the well being of the human race."
Foundation directors George Fleury, who is chairman of the board and chief executive officer, and Michel Hamel, who is secretary-treasurer and managing director, are also charged with authorizing and permitting illegal distributions without a prospectus. The AMF is seeking fines totalling $340,000 against each director.
Réjean Duguay and Denis Nadeau, who are described as "recruiters" for the foundation, were also charged with aiding with illegal distributions and acting illegally as a securities deal or adviser. The AMF it is seeking fines totalling $84,000 from Mr. Duguay and $12,000 from Mr. Nadeau.
The AMF said it is seeking fines totalling $850,000 from the foundation itself, which is charged with 34 counts of making illegal distributions of securities.
Janet McFarland