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Stack of Canadian money.Geoffrey Holman/Getty Images/iStockphoto

Alberta regulators have charged two men with fraud after investors lost millions of dollars investing in The Investment Exchange Mortgage Corp. securities.

The Alberta Securities Commission said Monday it has charged Kenneth Charles Fowler and Douglas Wayne Schneider of selling more than $27-million of TIE Mortgage securities without registration, and with making "misleading or untrue statements" to investors.

The regulator said an arrest warrant has been issued for the two men, but they have not been taken into the custody. The ASC said it is asking for the public's help in locating them.

In late 2012, the ASC halted all trading in TIE Mortgage securities after growing concern about the investments. An Alberta court appointed an inspector in December, 2012, to locate and seize all property of TIE Mortgage and Mr. Fowler. The inspectors found evidence the company had collected more than $27-million purportedly as short-term investment loans.

A receiver's report by accounting firm Grant Thornton Ltd., filed with the Alberta Court of Queen's Bench in May, 2013, said based on an inspector's review of the company's financial information, "there were no legitimate mortgage investments and the funds have either been diverted to various unauthorized parties, or utilized for purposes unrelated to mortgage investments."

The receiver said it had taken steps to seize a house in Calgary that was registered in Mr. Fowler's name, and said it was unoccupied. The receiver also said it had also found records indicting Mr. Fowler bought a $115,000 diamond engagement ring for his girlfriend using money transferred from the company's accounts.

The receiver's report said there was evidence of a regular "flow of funds" from the company's accounts to Mr. Fowler's own accounts. There were also records of other jewellery purchases on Mr. Fowler's credit card, and evidence he was making payments on a 2006 Porche 911 Carrera.

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