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Fraudster misled investors in reinsurance scheme, ASC panel rules (Frances Twitty/iStockphoto)
Fraudster misled investors in reinsurance scheme, ASC panel rules (Frances Twitty/iStockphoto)

Fraudster misled investors in reinsurance scheme, ASC panel rules Add to ...

Victor DeLaet committed fraud and made “misleading or untrue” statements when he raised $47-million from investors in his Focused Life Group of Companies, says Alberta’s securities regulator.

An Alberta Securities Commission hearing panel ruled Tuesday that Mr. DeLaet used promotional material and documents that misled investors into believing their investments in U.S. life settlement policies were secured with “reinsurance bonds” designed to protect the investments and provide a steady stream of income.

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In fact, he only bought one reinsurance contract, telling the ASC hearing panel he intended to acquire more reinsurance but delayed the purchase until appropriate bonds could be sourced.

The hearing panel said it rejected his arguments, and said investors were purposely misled about the safety of their money.

“We find here a clear, continuing and deliberate deceit, its purpose to obtain money from investors,” the panel ruled.

The panel decision said Mr. DeLaet acknowledged he never generated any returns from the life settlement investments and admitted that investor funds were mingled with general operating accounts and were not kept separate as promised.

Investors, most from Western Canada and many of them senior citizens, received almost nothing, and Mr. DeLaet’s companies are now in bankruptcy. The hearing panel said Mr. DeLaet personally made at least $2.4-million between 2006 and 2009, including a $600,000 “shareholder loan” that he did not repay.

The hearing panel also found Stanley Gitzel breached securities laws by permitting untrue statements to be made to investors. He was not accused of fraud.

The hearing panel said it accepted that Mr. Gitzel, who was a director and senior officer of entities within the group of companies, did not know details about day-to-day operating decisions made by Mr. DeLaet and did not know he had decided not to buy the promised reinsurance. The panel said it accepted Mr. Gitzel’s “expressions of contrition and remorse” but said if he “had exercised even minimal diligence” he would have found out key facts sooner.

No penalties have been decided yet. The panel has asked both sides to make submissions on sanctions.

 

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