A securities trader who turned himself in to the RCMP and revealed he was running a Ponzi fraud has been banned for life from working in the securities industry or trading securities in Ontario.
Kevin Zietsoff admitted he improperly raised $15-million from more than 80 people and lost most of the money in unsuccessful futures trading schemes. His victims included his parents, who lost their life savings of $2.5-million, and his now-estranged wife, who lost $300,000 she had in her RRSP account.
Mr. Zietsoff pleaded guilty to fraud in December and will be sentenced Feb. 28 in Ontario Court in Toronto. Also Tuesday, he reached a settlement with the Ontario Securities Commission, accepting a permanent ban from working in Ontario's securities sector or trading securities, and agreeing he will consent to any other provincial securities regulator imposing the same conditions.
Mr. Zietsoff turned himself in to the RCMP in January, 2013, telling officers he wanted to disclose his fraudulent activity, which the RCMP knew nothing about at the time.
In a report filed in court as part of his guilty plea, he admits he began investing other peoples' money in 2006 on futures exchanges around the world. He told investors he was a successful trader with a "no risk" strategy that paid "guaranteed returns," but in fact "his gains were significantly and consistently overtaken by losses."
The OSC settlement agreement said Mr. Zietsoff "had a record of consistent and near total trading losses."
Investigators estimated he lost more than $10-million of investors' funds in his unsuccessful derivatives trading operation, and paid about $5.5-million to victims in interest or principal repayments. He deflected clients' requests to get their money back by telling them a variety of lies, including that his money was tied up in the bankruptcy of MF Global in 2011, when in fact he had lost the money in trading schemes.
The report filed in court said he turned himself in to police "when the funds were exhausted" and his efforts to borrow $15-million from a friend in Hong Kong failed.
He also told police he did not use the defrauded funds to live a lavish lifestyle. The OSC settlement said Mr. Zietsoff anticipates he will be ordered to pay full restitution to his victims as part of the sentencing in the criminal case, but it does not say how he could raise the money to pay restitution.
The OSC and RCMP worked jointly on the case as part of a new fraud unit the OSC created last year to work with police forces to get more criminal charges laid in financial fraud cases.