An Ontario judge has sentenced investment manager Keith Summers to three years in jail and ordered him to repay his investors after he pleaded guilty to fraud involving exchange-traded funds at his fund companies.John Tomaselli/Getty Images/iStockphoto
An Ontario judge has sentenced investment manager Keith Summers to three years in jail and ordered him to repay his investors after he pleaded guilty to fraud involving exchange-traded funds at his fund companies.
Mr. Summers, 49, admitted he overstated the assets under management while operating exchange-traded funds at Tricoastal Capital Partners, and concealed losses at his funds by falsifying monthly statements and tax forms. In April, 2013, he admitted he forged an audited financial statement.
Justice Sheila Ray of the Ontario Court ordered Mr. Summers to pay $4.3-million (U.S.) in restitution for his clients' losses. Mr. Summers also previously forfeited $1.4-million that remained in Tricoastal accounts after the company was shut down.
In an agreed summary of facts for his guilty plea, Mr. Summers also admitted he withdrew almost $1-million of investors' money from his funds to pay his personal and business expenses above the authorized management fees for the funds.
Mr. Summers reported his illegal activities to the Ontario Securities Commission (OSC), which launched an investigation with the U.S. Securities and Exchange Commission. The OSC launched a joint investigation with the RCMP, leading to criminal charges of fraud and uttering a forged document.
The OSC also launched an administrative hearing against Mr. Summers. He agreed to a settlement in August that included a permanent ban from trading securities in Ontario and a permanent ban from working as a registrant in the financial industry.
Mr. Summers's company was based in Burlington, Ont., but most of his investors were based in the United States. He maintained a "nominal office" in Buffalo, according to court documents, and had a mailing address in Minneapolis, where he had lived between 2000 and 2002.
Prior to founding Tricoastal, Mr. Summers worked at CI Financial, but said he lost his job in 2008 in the wake of the financial crisis and decided to start his own fund.
In the guilty-plea statement, Mr. Summers admitted he misled investors about his assets under management because he found it hard to convince people to invest in a tiny fund with no assets. He said he began to lie about the fund's performance when losses started to mount.
Janet McFarland