The Ontario Securities Commission has accused a Toronto man of improperly selling $90-million worth of securities to investors before his companies went bankrupt.
The OSC alleges Eric Inspektor, who headed the Kaptor Group of companies, raised money between 2005 and 2011 without ever being registered to sell securities and without issuing prospectuses or properly using accredited investor exemptions to sell to the public.
Investors lost about $38-million, the OSC said in a statement of allegations issued Monday.
The commission said Mr. Inspektor's lead company, Kaptor Financial Inc., which was billed as a merchant bank and asset-based lender, improperly raised $31-million from at least 80 investors.
A numbered holding company that was a parent of Kaptor Financial also raised at least $30-million from 39 investors, the OSC said. As well, two automobile financing companies owned by Kaptor Financial – Car Cap Inc. and CarCar Auto Finance Inc. – raised at least $28-million from 60 investors, the commission alleged.
The commission said investors were told they would earn high returns or rates of interest on various securities including promissory notes, debentures, shares and profit-sharing agreements.
"Through their dealings with Inspektor, investors were led to believe that the Kaptor Group was investing in various business activities within the Kaptor Group which would generate substantial rates of return and would generally yield investors returns between 15 per cent and 36 per cent annually," the OSC said in its statement of allegations.
Both the CarCap companies were placed into receivership in 2011 at the request of a secured lender and their assets were sold to repay loans. Investors did not receive any proceedings from the windup of the companies, the OSC said.
The OSC said Kaptor Financial was also put into receivership in May, 2012. Individual investors also received no distributions from the windup of that company.