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A BC Securities Commission panel determined that a Salmon Arm man and his mortgage investment company made misrepresentations and false or misleading statements to investors.
Donald Bergman and his company, All Canadian Investment Corporation (ACIC), made false or misleading statements in documents required to be filed under the Securities Act.
ACIC provided loans to owners and developers of residential and commercial real estate. The loans were secured by mortgages on those properties.
The company raised $1.6 million from 56 investors between Jan. 2014 and Dec. 2015 through three offering memorandums that explained how the loans would be secured.
BCSC states, an offering memorandum must contain specific information about an investment to help potential investors make a decision on whether to purchase the security.
The offering memorandums said the mortgages would be registered in the appropriate land title office, and were the first or second mortgage on the property; however, ACIC did not register some of the mortgages and cancelled some of the registrations.
In addition, some of its mortgage loans were secured by mortgages that ranked lower in priority than represented in the documents.
Starting in 2015, dividends to ACIC investors dwindled, says BCSC.
In 2017, the Supreme Court of British Columbia appointed a monitor to assist ACIC in the liquidation of the company’s assets. Losses for preferred shareholders are estimated to be between 81.9 per cent and 96.1 per cent.
The panel found that Bergman and ACIC made false or misleading statements in the offering memorandums because some of the loans were not secured as promised.
The difference between the offering memorandums’ statements and the truth, the panel said, concerned issues “of fundamental importance to investors … As these representations went to the safety and security of their investment.”
The panel, which also found that Bergman and ACIC made misrepresentations to investors, will impose sanctions after considering submissions from BCSC staff and the respondents.
