FUGITIVE FRAUDSTER HUNTED

Utah man accused of operating local real estate investment scheme

A man who pleaded guilty to theft and securities fraud in Utah seven years ago — but fled before he was sentenced — is now accused of defrauding investors through a real estate firm based in Bragg Creek.

Brian Arthur Kitts had been living in northern Utah when he was accused of running a scheme that raised cash for an initial public offering that never materialized, from 2003 to 2005, according to Utah court documents.

While Kitts pleaded guilty to four of nine charges in 2010, he failed to appear at his sentencing hearing, with reports he had fled to Canada, according to the Utah Attorney General’s office. A warrant remains outstanding for his arrest.

According to Alberta’s securities watchdog, Kitts turned up in Bragg Creek west of Calgary in 2014, when he opened a real estate financing firm called Vesta Capcorp Inc.

The Alberta Securities Commission released new allegations Friday claiming Vesta raised $5.3 million from 20 investors, half of them Canadian.

Kitts had told investors their money would finance real estate developers or others involved in the real estate industry, but the watchdog claims most of the funds were not invested as promised.

The company and its owner “used the funds to pay principal and interest owing to existing investors in a manner consistent with a Ponzi scheme,” the commission alleges.

“Investor funds were also used for other non-authorized purpos- es, including payments to Kitts’ and his wife’s personal bank accounts and expenses that appear to have been personal in nature.”

The securities watchdog believes $3.3 million was returned to investors in the form of interest or a return on capital, while the remaining $2 million went to Kitts, “mainly for his personal use.”

A securities commission panel is expected to set a hearing date into the allegations on Sept. 13, but the regulator hasn’t been able to find Kitts.

“We’re working on tracking him down,” said spokeswoman Hilary McMeekin.

None of the allegations have been proven.

In 2007, Kitts was accused of eight counts of securities fraud, eight counts of theft and one count of carrying out a pattern of unlawful activity, all in connection with an investment scheme, according to Utah court documents.

In a sworn affidavit, a securities investigator claims Kitts had raised about $90,000 from investors, largely for an initial public offering of a Nevada-based company.

The offering of public shares never materialized, however.

Investors were told various stories about the status of their funds until Kitts allegedly stopped answering phone calls and emails, the court documents claim.

Kitts ultimately pleaded guilty to two counts of theft and two counts of securities fraud. But he didn’t show up for sentencing.

(The accused) used the funds in a manner consistent with a Ponzi scheme.