B.C. wants fraud fine failure fixed
Securities commission asked by province to boost collection rate
The B.C. government on Monday denounced the B.C. Securities Commission’s dismal record of more than $500 million in uncollected penalties issued to fraudsters in the past decade.
In a written statement, Finance Minister Carole James encouraged any proposals from the securities commission to improve its collection of penalties.
The government response comes after a Postmedia investigation revealed more than 80 fraudsters who have harmed thousands of investors — in B.C., other parts of Canada, the United States and as far away as Switzerland — have escaped paying the largest penalties issued by the commission.
From fiscal 2007-08 to 2016-17, the B.C. Securities Commission collected less than two per cent of $510 million in fines and orders to pay back the proceeds of fraudulent activities, according to the commission’s financial reports and other records.
In the written statement, James said: “British Columbians believe in fair play and that everyone should have to play by the rules. The decision to allow the hundreds of millions in fines issued by the British Columbia Securities Commission to sit uncollected was not in the best interests of British Columbians.”
In her statement, James noted the securities commission is an independent regulator at arm’s length from the government, saying “we would encourage any proposals from the BCSC on any new mechanisms they may need to collect the fines they levy under the B.C. Securities Act.”
No details were released by James, who ministry officials said was unavailable for an interview, on how the provincial government would follow up or monitor any proposals.
James said in a broader context, the province is looking at all the tools at its disposal, including ways to address tax evasion and money laundering.
Postmedia’s examination of other provincial commissions’ financial records showed they are not stellar, but they are better than B.C.’s.
For example, the Ontario Securities Commission has a collection rate of about 18 per cent in the past decade. Still, there are $370 million in uncollected fines.
Recently, the OSC hired a specialized law firm to help boost collections.
Experts say if penalties are not collected, it can create a situation of impunity, which fosters more violations.
The B.C. Securities Commission acknowledged the poor collection rate, but says it is the nature of the fraudulent activity and the perpetrators that makes collection difficult and unlikely because they have spent or hidden the money — or fled.
The Postmedia investigation, however, tracked down potential assets totalling $30 million of fraudsters who had not paid their penalties. One fraudster owns a $700,000 house in Las Vegas and another a $1.4-million condo in Hawaii.
Responding to the revelation hundreds of millions of penalties were going uncollected, Bob Wiegers said Monday the pain remains of nearly $2 million he and his brother lost in an investment scam more than a decade ago.
They were taken in a fraud involving Cambridge International Bank and Trust, headed up by former Langley resident David Rowe.
“White-collar crime, it seems to be rampant, but it seems they are getting away with it,” Wiegers said. “It’s a sad situation that nothing is being done about it.”
The B.C. Liberal caucus declined Monday to comment on the uncollected penalties in the past decade, a period in which the Liberals were in power.
Liberal caucus communications official Heather Clifford said in an email that “unfortunately” no MLAs were available for comment.
The Liberals have 41 sitting MLAs, including two finance critics, Shirley Bond and Tracy Redies.