Supreme Court upholds securities penalty
A B.C. Supreme Court ruling has upheld a B.C. Securities Commission penalty against a Port Coquitlam businessman and rejected his $480-million counter-suit.
It’s the latest decision by the courts to back uncollected BCSC penalties dating back a decade.
In late November 2017, the securities commission filed a B.C. Supreme Court action to extend a 10year deadline to collect a $100,000 fine against Michael James Savage.
The 2007 fine was issued to Savage by the BCSC for misrepresenting a telecom investment and committing fraud.
“These decisions mean that the BCSC can continue to take steps to collect on our sanctions,” BCSC spokeswoman Alison Walker said in a written statement.
Asked how it will collect on the penalties from a decade ago, the BCSC would not provide details. “The BCSC vigorously pursues all cost-effective avenues to collect outstanding fines,” said Walker. “We determine a unique collections strategy for every case, and we will revisit and revise strategies throughout the life of a case.”
The BCSC filed the action to extend collection on Savage following a Postmedia News investigation that found 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 — had not paid the largest penalties issued by the securities commission.
From fiscal 2007-08 to 2016-17, the B.C. Securities Commission had collected less than two per cent of $510 million in fines and orders to pay back the proceeds of fraudulent activities, the investigation found.
In late 2007, a BCSC tribunal found that Savage had sold securities of Savage Tele.com when he was not registered to do so and without a prospectus. He also told investors the company existed when he knew its incorporation had been delayed, and that the company had purchased two of a planned 24 internet service providers knowing it had not done so, the tribunal found.
When some investors asked for their money back and threatened to sue, Savage transferred money from a company account and made some of it available to his fiancee, the tribunal determined. Savage did not respond to a request Thursday for comment via email.
Earlier, the courts upheld $3.9 million in penalties issued by the BCSC a decade ago against Abbotsford resident Daniel Eric Byer for his role in a Ponzi scheme. With interest, the penalties now total $5.13 million.
The BCSC has acknowledged its low penalty collection record, but says it’s the nature of the fraudulent activity and the perpetrators that makes collection difficult and unlikely. The money has been spent or hidden, sometimes abroad, or the fraudsters have fled.
Following the Postmedia investigation, the B.C. government said it expected there to be penalty collection improvements and increased prosecution of investment fraudsters.
Recently, B.C. Finance Ministry officials said staff are reviewing proposals from the BCSC to improve collections. Officials said the nature of this work is quite technical — and the ministry expects some may require legislative changes — and will take the time necessary to get it right.