BCSC pursues fraudster in U.S.
Judgment must be recognized in Nevada before BCSC is able to sue for collection
The B.C. Securities Commission has filed an application in a U.S. court to enforce a $21.7-million penalty against fraudster Michael Lathigee, who relocated to Las Vegas from Vancouver after he was sanctioned.
In documents filed in the Eighth Judicial District Court of Nevada, Lathigee argues the BCSC is attempting to enforce a judgment that is “non-recognizable” under the laws of Nevada and the United States.
The BCSC’s action against Lathigee is the latest among measures the regulator took after a Postmedia investigation, reported last November, revealed more than half a billion dollars of its penalties had gone uncollected in the past decade.
During the period, the collection rate was less than two per cent.
Immediately after the Postmedia investigation, the BCSC filed at least 10 writs of seizure and sale in B.C. Supreme Court for financial fraudsters owing nearly $70 million in penalties and renewed three enforcement orders.
Also following the investigation, B.C. Finance Minister Carole James ordered the BCSC to improve its collection record and called for new tools and modernization of the Securities Act to improve collection.
BCSC director of enforcement Doug Muir said Friday that before they can sue Lathigee for collection they must get their judgment recognized in Nevada.
The monetary sanctions were levied against Lathigee in March 2015, but Muir said the BCSC could not take action in the U.S. until appeals had been exhausted in Canada in May 2017. Muir said their action in the U.S., filed in February of this year, was not prompted by Postmedia’s investigation.
“We consider every proceeding and every action — and every outstanding judgment — and decide what steps to take and develop a strategy for each one of them,” Muir said in an interview.
The Postmedia investigation identified $31 million in potential assets linked to financial fraudsters who had not paid penalties, including a home owned by Lathigee in Las Vegas assessed at $729,000.
However, in March, Lathigee transferred ownership of the house to his wife, Celiste, Clark County Assessor records show.
BCSC officials said it was highly unlikely they could have done anything to prevent the transfer and are strategizing with their lawyers on what steps can be taken to prevent further transference of the property.
“It certainly makes it more difficult to collect now that (Lathigee) has moved the asset one step away from himself,” said Muir.
A judicial tribunal of the B.C. Securities Commission had ruled Lathigee and Vancouver resident Earle Pasquill fraudulently raised $21.7 million from nearly 700 investors in 2008 without telling them that Alberta real estate development projects, pitched through an investment club overseen by the pair, were in serious financial difficulty. The tribunal also found millions raised to invest in U.S. foreclosures had been redirected to prop up the Alberta real estate developments with unsecured loans.
The BCSC penalty total to the pair came to $51.7 million.
The BCSC has acknowledged its poor collection rate, but said it’s the nature of the fraudulent activity and the perpetrators that makes collection difficult and unlikely.
Muir noted shortly after the BCSC tried to collect from a third party owing money to three companies controlled by Lathigee and Pasquill, the companies declared bankruptcy.
“This case is consistent with what we are seeing and have seen with respect to trying to collect — that people take action to try to evade it or contest it,” he said.
B.C. Supreme Court documents show the BCSC has also been trying to serve Pasquill court papers to carry out an examination of him, a legal mechanism creditors use to determine a debtor’s assets and ability to pay.
Pasquill placed ownership of his home on Vancouver’s west side, assessed at $4.35 million this year, solely into his wife Vicki’s name in 2000.
The BCSC filed a copy of Postmedia’s investigation in court to support that Pasquill lived at the westside address.
We consider every proceeding and every action — and every outstanding judgment — and decide what steps to take and develop a strategy for each one of them.