Senior must repay $905K

A 77-year-old oilman living in a nursing home after his home was foreclosed upon has been ordered by the Alberta Securities Commission to pay $905,000 for defrauding investors.

An ASC panel found Richard Schmidt of Calgary illegally traded and distributed securities in Goldenrod Resources Inc., an oil and gas company, and made false and mis leading statements to investors, according to a news release on Thursday.

It said the panel has ordered Schmidt to pay an administrative penalty of $200,000, hand over $700,000 in ill-gotten gains and pay costs of $5,000. He was also permanently banned from trading in or purchasing securities and acting as a director or officer for any Alberta issuer.

From 2006 to 2010, Schmidt raised about $5 million from investors, the ASC said, acting as president and 75 per cent owner of Goldenrod. Neither he nor the company was authorized to trade in securities.

In its decision, the panel notes “that $700,000 of the approximately $5 million raised was not used for Goldenrod’s operations but was diverted by Schmidt to himself for his personal use.”

It added the $5 million is “essentially lost,” while pointing out Schmidt’s representative at a hearing in April said he is trying to sell the company to recover some money to return to investors.

The panel noted that Schmidt admitted his role in the scheme and co-operated with the ASC.

It said he was described by his counsel as a self-taught geologist, adding the panel learned he is an unemployed widower with no assets who currently lives on government support.

Schmidt’s 25 per cent partner and the other former director of Goldenrod passed away in 2011, the decision notes.

It added that Schmidt had received “minor sanctions” from the ASC in 1997 and 1999 and was warned in 2006 that his activities with Goldenrod “may well be problematic.”