Medicine Hat News

‘They’ve ruined people’s lives’

Scammed investor speaks out after head of The Investment Exchange pleads guilty to three counts related to fraud

- COLLIN GALLANT cgallant@medicineha­tnews.com Twitter: CollinGall­ant

Nearly four years after local investors took concerns to authoritie­s, the man at the head of The Investment Exchange has pleaded guilty to three counts related to fraud.

Kenneth Charles Fowler pled guilty Thursday at provincial court in Calgary to unregister­ed trading and illegally distributi­ng TIE securities.

Securities investigat­ors say most of the $27 million put in by investors was paid to Fowler as director himself or companies he owned.

Documents obtained by the News from a 2013 bankruptcy proceeding allege money was mostly squandered on hundreds of stock market transactio­ns made each day over the course of seven years.

He faces a possible maximum penalty of five years less one day in prison, a fine of up to $5 million, or both. Securities officials tell the News that prosecutor­s will seek prison time in relation to three charges when sentencing proceeding­s take place in June.

One local investor who lost $100,000 said the announceme­nt of guilty pleas is welcome but he was still livid at Fowler and another Medicine Hat man previously found guilty in connection to TIE.

“I knew them for years,” said the man, who the News has agreed not to name. “Then they did this? They’re no better than hardened criminals.

“They’re ruthless, and they’ve ruined people’s lives.”

The man is one of 35 investors — including a number of Medicine Hatters — who were original plaintiffs against TIE during court creditors proceeding­s in 2013.

Fowler was arrested in Mexico in late 2015 and extradited to answer the charges last year.

The Alberta Securities Commission announced Friday that the 66-year-old had pled guilty to the three charges ahead of a planned trial in May.

Another man with local connection­s, Douglas Schneider, was sentenced to one year in prison in July 2015.

A number of other TIE plaintiffs contacted by the News Friday did not return messages seeking comment.

In May 2013, Fowler’s Calgary home, its contents and a luxury car were sold at auction to settle the bankruptcy. After legal bills and costs were tabulated, net proceeds of $235,000 were distribute­d to creditors.

Documents show that during the life of the firm, about $4.3 million was paid out to investors, but only 40 of the some 337 clients requested dispersal of income rather than reinvestin­g profits.

Investigat­ors say $1.4 million in company funds was used to pay personal credit card bills and $3.6 million made in direct payments to Fowler. About $11 million flowed to a separate company, Southwell, which was controlled by Fowler and which investigat­ors say operated as his day trading account.

Documents show equity trading losses totalling $4.6 million from 2006 to 2012, and only showed one profitable year, due entirely to shortselli­ng of a single stock in 2008.

Fees on trades totalled $1.5 million on trades over a seven year period, equally and an average of 122 trades per day that cost $7 each.

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