MEXICAN BAD DEAL
A company and two of its representatives have been fined more than $100k for their role in a $3M Mexican land investment deal.
REGINA — The Financial and Consumer Affairs Authority of Saskatchewan has fined a company and two of its representatives more than $100,000 for their role in advising and accepting $3 million from Saskatchewan investors for a real estate development deal in Mexico.
Investors were promised an opportunity to develop 6.8 kilometres of beach-front property on the west coast of Mexico near a turtle sanctuary with condominiums and a golf course designed by Jack Nicklaus.
In a judgment last week, Landbankers International MX, S.A. De C.V was fined $50,000 and ordered to cease trading or acquiring securities in Saskatchewan. The company was ordered to cease advising Saskatchewan residents on securities, trades or exchange contracts.
The judgment resulted from a two-day hearing last May.
Kelly Friesen was also fined $50,000 and Sonja McAdam $4,500 for selling the company’s securities and advising residents without being registered to do so. Friesen, formerly of Warman, and McAdam, formerly of Christopher Lake, have also been banned from trading securities in the province.
An investigation into the company and its representatives began in the fall of 2007.
Under the covert identity of Frank Clark, Ed Rodonets, deputy director of enforcement with the FCAA, began investigating the company in 2007. He contacted Friesen, who, after several emails, offered to sell him shares in the Landbankers, a Mexico-based company. As the investigation proceeded, Rodonets obtained a search warrant for Friesen’s home.
On Thursday, Rodonets said he isn’t sure who owns the property and to the best of his knowledge, there hasn’t been any development on the property. He couldn’t say for sure if the proposed real estate deal was a scam, although the FCAA suspected it was.
“Which is why we took the action to protect Saskatchewan investors,” he said.
He said at least 200 residents invested in the proposal. To date, Rodonets has only heard of three residents getting their money back. He suspects that another 150 Canadians invested in the deal for an additional $2 million. Similar cease-trade orders have been levied against the company in Alberta and New Brunswick. Investors in the U.S. were also involved in the proposed real estate deal.
Rodonets said people need to be mindful that when they invest in a place like Mexico, they have to cross two borders to get their money back if the deal goes bad.
Asked what made this proposal entice investors to get involved, Rodonets quoted what one investor told him.
“I was standing on the beach,” he said. “The water was lapping at my feet. The wind was blowing through my hair. The sun was shining on me. My brain shut off and my wallet opened up.”