Columnist David Baines
Arvin Patel says he trusted Vancouver notary Rashida Samji, whom he identified as scheme’s promoter
A former credit union employee who recommended an alleged Ponzi scheme claims he is a victim.
AI can’t believe with all the education, experience and qualifications and everything, I just failed to see through this investment.
ARVIN PATEL FINANCIAL PLANNER
former credit union employee who recommended an alleged Ponzi scheme to his clients, friends and relatives claims he is a victim, not a perpetrator.
Arvin Patel, who worked as a financial planner at Coast Capital Savings Credit Union until earlier this month, told a B. C. Securities Commission hearing panel last week that he personally lost about $ 240,000 in the scheme, and his family members lost about $ 1.2 million.
“Honestly, if I had known that this was a Ponzi scheme behind the scenes, then I would not have participated in it myself or allowed my family’s money or clients who trusted me [ to invest in the scheme],” Patel told the panel.
The alleged Ponzi scheme came to light on Feb. 14 when BCSC enforcement staff issued an “investor alert” warning the public not to send money to Patel or Vancouver notary Rashida Samji, whom Patel says was the promoter of the scheme.
According to affidavits sworn by BCSC investigators, the scheme was referred to as the “Mark Anthony Investment.”
It was purportedly an investment in a “real estate and import/ export business involving wineries,” but had no connection to the Mark Anthony Group, which owns the Mission Hill winery in Kelowna.
According to affidavits filed by BCSC investigators, Patel said he referred 20 to 25 individuals who collectively invested $ 8 million to $ 9 million, which is still outstanding.
The total amount of money that was invested in the scheme is not known. The investigation is still in the early stages. No formal allegations have been made against anybody. Meanwhile, regulators have been taking steps to protect the public.
Days after the scheme was uncovered, Coast Capital suspended Patel, and the Society of Notaries Public of B. C. suspended Samji. The securities commission also froze their assets.
On Friday afternoon, Patel’s lawyer, Sean Boyle, applied to relax the freeze order on grounds that his client needed money to fund ongoing expenses, including legal fees.
“Mr. Patel is not a perpetrator. He is the victim of what appears to be a Ponzi scheme,” Boyle told the hearing panel, headed by BCSC vice- chairman Brent Aitken.
Then, in a move that surprised commission staff, Boyle called Patel to the witness stand to give his version of events. The Vancouver Sun was not there, but later obtained a transcript of the proceedings.
Patel recalled how his wife became terminally ill in 2005 and he went on stress leave for a year. He said his salary was reduced by 40 per cent and he had to draw on his RRSPS to support himself.
He said that during one hospital visit, Samji, whom he had known for 30 years, told him about a “guaranteed” investment yielding 12 per cent per year.
It was a private investment, purportedly involving subsidiaries of the Mark Anthony Group in Chile and South Africa. Samji would provide a “letter of comfort” that the money was in her notary trust account, and the subsidiaries could purportedly borrow against that money but the funds would never leave the account, Patel explained.
“I asked her if I could talk to someone at Mark Anthony Group and see if I could verify the structure of the investment,” he told the panel.
“She indicated to me, basically, it’s very confidential information … She told me she had consulted a lawyer and she did not require any disclosures or memorandums.”
Boyle asked whether her refusal to provide any documents should have raised a “red flag.”
“It should have,” he replied. “I trusted her as a family friend and notary public.”
He said the only independent inquiry he made was with the Society of Notaries Public of B. C. to confirm that Samji was licensed as a notary.
He said he personally invested $ 600,000 in stages, starting in August 2005. He said he received about $ 350,000 in interest payments, for a net loss of about $ 250,000.
He also said that family members in B. C., Ontario, California and the United Kingdom invested about $ 1.5 million, including $ 500,000 as recently as last month. He said they received about $ 300,000 in interest payments, for a net loss of about $ 1.2 million. Patel said he also referred the investment to colleagues at Coast Capital — including a financial planner and an investment insurance specialist. He said they invested about $ 1.2 million in total.
He also said he recommended the investment to Coast Capital clients, but did not say how many clients or how much they invested. He said he communicated with investors through his Coast Capital email service.
Boyle asked whether he received any commissions, referral fees or “kickbacks” from Samji for recommending the investment. “None,” he replied. “One final question,” Boyle said. “How did this happen? You have education and experience — what were you thinking?”
“I’m in total shock and utter disbelief,” Patel replied. “I can’t believe with all the education, experience and qualifications and everything, I just failed to see through this investment.”
He said Samji presents herself as a “very attractive, well- dressed, decent person ... A lot of people have been taken in by her because she appears to be very giving, sharing, philanthropic, charitable; very prominent in the Ismaili community; very well- established through the notary society.”
Patel said he feels ashamed that he recommended the scheme to so many people: “I can’t sleep. I feel like maybe committing suicide or something because it’s such a terrible, terrible tragedy and so many peoples’ livelihoods are at stake here.”
Commission lawyer Kristine Mactaggart Wright wondered why Patel — who is 58 years old, has worked as a financial planner for 30 years and was licensed as a mutual fund salesman and life insurance agent — knew virtually nothing about how the investment worked, failed to recognize so many warning signs, and placed so much trust in Samji.
“You never phoned to check if [ Samji] did have a trust account at any bank?” she asked.
“Personally, no,” he replied. ( The notaries society says Samji did not maintain any notary trust accounts.)
“Did you call the Mark Anthony Group in British Columbia to check if they have any wineries in Chile and South Africa?” she pressed.
“No, I didn’t. I just took her word for that,” Patel replied.
Mactaggart Wright asked whether any of his Coast Capital clients invested in the scheme:
“Yeah, they were my financial planning clients or some general clients that I knew from the bank that would come in and ask me for my advice. So as a financial planner, and in the scope of financial planning … the clients would ask me, ‘ What do you do for your investments?’
“I would bring it up in the course of conversation that this is what I would do, and they said that they would like to find out more about it … then they would go with Rashida and go out and do the investment.”
Samji did not attend the hearing, and was therefore not in a position to refute any of Patel’s allegations. She could not be reached for comment.
On Tuesday, the hearing panel announced it had revoked the freeze order against Patel’s chequing account on certain conditions, and issued new freeze orders against his retirement savings and brokerage accounts. The liens remain on the properties.