Victoria ‘ financial education’ firm has another ( questionable) deal for you
Wealth by Design recommends clients borrow against their home to invest in fledgling recycling company
IThe upshot is that Andison and Lahnsteiner are working on both sides of the transaction, which strikes me as a serious potential conflict of interest.
n March, I wrote about a Victoriaarea financial planning firm that has caused its clients a whole lot of financial grief. Wealth by Design describes itself as a “financial services education and capital- raising company.” It holds seminars and “boot camps” where it purportedly teaches attendees how to become “financially free within 10 years or less.”
Not coincidentally, it offers an array of investment products that will purportedly help attendees achieve that goal.
At the time of my column, the firm’s chief executive was Stephen Mcclure, who was supposedly so financially adept that he “became financially free at the age of 32.”
I found this puzzling, as many of the investments he recommended were disasters.
One was Merendon Mining, which was part of an alleged Ponzi scheme perpetrated by Milowe Brost and Gary Sorenson, who are now facing criminal fraud charges in Calgary.
Another was a charitable donation tax- deduction scheme called the Canadian Humanitarian Trust, which was disallowed by Canada Revenue Agency.
Yet another was an investment in Ontario- based Borealis International Inc., which was shut down by the Ontario Securities Commission.
With a string of losers like this, I wondered how Mcclure could have achieved financial freedom at such a young age.
Alas, he confessed, it was all a mistake: he was not “financially free” after all. He had invested in the same deals and had suffered similar losses.
Mcclure recently told me he was “laid off” as the firm’s CEO on April 20, the month after my column was published. One client told me Mcclure is now claiming to be on the verge of personal bankruptcy.
I wanted to ask Denise Andison — the founder, owner and chief operating officer of Wealth by Design — how her chief executive could sell so many bad investments and make such bogus claims about being “financially free” with no apparent repercussions until he was outed by The Vancouver Sun, but she never returned any of my calls.
Wealth by Design is now promoting another questionable investment offering. It’s a Victoria- based company called One World Polymers Corp., which purportedly purchases and ships waste plastic to recycling plants in other countries.
Or at least that’s the plan. It’s not clear that One World is actually in business. The company was only incorporated in March, which suggests it is still in the development stage. I repeatedly requested a copy of the company’s offering memorandum, which would presumably tell the tale, but neither Wealth by Design nor One World responded to my queries.
I am not surprised that neither firm responded. They are not operating at arm’s- length. Andison, who runs Wealth by Design, also serves as chief operating officer of One World. Gary Lahnsteiner, who works as a “wealth coach” at Wealth by Design, also serves as chief marketing officer of One World. The two companies also share the same office in Victoria. They are also jointly promoting the investment. In March, they held a dog- andpony show for about 100 prospective investors at the Grande Pacific Hotel in Victoria. Another investor meeting was held at the Victoria office on April 30.
The upshot is that Andison and Lahnsteiner are working on both sides of the transaction, which strikes me as a serious potential conflict of interest.
Even more worrisome, Wealth by Design is recommending on its Facebook page that investors borrow against their homes to finance an investment in One World.
The rationale is that the loan will cost only three per cent per year and is tax- deductible, while the investment will produce a 10- per- cent annual dividend, which is taxed at a lower rate than interest or regular income.
However, as we have seen so many times before, borrowing for investment purposes is a very risky proposition, especially when the promised returns are uncertain. In this case, I have no evidence that the firm is generating any cash flow, let alone enough to pay a 10- per- cent annual dividend.
There is one final aspect of this offering that concerns me. Like many such investments, it’s being sold under exemptions from prospectus and registration requirements.
The B. C. Securities Commission, concerned that unregistered salespeople such as Mcclure and Andison are “educating” investors and recommending investment products to them, recently instituted a new rule prohibiting them from selling an investment product to a client if they have previously provided that client with financial advice.
That presumably means that Wealth by Design personnel cannot sell the One World deal ( or for that matter, any other securities deal) to anybody who has attended any of the firm’s educational seminars or boot camps. If they do, they could be subject to regulatory action.