SECURITIES VICTIMS NEED RADICAL ACTION
RCMP must investigate $ 5.7- million investment debacle spawned by Maisie Smith and Jeff Eshun
EThe hearing panel ordered Smith and Eshun to return the $ 5.7 million they took from investors — and fined them another $ 1.25 million — but the likelihood of them paying is remote. … The only potentially meaningful action would be criminal charges, but unless there is an RCMP investigation, that simply isn’t going to happen.
arlier this week, a B. C. Securities Commission hearing panel found that Ontario financial adviser Ingram Jeffrey Eshun and his B. C. associate, Maisie Smith of Coquitlam, “took $ 5.7 million from 81 investors on false pretences.”
One would think that this would provide sufficient basis for the RCMP Commercial Crime Section to initiate a criminal investigation, but this is not the case. RCMP say they have other, more pressing priorities.
I am deeply disturbed by this response, for two reasons.
The first is that, although the BCSC prosecuted the case on the basis of an illegal securities distribution, rather than fraud, much of the evidence points to fraud.
According to the hearing panel, Eshun and Smith arranged for 81 investors to lend $ 5.7 million to JV Raleigh Superior Holdings Inc., a private B. C. company they jointly owned. Investors were told the money would be used to buy “consumer secured notes” that would provide high returns.
However, the panel said there was no evidence that JV Raleigh used any of the funds for the stated purpose: “To the contrary, it appears that investors’ funds were withdrawn from JV Raleigh and given to companies of which Eshun and Smith were directors and officers.”
The second reason is that Eshun and Smith did immense damage to investors. As part of the BCSC hearing, 10 of the victims tendered affidavits describing how much they lost and the grief they have been suffering. I republish some of their statements below.
By way of background, most of the victims are members of the Filipino community in the Lower Mainland. To spare them unnecessary embarrassment, I have obscured their identities:
• AA of Vancouver, registered nurse, says Smith convinced her to invest in JVR and to borrow the required funds against her house and RRSP. She ended up losing $ 218,000.
“Emotionally, I am depressed, I have been consulting with my family doctor and have attended some counselling due to depression since early 2011 and have seen a psychiatrist.”
• BB of New Westminster, dietary aide, says that after meeting Smith and Eshun, she and her husband borrowed $ 200,000 against their condo and got another $ 20,000 from their daughter’s RESP. They ended up losing $ 196,000.
“Our mortgage payment went up. Our daughter was not able to go to college as we could not afford to send her. I was so depressed that I wanted to end my life. All the years we saved — gone in just one year. We are now planning to sell our condo if we cannot afford our monthly payment.”
• CC of Burnaby, registered nurse, describes how Smith talked her and her husband into refinancing their home and “lured” them into buying JVR notes. They lost $ 76,000.
“I have been working two jobs to meet our financial obligations of paying debts and mortgages. It has been stressful and really affects our daily lives, both present and the future, including our retirement. Future plans have been derailed and vacations were cancelled.”
• DD of Vancouver, technician at Vancouver General Hospital, says she and her husband attended a presentation by Eshun and Smith, then borrowed against their home through Smith, who was affiliated with a mortgage broker. They lost $ 100,100.
“My husband and I had to remortgage our house after the investment scheme. It has given us sleepless nights and my husband almost suffered a nervous breakdown. We have suffered financial strains and our marriage almost ended.”
• EE of Burnaby, room attendant at Sheraton Wall Centre, describes how, on Smith’s recommendation and with her assistance, she remortgaged her home and used the proceeds to invest in JVR. She lost $ 50,000.
“This has made a big impact on my life. I have suffered from depression, a nervous breakdown and I have trouble eating and sleeping. I live by myself. I have no one to talk to.”
• FF of Surrey, forklift operator and part- time sorter with Purolator, describes how he remortgaged his home and, at the suggestion of DSC Lifestyle Services ( Eshun’s financial advisory firm) and Smith, invested $ 40,000 in JVR notes. He ended up losing all of it.
“My wife told me that she is very depressed about losing the money and has problems sleeping because if it. Losing the $ 40,000 is a reason we have to sell our house.”
• GG of Vancouver, home care worker, describes how a friend referred her and husband to DSC, and how they borrowed against their home to buy JVR notes. They lost about $ 160,000.
“Our monthly mortgage payment went up and it has taken an emotional toll as well. Sometimes I cry, especially when I think about our loss … Then we blamed one another and have had an up- and- down relationship because of this. We are thinking about our kids. This is a big loss to us. We are hoping that there is someone that can help us recover this loss and always pray that Maisie will return our money back.”
Fat chance. The hearing panel ordered Smith and Eshun to return the $ 5.7 million they took from investors — and fined them another $ 1.25 million — but the likelihood of them paying is remote.
The panel also thinks there is little likelihood they will change their ways: “Their contraventions are serious, but there is no evidence before us that would give us any comfort that they intend to alter their behaviour,” the panel stated in its decision.
The only potentially meaningful action would be criminal charges, but unless there is an RCMP investigation, that simply isn’t going to happen.
I understand that RCMP cannot investigate every case of suspected securities fraud, but this is a large and compelling case. For me, it is the line in the sand. If the RCMP allow this sort of thing to pass with no meaningful investigation, the provincial government should intervene. Only radical action is going to wake these people from their slumber.