A company that raised $105,000 from two investors for a failed seniors housing project in Creston B.C. has been ordered by the BC Securities Commission (BCSC) to pay the full amount back in a disgorgement fee.
A BCSC disciplinary panel on January 27 ordered Havenplex Holdings Ltd. to pay a $105,000 disgorgement fee for breaching the Securities Act. The money was raised for the Cherrywood Estates in Creston.
But the money came from two people who were not accredited investors. Since the money was raised under the private issuer exemption, and since Havenplex never filed a prospectus, it was a breach of securities law.
Havenplex has admitted liability and told the BCSC it is making efforts to repay the investors.
The panel heard that there is no evidence that the $105,000 raised was used for the personal gain of Havenplex directors or officers.
“In fact, there is no evidence before the panel of what was done with the subscription proceeds,” the BCSC says in its reasons for decision. “There is no evidence before us of the investors’ investment in Havenplex.”
The property in question now appears to be up for sale. It is already zoned for seniors housing.
In an earlier ruling, in March 2016, Patrick Aaron Dunn, who had raised the money from the two investors on the behalf of Havenplex, was sanctioned by the BCSC.
According to the BCSC, Dunn had offered to raise money for Havenplex in 2013 and ended up doing so by selling promissory notes. One of the investments was deemed to be unregistered trading, since Dunn was not registered to sell securities at that time.
The BCSC noted that Dunn “did not profit from his misconduct.” Even so, he was ordered to pay a $11,000 fine and was given restrictions on the type of securities trading he is allowed to conduct.
