The legal fight to ban a convicted fraudster from B.C.’s capital markets began in front of a B.C. Securities Commission panel this week.
West Vancouver resident Aly Babu Mawji — who was convicted of illegal market manipulation in Germany and also happens to be presently embroiled in an investigation of an alleged illegal share distribution scheme — faced a preliminary hearing at the BCSC in Vancouver.
The BCSC is seeking to ban Mawji from any activities surrounding the securities industry as a result of his role in a significant pump and dump scheme that led to a 38-month sentence in October 2012.
Abbas Sabur of Shapray Cramer LLP represented Mawji while BCSC counsel Deborah Flood took on the arguments for the commission’s executive director Peter Brady.
Sabur argued on procedural and administrative grounds that some evidence from Germany’s court records ought not to be included in any future full hearing because Brady introduced the evidence months after issuing an order against Mawji on Oct. 1, 2018. Part of Sabur’s argued a six-year statute of limitations had expired since the Oct. 12, 2012 conviction.
The Oct. 1 order (the only records of the hearing process available to the public) only includes a German court of appeal document that only refers to ‘M’ as the subject. As such Sabur contended it’s not possible to establish that ‘M’ is Mawji.
Flood described the arguments as “meritless” and said entering evidence — including the lower court documents that actually name Mawji — after an initial order is lawful practice.
“Mr. Mawji is not denying he is the appellant in the decision of the appeals court.
“He’s not denying he was sentenced to three years and two months,” said Flood.
Sabur also argued that the evidence submitted does not explicitly outline how Mawji’s violations in Germany are necessarily a violation in B.C.
“Are you satisfied the laws that (Mawji) allegedly violated in Germany are laws that should be enforced here (in B.C.) now?” asked Sabur to the panel.
A BCSC panel of commissioners (judges) withheld its judgement on the arguments until a later date. A hearing could be heard as early as September.
The BCSC’s Brady is asking the panel to permanently ban Mawji from trading in or purchasing any securities or exchange contracts. Furthermore the ban specifies Mawji should not: rely on using exemptions to purchase securities; become or act as a director or officer of any issuing company or registrant; act as a registrant or promoter; act in a consulting capacity in connection with securities activities; and engage in investor relations activities.
According to reports in 2006, Mawji had been promoting Vancouver-based De Beira Goldfields Inc., a shell company sold on the OTC Bulletin Board and Frankfurt Stock Exchange. He also appeared to be working at Varshney Capital at the time. Thereafter Mawji worked in Europe and West Asia. It was eventually determined by the German Federal Court of Justice he defrauded 25.7 million Euros from investors.
BCSC applied for orders against Mawji only after 25 so-called consultants, including Mawji, and their 26 associated firms — collectively dubbed by Brady as the Bridgemark Group — are alleged to have entered into illegal consulting agreements with 11 Canadian Securities Exchange-listed (CSE) cannabis, cryptocurrency and alternative energy companies in a bid to manipulate stocks.
The commission, in applying to ban Mawji, said it made its application “based on [his] conviction for securities misconduct in Germany.”
It would not speak to ongoing enforcement actions of particular individuals. As such, it provided no explanation why it took nearly six years to serve Mawji with orders despite his highly publicized conviction.
Mawji is living in a West Vancouver home with his spouse Denise Trainor, who is also a respondent to the BCSC investigation. The house was previously sold to a numbered company last November for $2.8 million by realtor Lisa Jackson, the spouse of Anthony Jackson. Anthony is the principal of Bridgemark Financial Corp. a BCSC respondent who promoted some of the companies involved in the investigation. Lisa is named as a respondent in a similar investigation by the Alberta Securities Commission involving Prize Mining. Corp.
The house, was assessed this year at $2.18 million; it has been relisted for sale at $2,888,800.