BCSC panel finds that B.C. company and two directors broke securities laws

VANCOUVER, Aug. 7, 2012 /CNW/ - A British Columbia Securities Commission panel has found that a B.C.-based company and its two directors breached securities laws by selling securities without being registered. 

The panel found that JV Raleigh Superior Holdings Inc. entered into loan agreements with 81 investors between July 2006 and January 2009, raising approximately $5.7 million. The investors included 49 B.C. residents, who invested $3.2 million. The loan agreements are securities as defined under the Securities Act.

The company's two directors, Maisie Smith (aka Maizie Smith) and Ingram Jeffrey Eshun, each owned 50 per cent of JV Raleigh. Like the company, neither was registered to sell securities in B.C.

Under the loan agreements, JV Raleigh was to borrow money from investors to purchase "consumer secured notes receivable", which JV Raleigh described as "a form of factoring" with typically "high yields." There is no evidence that the company used any of the funds for this purpose.

JV Raleigh deposited the investors' advances under the loan agreements to bank accounts opened by Smith and Eshun.  Both had individual authority to withdraw funds from the accounts, and both did so.  Eshun signed four cheques made payable to himself totalling $150,000.  In closing a JV Raleigh credit union account, Smith received a bank draft in the amount of $2.7 million.

The company also claimed it would provide investors a monthly "return of capital" payment, and return the balance of the investment, plus interest, at a later date. There is no evidence that any investors received a return of capital or any interest.

In a statement of admission entered into evidence at the hearing, JV Raleigh and Smith admitted that they broke securities laws by trading in securities without being registered and without filing a prospectus.

The panel directed the parties to make submissions on sanctions according to the schedule set out in the findings.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the decision on our website, www.bcsc.bc.ca, by typing JV Raleigh Superior Holdings Inc, Maisie Smith, Ingram Jeffrey Eshun or 2012 BCSECCOM 301 in the search box.  Information regarding disciplinary proceedings can be found in the Enforcement section of the BCSC website.

Please visit the Canadian Securities Administrators' Disciplined Persons List for information relating to persons disciplined by provincial securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).

Learn how to protect yourself and become a more informed investor at www.investright.org

SOURCE: British Columbia Securities Commission