B.C. Financial Host Fined For Fraud, Banned From Markets
November 7, 2014 at 3:52 AM (PT)
Investment advisor and radio host DAVID MICHAEL MICHAELS, convicted by the BRITISH COLUMBIA Securities Commission of a C$65 million fraud promoted on a weekly BELL MEDIA News-Talk CFAX-A/VICTORIA, BC show, has been fined over C$23 million in the case and has been banned from working in financial markets. The fine, including C$17.5 million in a direct fine and forfeiture of $5.8 million he earned in commissions, is the second largest in BCSC history.
MICHAELS was found by the Commission to be acting as an investment advisor to 484 clients without being registered, with the agency noting a "significant history of securities market misconduct" that led to suspensions and to which MICHAELS reacted by restructuring his affairs rather than changing his conduct. Clients averaging 72 years of age were advised to make high risk investments that became worthless; C$40 million was lost and the rest, the BCSC says, remains at risk. The commission also considered MICHAELS' business model "highly predatory in nature" and said he had advised clients to borrow money to invest with him, leaving them not only having lost money but now owing on the loans.
MICHAELS is expected to appeal the sentence. He argued to the BCSC that "there are gradations of fraud and misrepresentation" and that his misdeeds were "less serious than Ponzi schemes or cases where bogus securities are sold," adding that "none of the funds invested were diverted for personal use or put into non-arm’s length investments" and that he invested his own money as well.