BCSC Issues $15m Penalty against Fraudulent Ponzi Scheme Operator

British Columbia Securities Commission (BCSC), one of Canada’s thirteen provincial financial regulators, has issued financial sanctions and market bans against Thomas A Williams and his group of companies for fraud and illegal distributions.

Sanctions have also been issued for illegal distributions against several of the finders that Williams commissioned to help him raise money.

Williams, a former registrant, controlled six entities collectively known as the Global Group of Companies.

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Ponzi Scheme Ponzi Scheme A Ponzi scheme is a scam that looks to lure investors, ultimately paying profits to earlier investors with funds from more later investors.This form of fraud tricks victims into believing that products are instead generated from product sales or other means. In actuality, most investors are completely oblivious to the actual origin of incoming funds.One of the central attributes of a Ponzi scheme is the necessity of its ongoing nature, which is dependent on a steady flow of new contributions and A Ponzi scheme is a scam that looks to lure investors, ultimately paying profits to earlier investors with funds from more later investors.This form of fraud tricks victims into believing that products are instead generated from product sales or other means. In actuality, most investors are completely oblivious to the actual origin of incoming funds.One of the central attributes of a Ponzi scheme is the necessity of its ongoing nature, which is dependent on a steady flow of new contributions and Read this Term

In January 2016, the BCSC found that Williams and the Global Group of Companies committed fraud, through a Ponzi scheme, by raising around $11.7 million from 123 investors between February 2007 and April 2010.

The panel also found that Williams, some of the entities listed under the Global Group of Companies and several of the finders used by Williams to introduce investors to the Global Group of Companies, breached securities laws concerning prospectus and registration requirements.

The finders found to have committed misconduct were Susan Nemeth, Renee Penko, Irene Beilstein and Dennis Weigel.

The BCSC stated: "The scope of the fraudulent conduct in this case in terms of the number of investors, the amount of money raised from investors and the extent of the deceit visited on investors was extremely significant."

Penalties

As a result of his wrong-doings, Williams has been ordered to pay a $15 million penalty to the BCSC. He has also been ordered to resign any position he holds and has been permanently prohibited from becoming or acting as a director or officer of any issuer or registrant.

He is also permanently banned from trading in or purchasing any securities, becoming or acting as a registrant or promoter, acting in a management or consultative capacity in connection with the securities market, and engaging in investor relations activities.

The amount of money raised from investors and the extent of the deceit visited on investors was extremely significant.

Williams and the Global Group of Companies have also been ordered to pay $6.8 million in disgorgement to the BCSC, on a joint and several basis. The panel also permanently banned the Global Group of Companies from trading in or purchasing any securities, acting in a management or consultative capacity in connection with the activities in the securities market, and engaging in investor relations activities.

The BCSC has also ordered the finders Nemeth, Beilstein Weigel and Penko to pay individual penalties and hand back their fraudulent gains.

In another Ponzi scheme related offence last June, Finance Magnates reported that the US SEC charged two Californian men and their investment firm with operating a Ponzi scheme as they purported to specialise in catering to middle-class investors and securing exorbitant returns by investing in hot pre-IPO stocks.