News Release

Vancouver - A British Columbia Securities Commission panel has ordered a B.C. man who committed fraud to pay a fine, permanently cease trading and purchasing securities, and pay back investors’ money he used for personal gain.

The BCSC panel found that Ralph Kelly, a Parksville resident and the former president of Virtual Community Exhibitions Inc. (VCE), committed a fraud when he deceived B.C. investors into buying VCE shares and then deliberately converted more than 50 per cent of the money for his own use.

“Kelly perpetrated a fraud on the investors. He deprived the investors of their funds by converting $242,153.60 to his own personal uses,” the panel said in its decision. “We have found that Kelly knew he was making misrepresentations. His statements to prospective investors and the promotional materials he participated in preparing, approved and distributed to investors were a tissue of outright lies.”

In its decision, the panel ordered that Kelly be permanently prohibited from trading or purchasing securities in B.C., that Kelly pay a $200,000 administrative penalty, and that Kelly disgorge for the benefit of the investors his ill-gotten gains of $242,153.60.

Between May 2001 and June 2003, Kelly promoted, offered and sold $418,000 worth of shares of VCE to 58 B.C. investors.

In promotional materials and direct discussions with investors, Kelly stated that VCE and its affiliated companies would create an on-line tradeshow and an advertising website with product purchasing and delivery features. Kelly presented materials to investors that projected revenues of $38 million based on 35 virtual exhibition events scheduled between March 2002 and March 2003. These were all lies.

Kelly also represented to investors that VCE would buy back their shares, at their option, one year from the date of purchase at a 20 per cent premium. At the panel hearing, investors testified the repurchase agreement was the most important factor in their decision to invest.

In the end, VCE did not buy back the shares and B.C. investors lost their investment.

The notice of hearing against VCE and Kelly also named Raymond Patrick Shaw as a respondent. In August 2007, the commission issued an order against Shaw (2007 BCSECCOM 500) and the executive director discontinued the proceedings against him.

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 in the search box, Ralph Kelly or 2008 BCSECCOM 560. If you have questions, contact Ken Gracey, Media Relations, 604-899-6577.

Learn how to avoid investment fraud at the BCSC's investor education website: www.investright.org.