BCSC panel finds that Vancouver real estate developer committed fraud
Vancouver - A British Columbia Securities Commission (BCSC) panel has found that Brendan James Schouw and Hornby Residences Ltd. perpetrated fraud on an investor.
The panel found that in November 2009, Schouw convinced one investor to invest $1 million in Hornby for a Vancouver real estate project. The investor received an investment certificate promising 18 per cent simple interest to accrue annually. Schouw is a Vancouver resident and real estate developer, who has never been registered under the Act. Hornby is a B.C. company and Schouw is its sole director and officer.
The panel found that after depositing the investor's money into Hornby's bank account, Schouw redirected certain of the funds to his own account. Schouw spent approximately $75,000 of the investor's money on his personal mortgage payments and on his separate property management business, despite representing to the investor that all of his investment would be used for the development of a Vancouver real estate project.
In its decision, the panel noted that "Seventy-five thousand dollars of [the investor's] investment was diverted from its investment purpose. Those funds were both put at risk and ultimately lost."
The panel also found that as Hornby's sole director and officer, Schouw permitted or acquiesced to Hornby's misconduct and is thus liable for Hornby's fraud.
The Executive Director of the BCSC brought broader allegations of fraud against Schouw and Hornby, alleging that approximately $440,000 of the investor's funds were improperly diverted. These allegations were dismissed by the panel.
The panel directed the parties to make submissions on sanctions according to the schedule set out in the findings.
You may view the findings decision on our website www.bcsc.bc.ca by typing Brendan James Schouw, Hornby Residences Ltd. or 2017 BCSECCOM 17 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 List for information relating to persons and companies disciplined by provincial securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).
About the British Columbia Securities Commission (www.bcsc.bc.ca)
The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:
- A securities market that is fair and warrants public confidence
- A dynamic and competitive securities industry that provides investment opportunities and access to capital
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