David Michaels told his clients to invest a total of more than $65 million on now worthless investments. (CBC)
A Hawaiian condo co-owned by a Vancouver Island financial fraudster is being sold due to a partial settlement agreement with the B.C. Securities Commission.
In 2014, a B.C. Securities Commission tribunal found that David Michael Michaels had perpetrated a massive fraud that cost 484 investors a total of $65 million in securities.
Investors were drawn in with a weekly CFAX infomercial radio show but the commission found that between 2007 and 2010, the Cowichan Bay, B.C. resident acted as an investment advisor without being properly registered to sell securities. The average age of the investors was 72.
BCSC imposed sanctions against Michaels $23.3 million in October of that same year, including a $17.5 million fine and the $5.8 million he earned in commissions and marketing fees for securities by advising seniors to sell their stocks, bonds and mutual funds to buy high-risk exempt market securities, which can be sold without filing a prospectus, and insurance-based investment products.
Then in 2015, the BCSC launched two lawsuits: one against property in Hawaii and another in relation to property in Mill Bay. According to the BCSC, Micheals co-owns the Hawaiian property but does not own the Mill Bay property.
On June 12, 2018, BCSC reached an agreement with Michaels that states that the property will be sold and the proceeds turned over to the BCSC. The BCSC will also receive a cash payment of $50,000 from Michaels. The BCSC will distribute both amounts to the investors.
“This is a great outcome for victims of Mr. Michaels’ misconduct,” says Doug Muir, Director of Enforcement at the BCSC. “It avoids the further delay and uncertainty of lawsuits, which means we will have money to return to victims sooner. The BCSC will continue our efforts to collect our sanctions against Mr. Michaels, and this agreement is a good step as part of that process.”
The agreement does not affect the BCSC’s ability to continue to collect against Michaels’ outstanding sanctions.
In 2016, Michaels lost an appeal in the BC Supreme Court against a $17.5 million fine imposed by the BCSC. The court said almost all the investments are worthless and that many of Michaels’ clients have had their financial futures ruined.
The Hawaiian condo is located at 69-1033 Nawahine Place, Apartment 13H, Hali’i Kai in the Waikoloa district of South Kohala County. An inactive listing on realtor.com from November 2014 had an estimated sale price of the 1,403 square-foot, two storey, three bedroom, two bathroom condo at $1,041,900. The property is described as an “impeccable oceanfront unit located in an area with undeniably great ocean views at the resort.”
The Hawaiian condo co-owned by David Michael Michaels. Photo Credit: Realtor.com.
The BCSC will post a notice on its website when the money has been received, along with instructions about how investors can make claims.
With files from The Canadian Press
Alexa Huffman
