A Vancouver Island man duped an investor out of $1 million by falsely claiming ownership of the Sooke Harbour House hotel, according to a B.C. Securities Commission panel.
The BCSC ruling released Tuesday states that Sooke’s Timothy Craig Durkin, a director of SHH Holdings Limited, got a seven-figure investment after stating SHH owned all shares of the Sooke Harbour House hotel through a subsidiary when, in reality, it did not own any shares.
Durkin’s conduct was “deceitful” and “misleading,” the panel says.
The case was first made public by the BCSC, the province’s independent government agency responsible for regulating capital markets, in Oct. 2021, when a hearing was scheduled to take place the following November.
“The investor, a Chinese citizen who was trying to immigrate to Canada, had already invested in a spa business in the Sooke area and was considering broadening her investments in the region,” the BCCSC said in a news release Tuesday.
“In emails with the investor’s accountant, Durkin chose not to correct erroneous information and misunderstandings about the ownership of the hotel’s shares.”
Durkin told the victim that by buying 40 per cent of SHH’s shares in the corporation that owned the hotel, they’d obtain 40 per cent ownership — prompting the investor’s company, based on false information, to sign an agreement and advance $1 million, the BCSC says.
In the ruling, the panel highlighted what it calls “the single most compelling piece of evidence in this case,” which contradicted “all of Durkin’s evidence and submissions” stating he believed the investor understood that SHH did not own the hotel’s shares.
In an exchange of emails in fall 2015 between Durkin, on behalf of SHH, and the investor’s lawyer, on behalf of the investor, the lawyer asks: “Is Holdco already the sole shareholder of Opco, or will it be acquiring all of Opco’s shares concurrently with GB’s purchase of Holdco’s shares?” Durkin replied, “Already acquired.”
The panel found Durkin then raised the funds between Dec. 2015 and March 2016, including $250,000 by bank draft on Dec. 12, 2015, followed by $250,000 by cheque on Dec. 18, 2015, and $500,000 by cheque on March 1, 2016.
The funds were spent and have not been recovered.
“In its decision, the BCSC panel concluded that on three occasions, SHH and Durkin made false statements about the hotel’s ownership, knowing that they would be taken as an accurate representation of its current financial situation, and not its status after the transaction closed,” the commission added in its release.
The well-known Sooke hotel, located on Whiffin Spit Road, has been around for decades and, according to a message on its website, is currently closed and undergoing renovations with no clear timeline for reopening.
Its history, while extensive, is also complicated.
In September 2020, a B.C. Supreme Court judge ended what he called a “six-year odyssey of lies, excuses, threats, intimidation and bullying” by Durkin, who entered a share purchase agreement with owners Frederique and Sinclair Phillip.
The Philips believed they’d receive $6 million in the deal, but documents revealed that Durkin had only raised $54,000 by February 2015. Despite that, he ultimately took control of the resort’s operations and later filed an injunction based on a false affidavit to keep the couple off the property.
The judge awarded the Philips $4 million in damages, but the couple said their losses from the fraudulent deal wiped out their life savings.
-With files from CHEK News