Calgary (July 22, 2020) – An Alberta Provincial Court found Ronald James Aitkens guilty of investment fraud and misrepresentations in connection with a real estate investment opportunity. The court document said that more than $35 million were raised in total from approximately 1,400 individual investors. The Alberta man was already sanctioned by the Financial and Consumer Affairs Authority of Saskatchewan (FCAA) for investment fraud regarding multiple proposed land development schemes. The sentencing submissions are scheduled for September 4 in the Provincial Court of Alberta.
The Alberta Securities Commission (ASC) announced in a press release issued on July 21 that the Provincial Court of Alberta found Ronald James Aitkens guilty of fraud and breaching Alberta’s Securities Act in connection with a real estate investment scam.
Legacy Communities Inc. and the Offering Memorandum exemption
Aitkens distributed and sold securities of the real estate investment opportunity ‘Legacy Communities Inc.’ Legacy was formed for the specific purpose of the acquisition and development of a 503-acre parcel of land immediately west of Calgary.
The court document said that securities were distributed to investors under the Offering Memorandum exemption. The court pointed out that this ‘exemption relieves an issuer from the more onerous requirement of the prospectus and registration system.’ An offering Memorandum is essentially a thorough business plan for the due diligence of investors.
From July 2005 to October 2007, three separate Offering Memoranda were issued in order to solicit investors for the Legacy project, each of them described a specific investment in a real estate development on the western boundary of the City of Calgary.
In total, more than $35 million were raised from approximately 1,400 individual investors. According to the court document, some investors devoted money from their retirement savings plan to the project. In 2011, the project ultimately failed and the ASC launched an investigation.
The court document said that ‘it is alleged that the funds were not used for their stated purpose, that highly relevant ‘Investment Agreements’ Legacy had with companies controlled by Aitkens were not disclosed, and that he engaged in general fraud in the course of the project.’
Investment fraud and misrepresentations
On July 20 of this year, the Provincial Court of Alberta found Aitkens guilty of one count of fraud and another count of making false or misleading statements in an Offering Memorandum.
In his reasons for the decision, Judge L.W. Robertson stated, ‘it is the obligation of the party seeking the investment capital, the issuer, to provide only accurate and truthful facts about the opportunity. An investor is entitled to rely on this information before deciding whether or not to place their money into a particular venture.’
Judge Robertson also pointed out that this matter exposed the need for detailed and accurate information to be delivered to investors and that reliable and efficient capital markets and investor confidence depend on accurate disclosure.
Sentencing submissions are scheduled for September 4, 2020, in Calgary Provincial Court. All counts carry the same maximum penalty of a fine of not more than $5 million, a term of imprisonment of not more than 5 years less a day, or both.
Fraudulent land development schemes in other jurisdictions
A year ago, the Financial and Consumer Affairs Authority of Saskatchewan (FCAA) sanctioned Aitkens and four of his companies for committing fraud and making untrue or misleading statements to investors.
The FCAA documents read that the Alberta man raised over $84 million from thousands of investors including hundreds in Saskatchewan through multiple proposed land development schemes. The FCAA hearing panel found that he took money and property from investors and used investors’ money for unauthorized purposes.
‘The panel pointed out that Aitkens acted with blatant disregard for the securities laws of Saskatchewan and that as a result, hundreds of Saskatchewan residents have lost their investments,’ an FCAA press release read.
Aitkens and his companies were ordered to pay an administrative penalty of $500,000 in total and collectively pay the hearing costs of over $30,000. Furthermore, Aitkens has been permanently banned from trading in securities or derivatives or using any exemptions in Saskatchewan securities laws.
Marina Burghard writes for Canadian Fraud News about fraud-related cases, whistleblower, jurisdiction, identity theft, consumer protection, etc. – essentially about scams and how to protect yourself against this kind of fraudulent criminal behavior. She holds a Master’s degree in Political Science where her interest in criminology grew. Besides fraud, Marina’s scientific interest lies in terrorism, extremism and how to deal with it as a society.