ASC: Convicted Ponzi scammer permanently banned from capital market

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Calgary (November 25, 2020) – The Alberta Securities Commission (ASC) permanently prohibited Edmonton man, Timothy Ray Carruthers, from participating in Alberta’s capital market on November 17, after he was convicted for a Ponzi scheme at the Court of Queen’s Bench of Alberta last year. From January 2009 to June 2017, he defrauded his investors out of more than $5 million claiming to use the money for lucrative short-term bridge financing opportunities. The court heard that he used the funds to finance his lifestyle and to further his fraudulent investment scheme.

According to the commission’s decision, the convicted Ponzi scammer, Timothy Ray Carruthers, is permanently prohibited from participating in Alberta’s capital market. The Alberta Securities Commission (ASC) issued the ban on November 17, one and a half years after his conviction on 22 counts of Fraud Over $5,000.

The Ponzi scheme: Short-term bridge financing scam

Carruther was a financial planner and ran his company Wakina Consulting Inc., which was located in Edmonton. He worked for four financial service companies before he started his own capital market business in 2001. The father-of-four solicited investors – many of whom were acquaintances, neighbors, relatives, and past co-workers – to participate in an investment involving bridge mortgage financing.

He persuaded his victims by telling them that bank managers had approached him with borrowers in need of short-term bridge financing. The fake investment was supposed to be a joint venture as he would also be investing. The loan was supposed to be running for less than one year and would be financed by Wakina using funds provided by the investor and Carruthers. He also told investors that their money would be secured by caveats or liens registered on the title of both the home being sold and the home being purchased by the borrower.

None of this was true. During his trial, the court heard that he forged land title certificates, T5s, profit-and-loss statements, and other documents throughout the scheme.

While some of the funds were used to continue the fraud, most of the money raised was misappropriated for personal use, including ‘opulent’ vacations, a diamond ring worth more than $40,000, payment of his daughters’ credit card bills, a Porsche, and almost $500,000 in paycheques to his wife who did not work for him or Wakina. Carruthers filed for his third bankruptcy after the inevitable collapse of his Ponzi scheme.

The Ponzi scammer pled guilty

On February 7, 2019, Carruthers plead guilty to all 22 counts of Fraud Over $5,000. He admitted to knowingly carrying out the fraudulent short-term bridge financing scheme between January 2009 and June 2017. During this time, Carruthers and Wakina received more than $5 million from 22 investors in at least 175 joint ventures.

Court of Queen’s Bench Justice Larry A. Ackerl said the investment scheme had a ‘deceitful nature’ and that Carruthers’ criminal conduct was ‘orchestrated and multi-faceted’, as well as ‘prolonged, considered, and intricate.’

In March 2019, the Alberta court sentenced Carruthers to six years in prison, ordered him to pay restitution for the net financial loss incurred by each investor, and ordered a lifetime prohibition against Carruthers seeking, obtaining or continuing any employment, or becoming or being a volunteer in any capacity, that involves having authority over the real property, money or valuable security of another person.

Permanently banned from Alberta’s capital market

On November 17 of this year, an ASC commission decided to reciprocate his criminal fraud conviction. The regulator has this possibility when a person has been convicted of an offense arising from a course of conduct relating to securities.

The panel found that his convictions indeed arose from a course of conduct related to securities and that it was in the public interest to issue a permanent ban from Alberta’s capital market. The panel pointed out that fraud involving a Ponzi scheme is especially serious. In Carruthers’ case, the fraud exceeded $5 million and most of the money raised was misappropriated for personal use.

‘We found Carruthers’ conduct in relation to several investors particularly odious: he defrauded his daughter-in-law’s grandmother causing her to lose $150,000; he convinced a woman who cleaned his office building to invest her $20,000 inheritance; and he defrauded a family of $50,000 of life insurance proceeds from the death of their child,’ argued the ASC in their decision.

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