ASC: New penalties for convicted fraudulent real estate developer

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Calgary (February 3, 2020) – An Alberta Securities Commission (ASC) panel imposed new penalties on Marie Louise LaFramboise, a convicted fraudulent real estate developer for her role in the failed Cougar Rock project. Between 2006 and 2010, LaFramboise was responsible for raising money for the condo project in a planned commercial recreational property close to Jasper National Park. Last year, a criminal trial found her guilty of defrauding 24 investors in that process. On January 28, an ASC panel decided to permanently cease LaFramboise from trading securities or derivatives and banning her from a variety of investing-related activities in order to ‘protect investors and the Alberta capital markets’.

The Alberta Securities Commission (ASC) imposed new penalties on Marie Louise LaFramboise. The former real estate developer is already convicted of fraud by the Court of Queen’s Bench of Alberta for her role in the failed Cougar Rock project. Now, an ASC panel decided on January 28 that the offense was ‘arising from a course of conduct related to securities and that it is in the public interest to issue an order’ by the ASC to ‘protect investors and the Alberta capital markets’.

The Cougar Rock project

In 2006, LaFramboise got involved in the $700-million Cougar Rock project – a failed commercial recreational resort including a golf course close to the gates of Jasper National Park. LaFramboise was responsible to develop the condominiums and raise money for the condo project.

According to the Agreed Statement of Facts of her criminal trial, she committed different types of fraud during transactions connected to her real estate developments for the condo project. The statement explains that between 2006 and 2010, 24 victims invested more than $870,000 for condos that ultimately were never built. Furthermore, ‘LaFramboise contravened the Condominium Property Act (Alberta) by not placing the condominium deposits into a trust account.’ The funds were deposited in a business account, she controlled and were used for expenses, credit card debt of her business as well as personal expenditures.

Furthermore, she sold shares of a non-existent condominium development to one of her victims and bonds for ‘financing improvements to the […] property’ to three of her victims, which she kept for herself.

The criminal trial of a ‘particularly odious’ fraud

In June 2018, LaFramboise has been charged with 36 counts of Fraud Over $5,000. After she pleaded guilty to one count, she was sentenced to four years in prison on January 7, 2019. Moreover, the court ordered the former real estate developer to pay approximately $1.2 million in restitution.

The sentencing judge explained that the ‘multiple layers to this fraud which added to the aura of respectability and legitimacy, which when added to [LaFramboise’s] sterling reputation, made it readily understandable that people would […] take a chance and make what they thought was a good investment.’ The apparent legitimacy of the scheme made the fraud ‘particularly odious’ to the trial judge.

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The ASC reciprocates the criminal fraud conviction against the real estate developer

An ASC panel found on January 28 that this was a course of conduct related to securities and that it was in the public interest to issue orders against LaFramboise under the Securities Act to protect investors and the Alberta capital markets. The ASC panel concluded in their decision that ‘the scheme was multifaceted, continued for several years, affected at least 24 individuals, and the quantum of the overall fraud exceeded $1 million, of which substantial amounts were misappropriated for personal use.’

Subsequently, they decided that the 62-year-old LaFramboise ‘must permanently cease trading in securities or derivatives’. She is also permanently prohibited from ‘becoming or acting as a director or officer […] of any […] company that is authorized to issue securities’ as well as from ‘engaging in investor relations activities […] advising in securities or derivatives […] becoming or acting as a registrant, investment fund manager or promoter,’ or ‘acting in a management or consultative capacity in connection with activities in the securities market.’ Furthermore, she must resign ‘all positions she holds as a director or officer of any issuer’.