A Vancouver company that duped a vulnerable woman to remortgage her home but then used the money to pay the director, his family and his girlfriend, is on the hook for $900,000.
According to a March 8 B.C. Securities Commission decision, the company, Bracetek, had less than $100 in its bank account and no revenue when Geoffrey Rajay Sidhu approached an investor he’d met online.
In 2015, Sidhu met the unnamed investor for coffee and discovered that she was struggling financially.
She lived mortgage-free on the west side of Vancouver in a $3.2 million home but had little income and lived mainly off child support. She also had more than $300,000 in debt.
Sidhu told her she should remortgage her home. He then told her about Bracetek, a company which his father owned.
He said the company made braces used in home construction and owned patents for them. He said there was a lot of excitement over the product.
Sidhu said the company was planning to go public within six months to a year and that she would triple her investment.
The investor then paid $1.75 million to Bracetek to buy shares.
However, the company didn’t have any licensing fees for the bracing products and had no revenue.
Bracetek then spent nearly all the money on companies owned by Sidhu and his father.
By the beginning of 2017, the company had around $2,000 in its bank account.
In May 2021, the B.C. Financial Services Authority issued a notice of hearing against Bracetek and Sidhu accusing them of committing fraud and illegally distributing securities.
In September 2022, Sidhu admitted to the illegal distribution of securities and was ordered to pay $950,000 and barred from trading or purchasing securities for seven and a half years. So far he’s paid back $50,000.
The decision says the fraud allegation was dropped.
The investor lost her entire investment and launched a civil suit against Bracetek and Sidhu, but the matter had yet to go to trial.
“The Investor sold her home to pay off the mortgage and is now renting. She spends thousands of dollars a month on rent. She fears that she could never afford owning a home again. The financial harm to her is manifest,” the decision reads.
The decision says she had suffered emotional trauma and physical harm from the experience.
The decision says there no evidence that Bracetek has any current or future value.
“Even if the investor were ultimately successful in recovering some or all of the $1.75 million, she has lost the use of those funds in the intervening years,” the decision says.
The Financial Service Authority says there are no mitigating factors in the case.
“Bracetek’s conduct should not be condoned in these circumstances. Not only did it directly obtain the benefit of the full $1.75 million as a result of its misconduct, it spent virtually all of that money as soon as it had the cash to do so, to pay back and benefit its sole director, his family and girlfriend,” the decision reads.
The Financial Services Authority found Bracetek violated the Securities Act by selling $1.75 million in securities to the investor without a prospectus.
The Authority ordered Bracetek to pay $850,000 and fined it $50,000.
The decision says Bracetek did not take part in the proceedings.
This article was originally sourced from www.infotel.ca