A former B.C. doctor turned cannabis stock promoter has admitted to the U.S. Securities and Exchange Commission (SEC) he participated in a massive, billion-dollar stock fraud scheme partly orchestrated from Vancouver via a network of offshore shell companies.
After initially pleading the Fifth Amendment following his August 2021 civil charges, Avtar Singh Dhillon — who faces prison time at a sentencing hearing this November for a parallel criminal conviction — agreed earlier in April to testify about his role in the illegal trading scheme alleged by the commission. Dhillon settled with the commission ahead of a federal court trial by jury in Boston this week for co-defendants from British Columbia.
According to the final judgment and consent agreement, Dhillon is ordered to pay back US$9.1 million, representing the net profits gained as a result of his conduct. He will also pay US$1.3 million in interest. Of the US$10.4 million, US$1.5 million will be offset from a payment he made following his criminal conviction.
Based on Dhillon’s “cooperation in a Commission investigation and/or related enforcement action,” Dhillon will not pay a civil penalty.
Dhillon agreed to have the commission file liens on “certain real estate in California” and to promptly make “diligent efforts” to sell them. Prior to the charges Dhillon was known to reside in a US$12-million, 9,300-square-foot, yacht-lined waterfront home in Long Beach, Calif.
Dhillon holds an interest, via numbered companies, in seven B.C. properties worth millions of dollars, according to B.C.’s Land Owner Transparency Registry on Sep. 15.
Dhillon has surrendered a number of rights in relation to his admission signed on Sep. 6., including that he never deny the allegations in the SEC complaint. The judgment also bans him (for a second time) from participating in penny stock trading and related business activity with public companies and stockbrokers. (Penny stocks are now defined as any equity or security below a price of $5.)
Last October Dhillon pleaded guilty to three felony securities offences: one count of wilful failure to disclose stock sales, one count of aiding and abetting the sale of unregistered securities and one count of conspiracy to not disclose touting compensation. Based on his offences, he could receive a prison term of 63 to 78 months in federal prison.
As such, Dhillon is banned from promoting stocks and acting as a director or officer of a public company in the United States. However, he could still do so in Canada, as the B.C. Securities Commission (BCSC) has not placed reciprocal orders on him. (Dhillon is under house arrest, having surrendered his passports.)
Dhillon, 62, is a native of India and a former B.C. resident who obtained an internal medicine degree from the University of British Columbia. But over the past 25 years Dhillon pivoted his career toward promoting mostly health science companies. During this time he claimed to have raised more than C$1 billion in public and private financing. Dhillon served as past chairman of the Cannabis Canada Council and is a former member of the securities practice advisory committee to the BCSC.
Dhillon directed Vancouver-based Emerald Health Therapeutics in the Lower Mainland before running afoul with the SEC in 2021. The company operated out of Richmond, where he leased land to it, according to company filings.
Therapeutics’s parent company was Emerald Health Pharmaceuticals (EHP), a San Diego-based company Dhillon also directed and one in which he concealed compensation for stock promotions, leading to criminal proceedings against him.
In October 2022, Dhillon’s longtime business partner, Vancouver lawyer and EHP chairman Jim Heppell reached a US$517,955 settlement for EHP with the SEC without the company itself admitting or denying wrongdoing.
Therapeutics operated a cannabis business in Vancouver and shareholders include co-defendants in the civil case, including B.C. businessman Graham Taylor, who agreed to pay the SEC nearly US$5 million following a settlement in which he neither admitted nor denied his role in the alleged fraud.
Taylor is alleged to be an associate of West Vancouver resident Frederick Sharp, a former lawyer turned offshore shell facilitator alleged by the SEC of being the “mastermind” of the pump-and-dump scheme. Sharp never responded to the complaint and a US$52.9 million default judgment was awarded against him in May 2022.
Court filings in the SEC civil case since June show settlement judgments have been reached with co-defendants Courtney Kelln, of Surrey, Mike Veldhuis, of Vancouver, and Paul Sexton, of Anmore (based on their known locations from an August 2021 complaint). The judgments against those three have yet to outline any disgorgement (payback of ill-gotten gains) costs and penalties.
The trial is only in-person, and Glacier Media is unable to attend. Richmond resident Yvonne Gasarch and Jackson Friesen of Delta do not have judgments against them and remain innocent until proven guilty.
Gasarch, whose Chinese name is Zhiying Chen, was code named “Wires” by Sharp and others, according to the SEC complaint. She was allegedly primarily responsible for moving stock proceeds through offshore accounts set up by Sharp.
In a related criminal claim brought by the Federal Bureau of Investigation and U.S. Department of Justice, Sharp is accused of criminal securities fraud as well as conspiracy to commit securities fraud, as is Kelln and Veldhuis., as is Kelln and Veldhuis.
“Fred Sharp and his co-conspirators are accused of executing a sophisticated, global con that allegedly bilked unsuspecting investors out of tens of millions of dollars. Investor confidence is essential to keeping our financial markets afloat and actions like the ones these individuals are charged with today chip away at the faith investors place in the process,” said Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division, in an August 2021 statement.
The criminal proceedings have yet to commence and Sharp, Kelln and Veldhuis are presumed innocent unless proven otherwise in court. And while an arrest warrant has been issued against Sharp, no extradition process has commenced in B.C.
Sharp, Gasarch, Kelln, Veldhuis, Friesen and Taylor face civil forfeiture proceedings by the SEC, represented by securities lawyer David E. Gruber, in the Supreme Court of B.C.
This article was originally sourced from www.VancouverIsAwesome.com