Calgary (August 17, 2020) – Alberta RCMP announced that they laid charges against former financial planner with Espoir Capital, Vernon Fauth, for conducting a multi-million-dollar Ponzi scheme between January 2012 and July 2015. The Alberta Securities Commission (ASC) already ordered him to pay a total of $3.2 million and banned him permanently from market access for investment fraud. Now, he is also facing criminal charges.
Alberta RCMP announced on August 17 that they laid charges against former financial planner with Espoir Capital Corporation, Vernon Fauth, in connection with a multi-million-dollar Ponzi scheme that started eight years ago.
The multi-million-dollar Ponzi scheme
Alberta RCMP’s Integrated Market Enforcement Team (IMET) started an investigation into the fraud allegations after an investor issued a complaint with the Mounties. The investigation discovered that Fauth conducted a multi-million-dollar Ponzi scheme while working as a financial planner at Espoir between January 2012 and July 2015.
“Unfortunately, the victims suffered a considerable loss as a result of their investment within the Ponzi scheme they believed was credible,’ stated Corporal Christopher Girard, Investigator with the Alberta RCMP IMET. According to the release, investors had their funds used in a manner contrary to investor agreements. Girard added: ‘The economic and societal damage of these types of criminal acts are immeasurable and investors are reminded to remain vigilant with their investments.’
Already in November 2018, the Alberta Securities Commission (ASC) found that Fauth illegally dealt in securities of his former employer, made misrepresentations to his former clients, and perpetrated a fraud on investors. ‘Although he told investors their investment funds were safe because they would only be used to make certain types of secured investments, in reality, he used the funds in other ways that were not disclosed to investors,’ the commission explained.
The ASC panel found that he diverted funds to other businesses Fauth or his family owned or controlled and that he used funds to make payments to earlier investors in ‘the manner of a Ponzi scheme’ in connection with the sale of investments in Espoir.
In June 2019, the ASC sanctioned Fauth and ordered him to pay $3.2 million in total. The Calgary man was also banned permanently from trading in or purchasing any security or derivative, becoming or acting as a director of any issuer, as well as acting in a management or consultative capacity in connection with activities in the securities market.
Criminal charges laid
The RCMP announced that Fauth is now also facing criminal charges in connection with the multi-million-dollar Ponzi scheme. They charged the 73-year-old man with one count of Fraud Over $5,000. He has been released with a promise to appear in Calgary Provincial Court on September 14.
Corporal Girard reminded Albertans to ‘remain aware of potential scams, conduct their due diligence with their investments and report when suspected criminal acts are believed to have occurred.’ The RCMP asked anybody, who has information relating to a market-related fraud to contact the IMET at CalgaryIMET-EIPMFCalgary@rcmp-grc.gc.ca.
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.