The Ontario Court of Justice has sentenced David Singh, former head of financial planning firm Fortune Financial Management Corp, to three and a half years in jail and ordered him to pay more than $4.8 million for defrauding investors.
Ontario Court Justice Mara Greene sentenced Singh in Toronto on May 9.
Singh was convicted of charges under the Ontario Securities Act on Nov. 9, 2021, including one count of fraud, one count of trading of securities without registration, and one count of trading in securities without a prospectus.
The conviction involved the fraudulent sale of more than $5.5 million in securities by two syndicated mortgage companies owned by Singh, Rockfort Mortgage Investment Corporation and Greenview Capital Mortgage Investment Corporation, to Ontario investors between Nov. 1, 2014, and Jan. 31, 2018.
Securities lawyer and CEO of Registrant Law, Nancy Mehrad, says the Singh decision reminds the financial industry that securities law breaches can carry jail time, and the Ontario Securities Commission (OSC) will not hesitate to use these powers where necessary.
Mehrad says the OSC has the ability under the Securities Act to impose charges that carry up to five years of jail time and $5 million in fines. However, such prosecutions are usually for the most egregious cases where imprisonment is more suitable than traditional remedies.
“It is not often that the regulators will use this power and there is a higher standard of proof in such cases, as the punishment is imprisonment.”
Singh ultimately defrauded investors since their money was never actually invested in mortgages. In her decision, Justice Greene wrote, “I am satisfied beyond a reasonable doubt that Mr. Singh held out his companies as mortgage investment corporations, took money from investors on the pre-text of investing in mortgages but then failed to do so.”
Justice Greene noted that Singh hired staff to search out investors but did not create any mechanism for finding properties to mortgage, and when presented with an opportunity to fund a mortgage, he did not.
“I am satisfied that Mr. Singh deceived his investors, that this deception led to the loss of funds by the investors (as was testified to by a number of the investors) and that he knew he was being deceitful and knew that his investors would lose money if he did not fund some mortgages.”
Jeff Kehoe, director of enforcement at the OSC, said the imposed sentence sends a strong message that individuals who deceive investors and misappropriate their funds will be held accountable for their misconduct.
“We will relentlessly pursue prison sentences for individuals who commit crimes like these, which have a devastating impact on the lives of victims and their families.”
In 2000, the OSC sanctioned Singh for supervisory failures as head of Fortune Financial.
The OSC prosecutes charges laid under the Securities Act, and the Ministry of the Attorney General prosecutes charges laid under the Criminal Code.
Kehoe said a team within the OSC enforcement branch examines serious breaches of Ontario securities law, including investigating alleged recidivists and prosecuting these matters in provincial court with the primary objective to protect investors and further enhance confidence in the Canadian capital markets.
The OSC protects investors from unfair, improper or fraudulent practices, fosters fair, efficient and competitive capital markets and confidence in the capital markets, encourages capital formation, and contributes to the financial system’s stability and the reduction of systemic risk.
This article is originally sourced by www.lawtimesnews.com.