Alberta families and businesses are out almost $10 million this month due to a dicey investment scheme by a St. Albert company.
Optam Holdings Inc., an investment company based in St. Albert and owned by city resident Wade Closson, filed for bankruptcy April 2.
Documents filed with the Office of the Superintendent of Bankruptcy Canada suggests that Optam owed $9,675,483 to some 69 creditors at the time – about 18 of whom were based in St. Albert.
Many of these creditors were close friends and relatives of Closson, said “Jane,” a Sturgeon County resident and one of the creditors. (Jane did not wish to have her real name used out of concern for her family.)
The bankruptcy had cost her family $300,000, Jane said. She knew of one couple in their 60s who had invested their entire pension into Optam.
“They don’t know what they’re going to do,” she said. “They think they’ll have to sell their house and move in with their children.”
Jane said that she had been close with Closson and his family for years.
“They’ve had us over for dinner. Our kids play together,” she said.
About eight years ago Closson made them an offer: give him some money, and he would loan it out to others as a B-lender (someone who gives loans to those who normally don’t qualify for them) and net them a 17-per-cent return. Attracted by the high interest rate and their trust in Closson, they agreed to do so.
“We completely and blindly trusted him,” she said.
Jane said her family and others continued to invest in Optam over the years and received regular monthly payments in return. Closson also sent them promissory notes as securities.
They got suspicious this January when they heard that other creditors had not been able to cash out their investments. Soon, the monthly payments stopped, triggering a flood of calls, texts and e-mails to Closson.
On March 26, Jane and the other creditors got an e-mail from Closson saying that he had declared bankruptcy. All the money was gone, and a trustee would soon be in touch with them.
Jane said her family was devastated by the news.
“I’ve never seen my husband cry,” she said, but he did when he heard what had happened.
“He said, ‘I’ve ruined our lives. I’ve lost all our money. I can’t believe he (Closson) did this to us.’”
Jane alleged that Optam might have been a Ponzi scheme – a fraudulent investment plan where old investors are paid using the money from new ones. This allegation has yet to be proven in court.
Many of the affected creditors in this case have made similar allegations, said Arthur Waring, a chartered accountant with A.C. Waring & Associates Inc., which is the trustee overseeing the bankruptcy. They have also told him that the Alberta Securities Commission was looking into it.
The Alberta Securities Commission does not have any public actions filed against Optam, said spokesperson Mark Dickey. Under the Alberta Securities Act, he could not legally confirm nor deny if any investigation was underway.
While Waring could not confirm nor deny if an illegal investment scheme was happening at Optam, he did say that the company did not appear to be making an 18 per cent return on its investments, and may even have lost money.
Given that mortgage rates were at an all-time low, Waring said the rate of return that Optam had promised here was more than one could reasonably expect to get.
“If something sounds too good to be true, it probably is,” he said.
Documents provided by Waring suggest that Optam owed some $2,011,983 to St. Albert businesses and individuals. The largest single debt, $750,000, was owed to a numbered company in Sherwood Park.
The company had $358,900 in assets as of April 2, Waring said, which left some $9,316,583 in missing investment money. About $3 million of the missing money appears to have gone towards a lumber operation in Nicaragua, he said, with another chunk going towards several restaurant start-ups. He was still tracing the rest of it.
Waring said anyone affected by this bankruptcy should file a claim with him as soon as possible.
While he will try to recover as much of the lost money as possible, Waring said creditors should expect significant losses.
“I spoke to someone yesterday who borrowed $400,000 against their home to put into this investment,” Waring said. Even if they get that all back, they’ll still have to pay the interest from borrowing the money.
Many of the creditors who have contacted him were discouraged and depressed, Waring said.
“Some people are at their wits’ end over this.”
Jane said her family might have to sell their home and car to recover their investment.
“Things are never going to be the same,” she said.
Waring confirmed that Closson was still in the Edmonton area. The Gazette could not reach him for comment.
Jane said she and the creditors were considering a class-action lawsuit and hoped criminal charges would be laid.
“To say we are angry is an understatement,” she said.
Bankruptcy Canada will hold a meeting of affected creditors this April 22 in Edmonton, Waring said.
Anyone affected by the Optam bankruptcy should call Waring at 780-424-9944.
