A St. Albert man behind two investment companies that cost Alberta investors an estimated $14 million will face the Alberta Securities Commission in February.
The securities commission, the regulatory agency responsible for administering the province’s securities laws, issued a notice of hearing for Wade Robert Closson on Dec. 18.
Closson, owner of Optam Holdings Inc. and Infinivest Mortgage Investment Corporation, is facing accusations of misrepresentation, fraud and illegal distributions in phony multi-million dollar mortgage investment Ponzi schemes between January 1, 2009 and April 2, 2013.
Between $11 million and $24 million was collected from 75 to 125 investors from Alberta and elsewhere, including at least 18 from St. Albert.
The commission investigation states that investors were promised an 18 per cent return if they invested in Optam – returns were to be earned by giving loans to people who wouldn't ordinarily qualify for them. Creditors invested between $6.3 million and $19.3 million.
Many of the creditors in Optam were close friends and relatives of Closson. Some invested their entire pensions into the company.
Cash dividends from the purported profits of Optam were to be provided to investors of Infinivest. Creditors invested an estimated $4.6 million.
Closson and his companies filed for bankruptcy on March 28, 2013.
He was not registered to trade in securities at the time. Neither of the companies were registered to sell securities.
Some interest, principal and dividends were repaid to investors, but about $14 million remains outstanding – $9.7 million through Optam and $4 million through Infinivest. In many cases, investors reinvested the money that was returned to them.
At least $2 million is owed through Optam to St. Albert businesses and individuals.
Interest paid to investors came from funds provided by other investors rather than profit earned by the mortgages, claims the securities commission notice.
Closson removed $1.7 million for personal use, the notice alleges, including bank account transfers, paying off personal and spousal credit cards, residential mortgages, condominium fees for himself and his family, car leases and other expenses.
He allegedly diverted $3.9 million offshore and to other projects.
Some money was invested into a lumber operation in Nicaragua and a pizza restaurant, said bankruptcy trustee Arthur Waring, at a creditors' meeting in April 2013.
Creditors referred to “Optam” as an acronym for “Other People's Time And Money.”
When asked at the meeting why he never told anyone the truth, Closson said, “I believed that I could fix things.”
The allegations by the Alberta Securities Commission have not been proven.
Once both sides have presented their case at the hearing, a panel will decide if the allegations are proven or not, says commission spokesperson Mark Dickey.
Closson could face up to a $1 million penalty per breach under the Securities Act, as well as a lifetime ban from trading, if found guilty.
The highest penalty the commission has given to one individual is $3.3 million, says Dickey.
Closson is scheduled to appear before the commission on Feb. 11, 2015 in Calgary to set a date for the hearing.
The Gazette could not reach Closson for comment.
