“Sadly, the victims suffered a considerable loss as a result of their investment in the Ponzi scheme which they deemed credible. The economic and societal damage from these types of criminal acts is immeasurable and investors are reminded to remain vigilant in their investments ”. said the corporal. Christopher Girard in an emailed press release.
“Albertans are reminded to stay abreast of potential scams, to exercise due diligence with their investments and to report suspected cases of crime.”
Fauth ordered to pay $ 3.2 million last year
In June, Fauth was sanctioned by the Alberta Securities Commission for violating the Securities Act by illegally dealing in Espoir securities, making false representations to Espoir investors and fraud.
He was ordered to pay a reimbursement of $ 2.6 million and an administrative penalty of $ 400,000, as well as investigation and hearing costs of $ 250,000.
The ASC also prohibited him from trading or buying securities, becoming a director of an issuer or other entities, and acting in a management or advisory capacity in the securities market.
An earlier ASC ruling said Hope had raised $ 15.5 million over a 10-year period and told investors their funds were safe.
But an investigative accountant testified that between January 2009 and September 2014, he saw no use of funds corresponding to representations made to investors.
Funds have been loaned to Fauth and his family
“Its funds have primarily been invested and loaned to Fauth, members of the Fauth family, FairWest, associated limited partnerships and other entities controlled by Fauth and his family, including Fauth Financial.
“Although $ 1.73 million in mortgages in favor of Espoir were recorded on the titles of two properties that Fauth and his wife owned in Edmonton and Calgary, the mortgages had little or no underlying value. Fauth admitted that they had been placed on the titles simply to ‘put a little more security for Hope on his balance sheet,’ ”the ruling reads.
He said Hope was using investor money to repay principal and pay interest to other investors like a Ponzi scheme.
At the end of 2014, Hope owed investors more than $ 12.3 million and was unlikely to be repaid, the ASC said.
The RCMP said the investigation was complex and consumed a lot of time and resources. It was produced in collaboration with the Forensic Accounting Management Group, the Financial Transactions and Reports Analysis Center of Canada, the Public Prosecution Service of Canada and specialized prosecutions.
Fauth was released on documents with a promise to appear in court on September 14.
If he is guilty, the charge of fraud over $ 5,000 carries a maximum penalty of 14 years in jail.