A British Columbia Securities Commission panel has fined Rashida Samji $33 million for committing a $100 million fraud on at least 200 investors. The panel also ordered that Samji be permanently banned from participating in B.C.’s capital markets.
In July 2014, the panel found that between approximately 2003 and January 2012, Samji, a former notary public, perpetrated a fraud when she traded securities to 200 or more investors for proceeds of at least $100 million.
The panel determined that Samji ran a Ponzi scheme. She told investors that she would hold their money in trust, and that it would be used only to secure letters of comfort for the financing of a British Columbia winery. Investors were to earn fees for securing the letters of credit. None of this was true.
In its sanctions decision, the panel noted that, “Samji perpetrated a fraud each time she traded securities to an investor”, and that she breached securities laws “many times in her dealings with hundreds of clients”. Furthermore, the panel wrote, ‘The magnitude and duration of the fraudulent investment scheme and the number of investors affected justify a significant penalty”.
In addition to the $33 million fine, the panel ordered that Samji pay to the commission $10,811,799, the amount determined to be the difference between the monies deposited by the investors pursuant to the fraud, and the monies paid out to them.
The panel also ordered that Samji resign any position she holds as a director or officer of an issuer or registrant. She is permanently prohibited from trading in securities, purchasing securities or exchange contracts (with limited exceptions), and from becoming or acting as a director or officer of any issuer or registrant. She is also permanently prohibited from becoming or acting as a registrant or promoter, from engaging in investor relations activities, and from acting in a management or consultative capacity in connection with the securities market.
IN November 2013, Samji was charged with 28 counts of fraud and theft following an investigation into a multi-million dollar ponzi scheme by the RCMP Federal Serious and Organized Crime (FSOC) supported by the Vancouver Police Department that started in February 2012.
It was alleged that between January 1, 2010, and August 31, 2012, about $40 million was obtained fraudulently from over 100 victims.
These charges represent $17 million dollars that was allegedly defrauded from 14 individuals between 2006 and 2012. This is part of a larger fraud that allegedly stretches back to 2003, according to the RCMP.
On November 6, the 28 charges of fraud and theft were sworn against Samji and on November 7, she was taken into custody without incident while leaving her residence. She was released on a $100,000 no-deposit surety and 13 bail conditions.
The trial has been scheduled for April 2015.
IN September 2013, B.C. Supreme Court Justice Laura Gerow certified a law suit against Samji and several financial institutions over the alleged Ponzi scheme as a class proceeding.
According to the ruling posted on the court’s website: “The plaintiffs allege Ms. Samji operated a fraudulent investment scheme known as the “Mark Anthony Investment.” Ms. Samji described the scheme to potential investors as a private investment opportunity to earn a guaranteed return. The money would be paid into her notary public trust account, where it would remain and would be used to assist the Mark Anthony Group (a reputable firm in the beverage distribution industry) in its business as an importer-exporter in the beverage industry. It was described as involving subsidiaries of the Mark Anthony Group in Chile and South Africa. At the end of a six-month period, the funds could be returned or the investment could be rolled over. The minimum investment ranged from $50,000 to $100,000.
“The plaintiffs and the proposed class members placed their money in trust with Ms. Samji by signing a “Letter of Direction” to “Samji & Associates,” the name under which Ms. Samji carried on her notary practice. The Letters of Direction which have been appended to the plaintiffs’ affidavits directed that the funds would be placed and would remain “in trust,” and would not be moved without specific direction from the investor.
“In reality, there was no legitimate investment opportunity. The “Mark Anthony Investment” scheme promoted by Ms. Samji had no affiliation with the Mark Anthony Group. Nor did Ms. Samji deposit the funds into any trust account for the benefit of any business operation. Instead, the invested funds were deposited by Ms. Samji in her general or personal account, or in the Samji Holdings’ account. The funds were then used for the general benefit of the Samji defendants and to make payments to investors in the scheme without the knowledge or authorization of the investors.
“As a result of investing in the scheme, the plaintiffs and proposed class have suffered loss and damage.”
Regarding Patel, the ruling noted: “Mr. Patel was a financial advisor employed by Coast Capital. He was also a mutual fund dealing representative for Worldsource. In the course of providing professional investment services to clients of Coast Capital and Worldsource, including the plaintiffs Lawrence and Jun Jer, Mr. Patel recommended the scheme as an investment opportunity to them. Mr. Patel also recommended the scheme to other employees of Coast Capital.
“As a registered mutual funds dealing representative of Worldsource, under the Securities Act, R.S.B.C. 1996, c. 418, and related enactments, and National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, B.C. Reg. 226A/2009, Mr. Patel was restricted to trading in only a limited class of investment funds. The scheme was not an authorized security for the purpose of the Securities Act, and Mr. Patel was not authorized to promote it to clients.”
The judge noted: “The defendants all assert that the issues are not common and therefore the class proceeding is not preferable.
“However, I have determined there are common issues involving each of the defendants. While the defendants argue the common issues are negligible in relation to the individual issues, I have determined that the common issues identified by the plaintiffs will in fact determine issues that are common to all of the proposed class members’ claims, and will move the litigation forward.”
SAMJI became a notary public in 1988. In 1995, she began running her notary practice through her Notary Corporation. In 2006, she became a “roving notary” whose practice was limited to covering the practices of other notaries due to illness or vacation.
The Society of Notaries Public of B.C. suspended Samji on February 7, 2012, and obtained a court order appointing a custodian over Samji’s practice on February 8. She subsequently submitted her resignation on March 6, 2012.
In April 2012, the B.C. Securities Commission announced: “For his misconduct, Patel is permanently banned from trading securities or exchange contracts, except in accounts in his own name; prohibited from acting as a director or officer of any company or registrant; acting as a registrant or promoter; acting in a management or consultative capacity in connection with the securities industry; and, engaging in investor relations activities.”