Over the past three years, U.S. regulators have penalized 15 British Columbians over $150 million for their roles in an alleged billion-dollar stock fraud scheme masterminded by former Vancouver lawyer Fred Sharp. While many have been banned or charged in the U.S., most remain free to operate in B.C., raising questions about the province’s lack of capital markets enforcement.
This is part two of a two-part story. Find the first part here.
There are two agencies that investigate criminality in B.C.’s public markets: The B.C. Securities Commission (BCSC) criminal enforcement division and the RCMP Integrated Market Enforcement Team (IMET).
Either agency may launch their own investigations, however there are cases the BCSC may refer to the RCMP. The commission is also responsible for administrative sanctions, where it may restrict or ban individuals from the markets, fine them and seek restitution.
Both agencies declined to speak about whether they were investigating anyone alleged by the SEC and DOJ to be involved with or related to the Sharp Group, citing privacy reasons.
Commission spokesperson Brian Kladko told BIV that since misconduct may cross many jurisdictions, “securities regulators around the world assist each other in policing the capital markets.”
Assistance may come by means of imposing preservation orders on behalf of the SEC, which has occurred with Sharp, as he contests ongoing civil forfeiture applications in B.C. Supreme Court.
Kladko also said the commission will typically not duplicate civil or criminal prosecutions.
“If another securities regulator or law enforcement agency—either in Canada or elsewhere—takes action against a wrongdoer, that frequently removes the need for us to investigate and prosecute the same matter," stated Kladko.
However, duplication would not include administrative reciprocal orders to bar individuals from participating in the local market.
If the commission does not typically investigate U.S. prosecutions against B.C. residents, BIV inquired what it has done in the past five years.
One public markets-related conviction in five years
Since January 1, 2020, the commission has secured criminal convictions against nine individuals: Two for failure to comply with an order, three for theft over $5,000, three for fraud over $5,000 and one for forged documents.
Four cases resulted in prison terms, with four years being the stiffest sentence.
Total restitution (penalties and disgorgement) amounted to close to $3 million.
None of the cases related to the public markets, and instead involved private capital-raising investment schemes.
The commission referred eight files to the RCMP IMET during this time, a fact BIV was required to file an information request for, as the commission claimed it could not disclose what files were forwarded for privacy reasons.
For its part, IMET told BIV it has secured three criminal convictions since January 1, 2020.
One is against a 79-year-old man for making false statements; another is against a 26-year-old man for fraud under $5,000.
The third case is the only one that explicitly relates to securities and includes two counts of engaging in fraud, two counts of distributing securities without a prospectus and one count of prohibited representations by a man from Surrey with no significant presence in the public markets.
To inquire as to why so few people have been criminally prosecuted in the capital markets, BIV interviewed Supt. Adam MacIntosh, the head of IMET in B.C. whose official title is officer in charge of cyber and financial investigation teams (CFIT) federal policing –Pacific Region (B.C./Yukon).
MacIntosh said IMET, which was once a standalone unit, is now located within CFIT, which also investigates fraud unrelated to the capital markets. IMET has 30 officers and civilian analysts, but MacIntosh was not readily able to provide its budget nor disclose how many vacancies exist other than to say vacancies are no greater than 30 per cent.
He said prosecution challenges include legal constraints, resource limitations and the complexity of transnational cases.
So-called “operational effectiveness” has long been a topic of discussion for IMET, and was discussed in a 2007 report commissioned after widespread complaints about IMET’s low amount of criminal prosecutions. The report pinned blame on legal constraints such as disclosure.
“Canada’s got some of the most stringent privacy laws in the world,” said MacIntosh.
If the BCSC receives information that is compelled under the Securities Act, for example, IMET must be “cautious about how and what we can receive legally where the information is compelled,” added MacIntosh.
This, he said, may help explain why there are never criminal prosecutions against individuals who are found liable for blatant frauds at BCSC administrative hearings.
MacIntosh maintained IMET has a good relationship with the commission, “despite legal frameworks, despite potential roadblocks that we have due to the legal issues around privacy—and we fully respect those, of course, the rule of law.”
Asked if there have there been instances in the past five years where IMET has forwarded information to the SEC, he replied: “Where appropriate we always share information with our partners.”
MacIntosh declined to comment on the specifics of the Sharp Group case.
In an interview, BIV provided retired Vancouver Sun business and securities reporter David Baines with the recent track records of the BCSC and IMET.
"Sharp’s illicit offshore dealings have been common knowledge in Vancouver for years, but I am not surprised that he hasn’t been criminally prosecuted in BC. The RCMP have proved unwilling or unable to criminally pursue even the worst offenders, which is why Vancouver still has a reputation as very fertile ground for stock fraud," said Baines, who maintains a keen eye on financial fraud in B.C.
"Both the BCSC and the RCMP do nothing more than nibble around edges. I keep hearing the same excuses, but I think ineptitude and disinterest, especially when it comes to the RCMP, are the main reasons. We deserve better," added Baines.
Connections to organized crime
Another alleged Sharp Group client is Burnaby resident and Hells Angel nomad Courtney Vasseur. According to a DOJ criminal indictment, Vasseur allegedly generated US$35 million in illicit proceeds through a pump-and-dump scheme in partnership with Curtis Lehner, a former Vancouver stockbroker and salesman at Eron Mortgage Corp.
The allegations against Vasseur and Lehner have not been proven in court. Extradition has been approved by a B.C. judge but is being appealed.
In a U.S. civil indictment, authorities showed alleged encrypted communications between Sharp and associates discussing concerns about Hells Angels and money laundering.
“Organized crime is in everything, right, whether it’s drugs, fraud, capital market, they’re in everything,” said MacIntosh.
Kallu said following his claim against Emerald Health Sciences, he has received death threats. He added that the U.S. Federal Bureau of Investigation took this claim seriously, but that the RCMP did not.
The company is linked to organized crime, as one of its founding directors is Kallu’s brother and convicted heroin trafficker Yadvinder Kallu, who was arrested in 1998 and sent to jail for three years.
Kallu said that since he was in high school at the time, he did not know the full extent of his brother’s criminal history when, after Yadvinder’s release and return to Canada, they founded Emerald Health Sciences.
When Kallu parted ways with Dhillon and the company in 2017, he says he became estranged from his brother and his parents, who owned the farm site where Kallu cultivated medical marijuana via his Health Canada licence.
In October 2020 the property was raided by Delta Police, who allegedly found evidence tying an illegal marijuana grow-op to the Hells Angels. Police stated the grow-op was disguised as a medical marijuana operation.
Kallu said he was not a subject of the investigation.
In a claim brought by the Director of Civil Forfeiture, Kallu’s father agreed via a consent order to forfeit $1 million—$700,000 of which is now secured against the property.
“I have gone through a lot of hardship in this time and knowing that my parents weren’t around to help me, it’s not the best feeling at all,” said Kallu.
On April 8 Dhillon handed himself in to the U.S. Federal Bureau of Prisons. After his plea deal he will spend four months at the minimum security Federal Correction Institute of Big Spring, in Texas.
At his sentencing hearing in December, Dhillon vowed to make amends with the family he says he let down, including his two young children.
Kallu said he wrote to federal prosecutors, but that they did not include his letter at sentencing.
“The fact that Avtar can sit up there in court and talk about his kids knowing what he’s done to his family members—it’s actually disgusting,” said Kallu.
The ‘Sharp Group’ and its B.C. associates owing money for civil fraud and/or facing criminal charges in the U.S.
Fred Sharp – The alleged “mastermind” owes the SEC $52.9 million and faces unproven criminal charges in the U.S. Sharp resides in West Vancouver and is opposing SEC forfeiture claims in B.C. Supreme Court. Banned by the B.C. Securities Commission (BCSC).
Zhiying Yvonne Gasarch – A Richmond woman who worked for Sharp; found liable for fraud and owes $2.5 million.
Courtney Kelln – A Surrey woman who also worked for Sharp; found liable for fraud and owes $1.6 million; faces unproven criminal charges.
Avtar Dhillon – Former B.C. resident who manipulated stock sales of three U.S. companies and owes $10.4 million; criminally convicted of three felonies; struck a plea deal and sentenced to four months in prison after facing upwards of six years.
Mike Veldhuis – A Vancouver resident owing $11.8 million; faces unproven criminal charges.
Graham Taylor – A Vancouver resident ordered to pay the SEC US$5 million after reaching a settlement in January 2023, in which he neither admitted or denied the fraud allegations against him.
Paul Sexton – An Anmore resident owing $17.4 million; faces unproven criminal charges.
Jackson Friesen - A Delta resident owing $11.8 million.
Bradley Moynes – A B.C. resident owing $3.4 million.
George Stubos - A B.C. resident owing $5.9 million; Stubos was barred from the industry for two years by the BCSC in 2007.
Dori-Ann Stubos - A B.C. resident owing $1.8 million for proceeds of fraud from George Stubos.
Amar Bahadoorsingh - A Surrey resident owing $1.4 million; banned by the BCSC.
Courtney Vasseur – A Hells Angels nomad from Burnaby facing unproven criminal charges; an extradition hearing is underway
Curtis Lehner – A former Vancouver stockbroker and salesman at Eron Mortgage Corp. facing unproven criminal charges; an extradition hearing is underway.
Vincenzo Carnovale - A B.C. resident owing close to $700,000 for fraud.
Frank Biller – A Vancouver resident owing $8.3 million; A key figure in B.C.'s Eron Mortgage scandal, Biller pleaded guilty to related criminal charges in fall 2024.
Ronald Bauer – A Vancouver resident who owes $4.3 million and pleaded guilty to one criminal count; Bauer was previously banned from B.C. markets for five years for alleged market manipulation.
David Sidoo – Former prominent Vancouver stockbroker and convicted felon in the U.S. college admissions scandal; allegedly worked with Bauer to manipulate stock sales; his civil charges are temporarily stayed.
