Protestors recently gathered outside the Newton branch of Coast Capital Savings (137th Street and 72nd Avenue) to demand the return of their money from an alleged Ponzi scam.
Despite inclement weather, dozens of victims of the alleged financial pyramid scheme, gathered on Saturday afternoon to fight for the return of their life savings.
They carried signs outside the Newton office reading, "Coast return our money" and "Coast gave us bad financial advice."
The dispute is the subject of lawsuits currently before the courts. At the centre of the controversy is a former Coast Capital investment advisor, Arvindbhai (Arvin) Patel.
Patel, who has been banned from trading securities, admitted to the B.C. Securities Commission (BCSC) in April that he encouraged his Coast Capital clients, as well as friends and family, to invest in what he called a secure investment guaranteed to pay them 12 per cent a year.
According to the Surrey Leader, the money went to Vancouver notary public Rashida Samji, who was to keep it in a trust account that would act as borrowing security to the Mark Anthony wine group to expand their winery operations internationally.
The claims were untrue – the Mark Anthony group was never involved – and the now-suspended Samji is accused by BCSC regulators of defrauding investors of $83 million after using money from new investors to pay earlier ones between 2003 and January 2012.
According to media reports, nearly $29 million was invested in the Samji-led investment by the mainly Surrey residents Patel referred since 2006, according to a BCSC ruling.
Coast Capital Savings meanwhile claims Patel was essentially a rogue employee who acted on his own.
"We were actually the ones who uncovered Ms. Samji's scheme and reported it to the B.C. Securities Commission," said Karen McDonald, senior manager of corporate communications at Coast Capital Savings.
McDonald added Patel was relieved of his duties within days of a client complaint that uncovered his activities.
Scott Nicholl, a Surrey lawyer representing 90 affected clients, says some invested more than one million and have lost much of their net worth.
Some borrowed money through Coast Capital to invest via Patel and may be forced to sell their homes to pay back credit lines.
Nicholl alleges the credit union and its affiliated mutual fund arm failed in their duty to properly supervise Patel when he was providing financial advice.
The securities commission said in an April ruling that Patel – who put $600,000 of his own money in the scheme – should have known Samji's claims were false and that high returns with no risk are impossible.
Other warning signs included the fact the investment wasn't approved by the credit union, had no disclosure documentation, and was described as an "exclusive" opportunity not available to the general public.
Most of Patel's assets have been seized and Samji's accounts are frozen but it's not clear how much investors may recoup.
The BCSC said a multi-million-dollar fine against the now-unemployed Patel would be appropriate, but pointless, as there is no reasonable prospect of it being paid.
Add new comment