News

Hearing alleges fraud

The executive director of the British Columbia Securities Commission (BCSC) has issued a notice of hearing alleging that a former Vernon mutual fund salesperson committed fraud.

The case involves the former salesperson allegedly  persuading a B.C. investor to unlock her pension funds to invest in a foreign exchange investment program, and allegedly did not forward her funds to be invested, but instead spent them with his girlfriend, in part on personal expenses.

The notice of hearing alleges that Robert Bruce Rush told the investor that she could use her locked pension funds to purchase a bond and then borrow money to invest using the bond as collateral.

Rush also told the investor the scheme was tax-free.

In 2008, the investor wrote a $73,200 cheque to Breakthrough Financial Inc. Rush was the sole director of Breakthrough.

BCSC staff contend that Rush told the investor her funds would be invested in a foreign exchange investment program offered by an Alberta resident who the Alberta Securities Commission (ASC) permanently banned from the Alberta securities markets in 2011. In 2014, a BCSC panel reciprocated the ban and permanently banned the Alberta man from the B.C. capital markets.

Rush and Breakthrough did not forward the investor’s funds to the Alberta resident, contends the BCSC, but instead Rush and his girlfriend spent the money in part on personal expenses.

BCSC staff allege that Rush did not tell the investor that he would be keeping and spending the investor’s funds.

The CRA later reassessed the investor $35,000 due to the pension unlocking scheme, resulting in the investor having to remortgage her home. The investor’s funds are gone.

The notice also alleges that Rush engaged in unregistered trading, thereby breaching securities laws.

“These allegations have not been proven,” wrote the BCSC on its website.

Counsel for the executive director will apply to set dates for a hearing into the allegations before a panel of commissioners on July 22.

On Feb. 2, 2014, the Mutual Fund Dealers Association of Canada (MFDA) found that Rush engaged in misconduct by contravening MFDA rules by selling off-book, inappropriate securities to clients, and by failing to cooperate with the MFDA investigation.

Rush is seeking a hearing and review of the decision.

 

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