West Vancouver resident and chartered professional accountant Anthony Kevin Jackson, and his family members, have reached a $1.75 million settlement agreement with a class of investors.
The agreement comes months after to be 鈥渁busive to the capital markets.鈥�
Jackson is subject to a suite of temporary prohibitions from the capital markets, including an eight-year ban from acting as a public company director, after paying a $100,000 administrative fine to the commission.
The settlement agreement hence precludes Jackson and his family members as subjects of a recently approved class action lawsuit brought by investors against dozens of other alleged scheme participants.
In addition to the $1.75 million payment, Jackson has also agreed to be interviewed by the investor鈥檚 lawyers at Bennett Mounteer LLP, to provide information relating to the allegations against those who remain subject to the class action lawsuit, which alleges an unlawful conspiracy against investors.
Jackson 鈥� who operated investment firm BridgeMark Financial Corp. and accounting firm Jackson and Company 鈥� specifically agreed to an interview at a location of his choosing and for no longer than six hours, according to terms of the agreement filed in court on May 30.
'Provide reasonable cooperation'
The settlement agreement stated all the defendants have agreed to 鈥減rovide reasonable co-operation to the plaintiffs鈥ith respect to any outstanding claims against Non-Settling Defendants in the Actions,鈥� including preserving any relevant documents in their possession.
Aside from Jackson and his companies, the other 鈥渟ettling defendants鈥� specifically include Jackson鈥檚 brother-in-law Ryan Peter Venier, father-in-law Albert Kenneth Tollstam, sister Tara Haddad and brother-in-law Abeir Haddad 鈥� and all their respective companies.
The family members were named as respondents in the commission's original hearing notice from November 2018. However, the commission dropped them and many others in an amended hearing notice.
The defendants negotiated and entered into the agreement 鈥渢o avoid further expense, inconvenience and burden of the actions鈥espite their belief that they have good, reasonable, and complete defences,鈥� states the settlement order put before Supreme Court of sa国际传媒 Justice Sandra Wilkinson.
Jackson and his companies agreed to specifically pay $1.65 million while the family members agreed to pay $100,000.
The alleged scheme saw purported consultants buy $50.9 million worth of newly-issued shares from penny stock companies listed on the Canadian Securities Exchange while simultaneously receiving $43 million worth of consulting agreements in 2018.
The purported consultants then sold the shares into the secondary market to retail investors while allegedly performing 鈥渓ittle to no consulting work.鈥�
Waterfront mansion
Lawyer Mark Mounteer stated in his affidavit he estimates the scheme generated $23.9 million in aggregate profits for those originally named in the class action lawsuit (based on only $39 million of consulting contracts).
Mounteer said the total disclosed consulting fees paid to Jackson and family members was $5.49 million. As such, the $1.75 million is about half of the estimated aggregate profit for Jackson and family members, according to Mounteer.
The settlement amount, stated Mounteer, is 鈥渁 reasonable level of disgorgement of the alleged unlawful benefit in the context of vigorously defended claims with all their attendant litigation risks.鈥�
Mounteer noted that he understood Jackson to be paying some of the settlement by way of an insurance claim via Kootenay Zinc Inc., the company he formerly directed. However, the exact amount is unclear.
Mounteer also noted Jackson resides in a home on Bellevue Avenue. The waterfront mansion was purchased by Tollstam and Jackson's wife Lisa Jackson in November 2018 for $15.88 million and without any mortgage financing.
But Mounteer stated the plaintiffs had no evidence about the source of funds, including if profits generated from the scheme were used to acquire it.
Meanwhile, the class action lawsuit was approved July 2 in the Supreme Court of sa国际传媒 against the other alleged participants of the scheme.
鈥淎ssuming all of the pleaded facts are true, it is not plain and obvious that the claim for unlawful means conspiracy is bound to fail,鈥� and may proceed to trial, stated Justice Wilkinson.
The court ruling noted 鈥渁 number of named defendants have entered into settlement agreements which have received approval or of which approval is pending.鈥�
As such, Jackson and the family members are no longer named in the class action and neither is , who agreed to pay the commission a $950,000 administrative fine and agree to a 10-year ban from the capital markets.
A class action settlement for Liu has not been filed in court, however.
'Primary architects'
Liu鈥檚 settlement with the commission stated he bought $5.6 million shares in three private placements of two penny stock firms. Liu also received $4.5 million in consulting fees from nine firms.
In addition to obtaining private placement shares in their own names, Liu and his companies also paid $12.4 million to other entities to buy shares as part of the scheme, the settlement states.
The commission had alleged Jackson and Liu to be the two 鈥減rimary architects鈥� of the scheme.
However, Mounteer states in his affidavit that 鈥渢he significant disparity in the amounts of the administrative penalties imposed upon Jackson and Justin Liu in their respective settlement agreements with the BC Securities Commission suggested that Jackson鈥檚 role and culpability for the scheme was not as great as we considered it to be.鈥�
The investors who are the representative plaintiffs in the class action lawsuit are: Michael Tietz, Duane Lowen, Robin Lee, Mike Dotto, Grant Greenwood, Malcom Runkee, Americo Morlani, Greg Lomnes and Stacey Dionne.
The class action plaintiffs have also reached settlements with Beleave Inc., for $2.4 million, and PreveCeutical Medical Inc., for $350,000.