A Vancouver real estate developer spent nearly $75,000 of an investor’s money on his personal mortgage payments and his property management business, a British Columbia Securities Commission (BCSC) panel found.
The panel found that in November 2009, Brendan Schouw convinced one investor to spend $1 million in Hornby Residences for a Vancouver real estate project. Schouw is the sole director of Hornby, a B.C. company.
The investor received an investment certificate promising 18% simple interest per year. After depositing the $1m into Hornby’s bank account, Schouw redirected approximately $75,000 for his own use, the panel said.
“Schouw would have known that these payments were made and that they were being made in a manner that was not consistent with what had been promised to [the investor] about the use of his funds.”
Schouw initially promised the investor that all of the funds would be used for the real estate project.
As Hornby’s sole director and officer, Schouw is liable for the company’s fraud. “Schouw admitted that he made all of the relevant decisions in issue regarding Hornby’s actions. There is no doubt that Schouw permitted or acquiesced to Hornby’s misconduct in this case,” the findings said.
Schouw was initially accused by the BCSC executive director of diverting the $440,000 of the investor’s funds, but the panel dismissed the allegations.
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