B.C. man sanctioned for illegally distributing securities

By Staff | June 19, 2013 | Last updated on June 19, 2013
2 min read

In a settlement agreement with the British Columbia Securities Commission, Richard Gozdek has admitted that he illegally sold securities in Armadillo, a Nevada corporation that claims to own an oil lease in Oklahoma. Gozdek has never been registered to sell securities in B.C., and Armadillo has never filed a prospectus, offering memorandum or exempt distribution report in B.C.

The agreement states that between December 2010 and April 2011, Armadillo sold partnership agreements to at least 26 investors in B.C. for proceeds of approximately $868,789. Gozdek directly solicited persons to invest in the partnership agreements, raising $550,778 from B.C. residents. Gozdek, through his company Sterling Financial Group, was paid a fee of approximately $40,062 for the sale of the partnership agreements.

Under a partnership agreement, an investor received title to an amount of crude oil from Armadillo’s lease in Oklahoma related to the amount of money invested. Each month Armadillo would extract and sell the amount of oil an investor purchased to a refinery on the investor’s behalf. According to the investors’ preference, the net proceeds would either then be used to acquire title to an additional quantity of oil, or would be forwarded to the investor in the form of a production payment.

Gozdek admits that by trading and distributing securities without being registered and without having filed a prospectus, he broke securities laws relating to both registration and prospectus requirements.

As part of the agreement, Gozdek has given an undertaking to pay $65,062.30 to the BCSC.

Additionally, he must resign any position that he holds as a director or officer of any issuer, registrant, or investment fund manager. For a period of five years, Gozdek is banned from trading in securities (with limited exceptions), and he is prohibited from becoming or acting as a registrant, investment fund manager, promoter, or director or officer of any issuer, registrant or investment fund manager.

He is also prohibited, for the same period, from acting in a management or consultative capacity in connection with the securities market, and from engaging in investor relations activities. Gozdek has agreed to comply fully with the Securities Act, securities rules and any applicable regulations.

The agreement notes that on July 29, 2011, the Ontario Securities Commission issued a notice of hearing and temporary cease trade order against Armadillo and others for alleged unregistered activity in Ontario.

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The staff of Advisor.ca have been covering news for financial advisors since 1998.