OSC fines, bars pair in $4 million Ponzi

The OSC has permanently barred two men from the Ontario capital markets, after finding they committed multiple breaches of the Ontario Securities Act.

Read: Reasons and Decision

The commission found that Joe Henry Chau and Sunil Tulsiani engaged in “egregious and dishonest” conduct in the unregistered distribution of bonds. The Maple Leaf Investment Fund (MLIF) bonds raised more than $4 million from over 80 “vulnerable” investors.

“The securities law violations committed by each of the Respondents were serious and their behaviour was egregious,” the commission said in its reasons for decision. “The respondents purported to rely on the accredited investor exemption but made no legitimate effort to determine whether the investors were duly qualified.

“Instead, they engaged in high pressure sales tactics by encouraging or counseling investors to misstate their entitlement to be treated as accredited investors and by stampeding investors into signing documents, including accredited investor declaration forms, without the opportunity to review them carefully and without the benefit of independent legal advice.”

Chau has been ordered to pay an administrative penalty of $450,000, while he and MLIF must disgorge $3,062,106 and pay costs of $163,700.

The OSC states: “We further found that Chau and MLIF knowingly perpetrated a fraud on MLIF investors…and that they had done so by, among other things, providing false and incomplete information.”

That false information related to how the funds would be used, that they were a safe investment, the background and status of MLIF and the project in Curacao that would purportedly receive the proceeds of the investments.

No Curacao-based project was funded. Instead, the funds raised were used to pay Chau’s personal expenses, interest to existing bondholders and MLIF’s capital requirements.

The OSC found that Tulsiani and Tulsiani Investments “represented to investors that they had conducted the necessary due diligence with respect to the investments; invested in every transaction that was presented to investors; and represented the interests of the investors.”

The OSC ordered Tulsiani pay an administrative penalty of $200,000 and that he and his firm, Tulsiani Investments, disgorge “on a joint and several basis together with Chau and MLIF,” $70,000. Tulsiani and Tulsiani Investments must also pay costs of $81,800.

Staff

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