December 27, 2013 - 10:32 AM
KELOWNA – A former mayoral candidate from Kelowna has been sanctioned by the B.C. Securities Commission for illegally selling $400,000 worth of defunct securities to fund a local real estate project.
Kenneth Dean Chung has admitted that he issued promissory notes in the amount of $100,000 each between March and July of 2008 to four investors from B.C. despite never registering in B.C. His company, 0804469 Ltd., has never filed a prospectus or made any exempt distribution filings with the BCSC.
According to Chung, the BCSC acted on a tip from one of the investors who lost money on the deal.
“I didn’t do anything wrong,” Chung says. “(The BCSC) were concerned about misappropriation of funds because back then a lot of developers were taking peoples’ money and using it personally. I didn’t do any of that. I brought friends and family into the project and that’s where I made my mistake. The project went sideways and we all lost money, including myself.”
He says that he was permitted to seek investment capital from friends and family close to him, but when the deal fell through; one investor contacted the BCSC and denied the relationship.
“One of my friends of ten years called and made the complaint, saying she wasn’t friends with me and that I brought her in under false pretenses.”
The promissory notes offered investors a 20 per cent per annum return on their money, and had a term of six months.
The Kelowna project, a residential subdivision in Peachland, fell apart during the 2008 financial crisis when Chung was unable to obtain additional financing.
As a result of his misconduct, Chung is prohibited from becoming or acting as a director or officer of any issuer or registrant for a period of five years. He is also prohibited from acting in a management or consultative capacity in connection with the securities market and from engaging in investor relations activities.
The entire settlement agreement can be viewed here.
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News from © InfoTel News Ltd, 2013