One of the properties involved in the scheme at 5259 Big White Road.

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A German man has been fined US$17 million for his part in an international fraud scheme that saw two luxury Kelowna area properties seized by the provincial government during an investigation into a worldwide multi-million dollar insider trading scheme.

On Mar. 24 the U.S. Securities and Exchange Commission obtained a final judgment against one of the ringleaders of the scheme, German national Michael Gastauer, and fined him US$17 million.

The case has ties to Kelowna and in December 2020, a B.C. judge commented several times on how highly complicated the fraudulent scheme was.

The international scheme generated US$165 million of illegal sales of stock in the U.S. markets in a "pump-and-dump" insider trading system that involved at least 50 companies.

READ MORE: Two Kelowna properties seized as part of international money laundering scheme

While the worldwide scheme involved Swiss bankers and shell corporations dotted around the world, roughly $2 million of the money also ended up in the Okanagan property market.

In 2019 the B.C. Civil Forfeiture Office seized two Kelowna properties: A 6,100 square-foot five-bedroom, four-bath house on a one-acre property with a pool at 1214 Mission Ridge Road, and a luxury ski chalet at 403-5259 Big White Road. The province later sold both the properties.

The properties had been bought in cash with a combined total of $2.1 million by Mexican businessman Carlos Gomez Brana, according to court documents.

Brana has no ties to B.C. and used a company he set up in Hong Kong and then registered in B.C. as an extra-provincial company to purchase the two properties.

Brana's company, Cuatro Cienagas Inversiones, was registered at the Mission Ridge Road property, although there's no mention in the court documents of what the company actually did.

He then transferred money to Benjamin Thomas Kirk, and his spouse Kayley Tyne Johnson to manage the properties.

B.C. Supreme Justice Kathleen Ker once referred to Kirk as a "known fraud artist" and pointed out he'd been fined $100,000 in Alberta and ordered to cease trading. Kirk had also been charged with violating the U.S. Securities Act in 2013.

In 2020 Kirk, Johnson, and Brana headed to court in B.C. and argued for the return of the property.

They argued the evidence against them was purely circumstantial and pointed to the fact they hadn't been criminally charged in B.C.

Justice Ker said the province didn't need to prove that the money used to buy the properties was part of the fraudulent scheme, only that there was sufficient evidence that could support that claim.

The Justice called the transactions "highly suspect."

However, according to court documents, Kirk and Johnson were later dropped from the case.

Then in August 2021, the province came to a settlement with the Mexican businessman. 

Court documents show the province agreed to keep $1.58 million from the sale of the homes, while Brana would get to keep the remaining $553,774.

There is no reason given in the court documents as to why the province chose to come to a settlement.

According to the U.S. Securities and Exchange Commission U.K. citizen Roger Knox is a major player behind the fraudulent scheme and he pleaded guilty in the U.S. to one count of securities fraud in January 2020. He is set to be sentenced at a later date.

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