Canada’s fraudsters: The insider who ‘sold’ the shares for their own personal gain

Canadian officials say that Clayton Firstenberg, the 44-year-old millionaire accused of defrauding investors of millions through non-existent “strategic acquisitions,” was so feared that he was a target of armed police in 2011. An investigator,…

Canada's fraudsters: The insider who 'sold' the shares for their own personal gain

Canadian officials say that Clayton Firstenberg, the 44-year-old millionaire accused of defrauding investors of millions through non-existent “strategic acquisitions,” was so feared that he was a target of armed police in 2011.

An investigator, Christopher Aberle, said Firstenberg and two accomplices were suspected of being “extremely dangerous,” and such precautions were taken “for their own safety, the safety of the public, and the safety of the individuals arrested.”

“This was our guy,” Aberle said. “But we were able to protect him.”

And so it is that investors who believed they had more than just money in the hands of an enterprising entrepreneur can find themselves, at this point, looking at pennies.

Firstenberg is one of a string of businessmen who have been alleged or convicted of fraud, or accused of fraud on investors, and are now in the hands of the justice system, though sometimes the targets of the justice system often find themselves fighting a losing battle as the problem grows larger than any single person could handle.

Most recently, Calum Draper, the former chief executive officer of the Port Coquitlam-based Cambie Pipe Line Ltd., was arrested and accused of defrauding up to 50 investors of tens of millions of dollars in the early 2000s. He will be arraigned in court later this month on charges of fraud and conspiracy to commit fraud.

Draper faces eight other charges, including concealing affairs, money laundering and living off the company’s revenue. His wife, Camille Parker, faces four charges, including money laundering and making and using false documents.

More importantly, however, was what was uncovered in two separate investigations by the Canadian Securities Administrators, a joint entity of the securities commissions of Ontario, Alberta, B.C., Saskatchewan and Manitoba, and the Investment Industry Regulatory Organization of Canada.

Between 2004 and 2006, Cambie Pipe Line Ltd. entered into three loans totaling $100 million. The first was for $20 million, and later the second loan was for $50 million.

Draper was aware that Cambie Pipe Line was in financial difficulty, according to court documents, and for some reason convinced other senior managers to kick in money, to the tune of $15 million. Draper also allegedly used a Cambie Pipe Line loan to pay off up to $5 million in a secret offshore tax shelter account.

Cambie Pipe Line is a master blender of natural gas and sells the fuel as a commodity through pipeline and terminal facilities in North America.

Between 2001 and 2008, Daniels allegedly used the company’s money to buy stock in other companies, an act that would have violated securities regulations in Canada. A majority of the company’s investors were seniors and small businesses owners who had little equity or experience, and many said they were warned that Daniels only looked at companies under $20 million, but soon after had $60 million in loans.

For four years Daniels fooled investors, according to the Canadian Securities Administrators, when he had no assets to back the loans and was in fact owing investors heavily. His scam unravelled in 2008, when he was hired to be the vice-president of Canada, the United States and South Africa, for Advanced Power Technologies Ltd., a company in Texas that specializes in fossil fuel conversion and fuel cell technology.

One of Firstenberg’s alleged accomplices was Cy Bourgeois, formerly the chief executive officer of Claremont Holdings Corp. whose assets he purported to have purchased. Bourgeois was paid an annual salary of $1.1 million in 2008, and on two occasions – in 2005 and 2008 – he demanded that Firstenberg or Bourgeois take $30 million personally. Firstenberg, who said he was a marketing agent, reportedly replied, “I really don’t need the money.”

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