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Hal (Mick) McLeod, Kenneth McMordie (a.k.a. Byrun Fox), Dianne Rosiek and David Vaughan guilty of costing some 800 investors more than $10 million US through Legacy Capital Inc., Legacy Trust Inc., Manna Trading Corp. Ltd., and Manna Humanitarian Foundation.

08/08/09 - Four British Columbia residents were found guilty of fraud Friday by a B.C. Securities Commission panel in a Ponzi scheme that cost some 800 investors more than $10 million US.

Hal (Mick) Allan McLeod, Kenneth Robert McMordie (a.k.a. Byrun Fox), Dianne Sharon Rosiek and David John Vaughan were ruled guilty of fraud for violating securities laws by trading securities without being registered and distributing securities without filing a prospectus. They lied to investors about how their money was being invested, what they could expect as a return, and the risk level of these investments.

A fifth accused, Robert (Robb) Murray Perkinson, was cleared of fraud in the scheme.

The fraudulent actions, which occurred from 2005 to 2007, were taken through Legacy Capital Inc., Legacy Trust Inc., Manna Trading Corp. Ltd., and Manna Humanitarian Foundation. When the scheme collapsed in June 2007, 800 investors had deposited $16 million US, receiving back at most, $5.6 million US. A sanctions decision will be made after submissions are made by parties in the suit. Submissions will be made in September.

McLeod created the scheme on a small scale with a few investors, then expanded it with Vaughan. When Rosiek and McMordie came aboard the "Manna scheme" aggressively sought investors, who were promised a monthly return of seven per cent that could be compounded, resulting in returns exceeding 100 per cent. Investors were told their money wold be placed with veteran traders with a history of double-digit monthly returns.

McMordie, using the name Byrun Fox, used what he termed "private common-law spiritual trusts" to avoid tax and securities laws with regard to the Manna scheme investments.

The three-member panel ruled that the four accused misrepresented the facts to investors.

"The reality is that Manna was a Ponzi scheme," the panel concluded. "Manna fraudulently used the investments of later investors to fund the promised returns to earlier investors, to pay commissions to the affiliates and consultants, to invest in an online gaming business, and to buy real estate in Costa Rica. McLeod, Vaughan, Fox and Rosiek fraudulently used investors' funds to enrich themselves."

A Ponzi scheme, named after New England crook Charles Ponzi, who bilked thousands in the 1920s in a postage-stamp speculation scheme, promises high returns but pays off investors using only money from other investors without actually earning revenue through a legitimate business.

http://www.vancouversun.com/business/Fo ... story.html

Four fined $26-million for B.C. Ponzi scheme

Also ordered to repay investors $16-million, but three have 'fled the jurisdiction' and little is expected to be returned, official says

10/27/09 - British Columbia regulators have imposed fines and repayment orders totalling $42-million against four people accused of running an aggressive and sophisticated Ponzi scheme, but a provincial securities official said most of the accused have disappeared and it appears little of the money is likely to be repaid.

A British Columbia Securities Commission hearing panel yesterday said the $16-million "Manna scheme" targeted 800 seniors and unsophisticated investors, some of whom mortgaged their houses and invested their retirement funds, only to lose most or all of the money.

The panel found Hal (Mick) McLeod, David Vaughan, Kenneth McMordie (also known as Byrun Fox) and Dianne Rosiek fraudulently sold securities to investors through Manna Trading Corp. Ltd. and related companies.

The panel imposed fines of $8-million against Mr. McLeod and ordered the other three to pay fines of $6-million each. In addition, the panel ordered the four accused and their related companies to repay the $16-million obtained from investors.

Investors were lured with promises their money would be invested in low-risk and secure products by experienced foreign currency traders, the BCSC said. Manna claimed its investments typically earned profits of not less than 240 per cent per year, and that investors historically had earned returns of 125 per cent annually. Investors were offered extra commissions if they helped to recruit others.

Many investors later told the BCSC that one of the most compelling parts of the pitch was a promise that some of the profits would go to charity to support humanitarian causes.

But Manna did not invest any of the funds in foreign currency or anywhere else, the hearing panel said. There were no trading profits, no investors received the promised returns and there is no evidence any money went to charity.

"The reality is that Manna was a Ponzi scheme," the hearing panel said in its ruling. "This was a deliberate and well-organized fraud that resulted in the loss of at least $10.4-million (U.S.) and probably closer to $13-million."

Lang Evans, enforcement director at the BCSC, said yesterday the panel's ruling sends a strong message that the BCSC will not treat such schemes lightly. "It was a blatant fraud, and I think the commission has reacted in the clearest terms possible," he said in an interview.

However, Mr. Evans said it will be difficult to collect on the penalties imposed against the four accused. He said Mr. McLeod, Mr. Vaughan and Mr. McMordie did not participate in the hearings and have "fled the jurisdiction." The BCSC does not know where they are. Mr. Evans said Ms. Rosiek has reported having no assets.

"If these people are poor, this will keep them poor," Mr. Evans said. "But we're not hopeful that we're going to recover anything in fines."

The RCMP has launched a criminal investigation in the case, but no charges have been laid yet, he said.

For two of the accused, the Manna case is not their first brush with scandal.

The BCSC hearing panel noted Mr. McLeod was president of First Capital Trading & Financing Corp., which was forced to cease operation as a deposit business in 2003 after the British Columbia Superintendent of Financial Institutions found the company and two related entities had engaged in deceptive and misleading practices.

Mr. Vaughan was disciplined by the BCSC in 1999 for engaging in an illegal securities distribution that had many features in common with the Manna scheme.

Mr. Evans said the case demonstrates the need for further investor education because the scheme had many of the classic "red flags" of a fraud, including promises of extraordinary returns at low risk, movement of funds to offshore locations and a requirement that investors keep the investments a secret.

Secrecy was so paramount that Manna investors were required to sign confidentiality agreements that kept them from even seeking professional advice about the investments.

http://www.theglobeandmail.com/report-o ... le1339610/