BC’s financial markets regulator uses new powers to chip away at hundreds of millions of unpaid fines

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The BC Securities Commission has begun using the new powers introduced last year to help collect unpaid fines.

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The amendments to the BC Securities Law went into effect at the end of March 2020 and included increased powers that allow the province’s financial markets regulator to freeze and seize properties transferred to third parties below market value.

Transferring property to third parties, sometimes spouses or other family members, is a technique that scammers sometimes use to put assets out of the reach of regulators trying to collect penalties.

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The amendments also allowed, for the first time, the regulator to freeze and confiscate registered retirement savings plans.

In one case, the BC Securities Commission (BCSC) has gone after money transferred by Renee Michelle Penko to her husband. Renee Penko owes $ 200,000 in penalties and interest for her role in a $ 11.7 million Ponzi scheme.

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The BCSC is also seeking about $ 645,000 in retirement savings in another case in which Vancouver resident Earle Douglas Pasquill owes $ 21.7 million in penalties.

“We are considering using all the powers that we now have available, in any event that applies,” BC Securities Commission chief enforcement officer Doug Muir said Thursday.

“The confiscation under the Penko (case) is a good example,” he said.

Muir said there are a number of new powers that are helping the commission in its collection efforts, including increased powers to freeze assets and automatic liens on a person’s property that are triggered on orders to refund fraudulent earnings.

However, he warned that the commission can no longer legally collect some penalties, since debtors have died, for example, or companies have been dissolved or debts have been extinguished by bankruptcy.

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In some cases, it will also take time to use new tools, including the BCSC’s ability to block the issuance or renewal of driver’s licenses for those who do not pay fines, Muir said.

That power of attorney went into effect in March of this year, and the BCSC is investigating one case so far.

“(Collections) is a long and slow process and often builds up to the result of getting money,” Muir said.

The amendments to the Securities Act were introduced more than two years after then-British Columbia Finance Minister Carole James directed the securities commission to improve enforcement and collection of fines.

James called for improvements to the app after a Postmedia News investigation published in November 2017 found that more than $ 500 million in fines had gone uncollected by the BCSC in the last decade, and that criminal prosecutions by the police were weird.

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An analysis of the securities commission and court records showed that at least 4,900 fraud victims lost $ 185 million in schemes from fiscal year 2007-08 through 2016-17.

In a case outlined in the BC Supreme Court, the BCSC says that Renee Penko gave $ 95,000 to her husband Frank Penko after receiving $ 128,000 in the liquidation of an estate.

Of the money, $ 25,000 was transferred on June 1, 2016 to her husband to support his hobby of rebuilding vehicles. Another $ 75,000 was transferred on June 9 to her husband’s personal bank account.

The transfers took place just months after a BC Securities Court found that 123 people had been defrauded out of millions of dollars in the Ponzi scheme in which Penko had participated.

Ultimately, the court ordered Penko to make payments of $ 75 a month toward his fine, made two payments in March and April 2019, and filed for bankruptcy the following month, according to BCSC court documents.

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In its petition to the BC Supreme Court, the BCSC argues that Penko’s transfers to her husband violate the amended securities laws, noting that the transfers were made without consideration.

The BCSC is seeking to have the $ 95,000, or “your winnings,” confiscated from the securities commission.

Neither Frank nor Renee Penko have responded in court to the BCSC allegations.

In the other case, the BCSC filed a civil lawsuit for the loss of about $ 645,000 in retirement funds at Canaccord Genuity Wealth Management in Vancouver to help pay Pasquill’s fines.

Pasquill has not responded in court to that lawsuit.

Pasquill has tried to overturn an order freezing retirement funds, but a BCSC court rejected his request, noting that BC’s laws were amended to allow the agency to pursue or impose freezing orders on registered retirement accounts.

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