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West Vancouver man jailed for breaching securities ban

A West Vancouver man with a history of swindling investors and ignoring securities regulations was sent to jail for six months this week after pleading guilty to breaching an order of the B.C. Securities Commission.
Frederick Neilsen

A West Vancouver man with a history of swindling investors and ignoring securities regulations was sent to jail for six months this week after pleading guilty to breaching an order of the B.C. Securities Commission.

Frederick Johnathon Nielsen, 65, was led away in handcuffs Sept. 25 following the sentencing by a judge in North Vancouver provincial court.

Nielsen had been banned by the securities regulator more than six years ago from trading shares, acting as a director, officer or consultant to any company involved in securities or engaging in investor relations after an investigation into his running of an illegal telephone marketing operation known as a “boiler room.”

But, according to information presented in court, that didn’t stop Nielsen from diving back into similar activities in connection with International Wagering Systems, a company trying to set up lotteries in Guatemala, and trying to drum up investors for a dubious scheme involving a bank in Cyprus between December 2013 and April 2015.

Despite his ban on involvement in securities markets, Nielsen could not resist an opportunity when he met one of the heads of the lottery company on a flight to Brazil. Nielsen used an alias to hide his past involvement in fraudulent activities, noted provincial court Judge Joanne Challenger. Soon he was involved in trying to raise money for International Wagering Systems and running parts of the company, while installing a “nominee” director and president to hide that fact, said Challenger.

Eventually some of Nielsen’s investors became suspicious about him. West Vancouver police caught up with Nielsen and arrested him for breaching the securities order in June of 2015.

But that was far from his first brush with the courts and regulatory authorities.

Challenger noted Nielsen is a “repeat offender” who “put his own financial interests above those of society.”

Back in 2001, Nielsen – who was then Fred Gilliland – was charged in the U.S. for a massive investment fraud scheme in Florida. Gilliland fled to West Vancouver, where he reportedly lived a lavish lifestyle while awaiting extradition. Eventually he was lured across the border by a disgruntled investor and arrested by U.S. authorities in 2005. He was handed a five-year jail sentence, said Challenger, and ordered to pay $12 million in restitution to his fraud victims and a $10-million regulatory penalty.

After being granted early release, Gilliland came back to West Vancouver and changed his name to Nielsen. Soon after, he set up the illegal boiler room, hiring four people to sell shares over the phone.

Challenger said it was significant that Nielsen “became involved in further illegal activities” within a few months of getting out of prison in the U.S.

The judge described his pattern of conduct as “brazen and ongoing,” adding, “his sole motivation for engaging in prohibited conduct was financial gain.”

Challenger noted that Nielsen’s lawyer argued for leniency, pointing out that “he was destitute upon his release from custody and had to sell his Rolex watch and diamond jewelry to get by.”

But the judge declined to let Nielsen off with a fine, saying that it would send the message it’s just “the cost of doing business.”

Nielsen also isn’t likely to comply with any court orders imposed, she added.

Nielsen is “a mature and worldly person” who “clearly and knowingly chose to commit this offence,” Challenger said. “He will have to suffer the consequences such as being vilified in the media and losing his employment.”

The maximum sentence for the offence is three years in jail or a $3-million fine.