Two real estate developers who illegally raised almost $2 million from investors for a Delbrook-area condo project have been fined and banned from the securities market.
A B.C. Securities Commission panel issued the penalty against Michael Jerome Knight and Jeffrey Karl Wiegel after determining they illegally raised $3.6 million for two separate condo projects — including a $1.9 million project in North Vancouver — from investors who didn’t properly understand the risks they were taking.
Neither of the men were registered to sell securities when they approached potential investors of The Brook development in North Vancouver, plus another Vancouver condo development, between 2006 and 2010, a British Columbia Securities Commission hearing panel found last September.
Wiegel is the sole director and officer of 835 Ltd., the company that eventually built the 24-unit Brook project in 2010.
A total of 31 investors who bought in lost their money.
The developer duo also illegally raised $1.7 million from 19 investors of the Vancouver-area development.
Losses for individual investors in the projects ranged from $50,000 to $100,000.
Also troubling, the panel wrote, in the case of the North Vancouver development, investors did not understand they left themselves liable for amounts owed to secured creditors at the end of the project.
That development included large construction loans taken out on the project.
Knight and Wiegel and the corporations that built the projects have now been jointly ordered to pay the $3.6 million illegally raised back to the securities commission.
In its decision, the panel also levied a $300,000 administrative penalty against Knight, who was the general manager of Streamline, an umbrella development company overseeing the projects.
In addition to not being properly licensed to sell securities, Knight fraudulently sold shareholder loans secured against a Vancouver property that he did not own, according to the decision.
Knight, who also contravened a previous BCSC order against him, has now been permanently banned from selling securities in B.C.’s capital markets.
“We had already had him banned from the market and he went back and engaged in the market — that’s a definite no-no,” said B.C. Securities Commission spokesman Richard Gilhooley. “Knight has been permanently banned — so that’s as serious as it gets for us.”
Wiegel was fined $100,000, has been banned from selling securities in B.C. for 10 years, and must resign any position he holds as an officer or director.
