By COLLIN GALLANT on July 23, 2020.
The man behind a collapsed real estate company that had dozens of Hatters as investors and once owned a proposed local community has been found guilty of one count of fraud and another of misleading investors.
Ronald James Aitkens, who was the controlling mind behind the Foundation Group of Companies, according to court documents, faces up to five years in prison and a $5-million fine when he is sentenced this fall.
The Alberta Securities Commission announced the verdict in a release on Tuesday afternoon, stating that provincial court justice J.W. Robertson ruled investment brokers and companies, not investors, are responsible for the business maintaining honest practice.
The criminal case relates to a specific land development known as Legacy Communities Inc., but the collapse of the “Foundation Group of Companies” run by Aitkens includes developments across Alberta.
Those companies began entering court-ordered creditor protection as debts and dividends came due starting in 2014.
Bankruptcy proceedings and an investigation by the ASC found assets were shifted between related companies, land was heavily mortgaged, and new funds were used to service dividend obligations to different investors.
In the criminal proceeding, Aitkins was found guilty of one count of fraud and one count of making false or misleading statements contrary to the Alberta Securities Act.
Specific to Legacy, $35 million was received from 1,400 investors over a three-year period ending in 2008. At the end of 2011, the company’s cash balance was $11,000.
The court found the funds were used to proceed with other, legally separate land development projects contrary to their stated purpose.
Sentencing submissions are due Sept. 4.
Aitkens, who is based in Lethbridge, and another company director, Roy Juergen Beyer, also faced sanction from the Alberta Securities Commission, which regulates the finance industry in the province.
A final decision from the ASC, published in October 2019, said misconduct had taken place but there was likely no deliberate attempt to defraud investors.
Both men worked as pastors in Medicine Hat in the early 1990s.
Aitkens received a lifetime ban on trading or promoting securities in the province, a $600,000 fine and will be responsible to pay $239,200 toward the costs of the ASC investigation.
The commission ruled that Beyer played “significantly less” of role in the operation as a marketer and director with the company. He was fined $75,000 and banned for 10 years from most aspects of capital finance activity. His portion of ASC costs amount to about $60,000. He argued at the ASC hearing that no sanctions would be appropriate.
Foundation acquired the Cimarron Development in Medicine Hat in 2011 from local builder Medican as that company wrestled with its own creditor protection process.
It eventually folded though it received the largest portion of a settlement from its contracted rights to provide construction services when the project west of Southridge Drive got underway.
It never did, and the land already acquired for the proposed community of 15,000 was eventually turned back to a mortgage holder.
The nearby new community of Coulee Ridge, proposed last year and currently under construction, lays on separate land that was never owned by Medican or the foundation group, but rather a local private ownership group, Coulee Ridge Developments has told the News.
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