An Ontario Securities Commission panel has found that Richvale Resource Corp., and its president, Pasquale Schiavone, effectively operated a one-man boiler room, defrauding investors of over $750,000.
In a decision released Wednesday, the panel found that Richvale and Schiavone took approximately $753,000 from 27 Canadian investors in a fraudulent investment scheme. According to the panel, Richvale, “operated a fraudulent scheme akin to a one-man boiler room and made material misrepresentations to induce Richvale investors into purchasing shares.”
The OSC panel said that, while Richvale claimed to be an exploration company, only 6% of the money it raised from investors was used for mining claims. The rest went to cash withdrawals, sales commissions, payments to directors, officers or employees, and undocumented loans to friends of employees. According to the panel, “Richvalehad no underlying legitimate business.”
It said that their conduct included perpetrating a fraud on the investors in Richvale, making prohibited representations, and trading and distributing securities without meeting the prospectus or registration requirements. And, it said that Schiavone was found to have acquiesced in this conduct as the president and a director of Richvale.
The OSC has yet to hand down penalties in the case. A sanctions and costs hearing will be scheduled for a later date, it said.