The British Columbia Securities Commission has ruled that a former White Rock, B.C.-based mutual fund salesperson defrauded his clients of about $1.6 million during a six-year period.

A BCSC panel found that Paul Maudsley and Shaylor Management Ltd. committed fraud when Maudsley convinced 23 clients to redeem about $1.6-million in mutual fund holdings to invest in other securities.

Maudsley did not invest any of the money, instead taking the clients’ money for his own use to fund his personal and lifestyle expenses, including, a self-admitted substance abuse problem described by a witness as “his cocaine and gambling habit and alcohol addiction.”

The panel also found that Maudsley failed to deal fairly, honestly and in good faith with his clients — nearly half were over 70 years old and three individuals suffered from physical or mental disability.

“He simply took their money, or caused Shaylor to do so — about as stark an instance of deceit as there can be,” said the panel.

“The evidence provides clear and convincing proof that Maudsley had subjective knowledge of the deceit, and that it would result in the deprivation of others.”

Maudsley committed his violations when he was a mutual fund salesperson at Investors Group Inc.’s South Surrey Regional Office in White Rock between 1996 and 2003. He was fired from the firm on Mar. 3, 2003.

In January 2003, when a compliance officer at another mutual fund dealer alerted BCSC staff with concerns about an “off-book” transaction involving Maudsley, the BCSC contacted Investors Group which launched an internal investigation.

Investors Group has compensated the victims, paying over $2.3 million to those hurt by Maudsley.

The BCSC panel will review submissions from the parties before it issues sanctions.