The Ontario Securities Commission has ordered a group of companies and individuals to disgorge $500,000 after a group of investors failed to receive their money back in a Toronto-based investment scheme that raised more than $1 million.

On Thursday, the OSC announced costs and sanctions against Franklin Danny White, Naveed Ahmad Qureshi, WNBC The World Network Business Club Ltd., MMCL Mind Management Consulting, Capital Reserve Financial Group, and Capital Investments of America.

In 2002, White and Qureshi created an investment program called Eggvestments, which was offered to members of WNBC – a corporation run by White that offered business consulting, tax consulting, private banking and other services. Through the program, investors bought “Eggs” for US$1,000 per egg, with the proceeds to be used to trade in the foreign currency markets.

Investors were told they would be given a guaranteed return on their investment of 15% to 20%, depending on the term of the investment. Investors in the program were solicited with assurances of the security of their investment and pronouncements of Qureshi’s expertise in currency trading.

From 2002 until 2004, more than $1 million was raised from investors through this program, but only US$651,139.50 was accounted for in Qureshi’s trading accounts, according to the OSC. Qureshi admitted that he lost nearly US$500,000 in foreign currency trading activities.

MMCL, Capital Reserve Financial Group and Capital Investments of America all acted in furtherance of trades in the Eggvestment program, according to the OSC.

Investors have, on aggregate, been repaid only approximately one third of the money they invested in the program, with some investors receiving all their money back, while others received nothing back. The amount outstanding to investors is approximately $800,000, according to the OSC.

The commission has ordered the group to disgorge $500,000. This takes into account the fact that one investor commenced a civil proceeding against White and WNBC in the Ontario Superior Court of Justice, and received compensation that included the return of their original $300,000 investment.

The OSC has also ordered that each of White and Qureshi must pay an administrative penalty of $50,000, and each of WNBC, MMCL, Capital Reserve and Capital Investments must pay an administrative penalty of $40,000.

The administrative penalties and disgorgement amounts will be allocated to investors who lost money in the investment scheme, the OSC said.

The group is also required to pay $169,651.25 to cover the costs incurred during the litigation phase of the hearing.

In deciding on the costs and sanction, the OSC said it felt that it was important for the penalties to reflect the seriousness of the securities law violations that occurred in the matter, and that not only deter the respondents but also like-minded people from engaging in future conduct that violates securities law.

IE