Court rules in favour of labour-sponsored venture fund against fund manager

A British Columbia Securities Commission (BCSC) panel has found that a life agent and former mutual fund rep committed fraud by diverting money she raised from a group of investors, ostensibly to fund her business, to pay for personal expenses, the BCSC announced on Monday.

The panel found that Lynne Rae Nickford (aka Lynne Rae Zlotnik) defrauded investors that provided funding for her business, Lynne Zlotnik Wealth Management (LZWM).

According to the panel’s decision, Nickford raised approximately $2 million from 13 investors in 2009 and 2010. She told the investors their funds were to be used to finance the business’ operations and growth.

Instead, Nickford spent more than $300,000 of the investors’ money on unrelated personal expenses. At the time, Nickford “had a serious gambling addiction,” the panel says in its decision.

“The investors’ funds were put at risk when all the funds were not used for the purposes of the respondent’s business, LZWM, as intended. With the subsequent bankruptcy of the respondent and her business, the investors’ funds were lost,” the decision adds.

According to the decision, Nickford argued that she never intended to deceive, or hurt, the investors, and that it was regulators’ move to freeze her bank accounts that prevented her from running her business and resulted in her bankruptcy.

However, the panel dismissed that explanation. “Whether or not the respondent intended to deceive or hurt the investors, the logical consequence of her actions was to put the investors’ funds at risk and ultimately those actions resulted in the investors losing all their funds,” the decision says.

The panel will hand down sanctions in the case after a future hearing.

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