A British Columbia court has awarded a judgment to Golden Capital Securities Ltd. in a suit against a host of co-defendants involved in an unlawful trading scheme.

The court found Michael Mitton, Barry Holmes, Alfred Rempel, CharlesWiebe, Valley Ridge, BB & HF Investment Corp. and North Shore jointly and severally liable to Golden Capital for the losses in two accounts. The losses were $715,202 and $38,733 in prejudgment interest.

Golden Capital was also seeking aggravated and punitive damages, but the court declined to rule on this, noting that counsel for the defendants did not address these issues in their submissions.

In the case, Golden Capital alleged that the defendants, together with others, conspired to trade in securities using an “unlawful trading scheme”. The firm also alleged that as a result of the alleged unlawful trading scheme it suffered substantial losses in bond and share trading.

Golden Capital alleged that Mitton and Holmes were the architects of the scheme. The heart of which was the undeclared short selling of shares, which permitted participants to “trade for free”, that is, without depositing and thereby risking any money or securities (margin) in trading accounts.

Golden Capital asserted that a pattern of securities trading was evidence of the alleged conspiracy. The court said that the documentary evidence indicated millions of dollars of undeclared short sales were made in the numerous accounts.

These trades occurred during the period December 1995 through March 1996. During this period Mitton and his wife were under a 20 year trading ban issued by the B.C. Securities Commission. Michael Mitton had a criminal record for several incidents of fraud, forgery, false pretences and theft in Quebec and Ontario during the years 1977 to 1989.

In December 2000 Michael Mitton pleaded guilty in Vancouver to six counts of fraud on brokerages and a charity, was sentenced to four years imprisonment and ordered to pay over $2 million in restitution. These offences were not directly related to the securities trades giving rise to this case. But Golden Capital alleged that because of Mitton’s criminal record and securities trading ban made him potentially notorious in the securities industry in 1996, he and other alleged conspirators concealed his identity from the various brokerages, so those brokerages would not learn Michael Mitton was involved in the trades and therefore decline to deal with them.