A former WFG Securities Canada Inc. mutual fund salesperson in Ontario has been fined $1.6 million by the Mutual Fund Dealers Association of Canada for soliciting nearly $1.6 million in funds from investors for investment products that apparently did not exist.

The MFDA has unveiled allegations against Michele Longchamps, who was a registered mutual fund salesperson at WFG from December 1999 to April 2007, and a branch manager with Portfolio Strategies Corporation from May 2007 to July 2007. The allegations also involve her husband, Jeffrey Longchamps, a registered mutual fund salesperson who worked for WFG from March 2005 to April 2007 in the same branch as Michele.

The MFDA alleges that between October 2004 and June 2007, Michele solicited and accepted a total of $1.58 million from 22 clients to be invested in the “Private Business Investment”, purportedly a re-insurance product issued by AEGON, and AEGON GICs, purportedly a GIC issued by AEGON.

According to the regulator, AEGON has never issued or offered for sale a “Private Business Investment” or GICs, and there is no evidence that the investments offered for sale by Michele existed. None of the monies received by Michele from the 22 clients were directed to or invested with AEGON, WFG or PSC, and note of the investments were known to or approved for sale by AEGON, WFG and PSC.

Rather, the client funds were made payable either to Michele, Champs Holdings — a general partnership registered under Michele and Jeffrey’s names, or Integrity Financial Management Inc. — an Ontario corporation of which Michele and Jeffrey were the sole directors at all times.

Michele only repaid $55,444.87 to the clients, and to date, the remaining monies are unaccounted for. In June 2007, Jeffrey and Michele advised branch personnel that they were going on vacation and have not returned. To date, their whereabouts remain unknown.

A second allegation against Michele involves her failure to cooperate with the MFDA’s investigation. For the two allegations, Michele faces a fine of $1.6 million and costs of $10,000.

Meanwhile, Jeffrey faces a fine of $848,921.83 and costs of $10,000. The MFDA alleges that between March 2005 and April 2007, Jeffrey “had and continued in a dual occupation without obtaining the approval of the member, WFG Securities Canada.”

While Jeffrey did not place any clients in the false investments, the MFDA alleges that he was aware of their existence — enough to promote them to clients and prospective investors. He also advised branch personnel to refrain from responding to client complaints concerning the investments in an effort to suppress knowledge of the scam coming to light, according to the MFDA.

Jeffrey “benefitted directly or indirectly from all of the monies provided by the 22 clients which have not been repaid and remain unaccounted for,” the MFDA document states.

IE