The Financial Services Regulatory Authority of Ontario (FSRA) has revoked the licence of an insurance agent who allegedly misappropriated more than $700,000 from two vulnerable seniors — members of a church where the former insurance agent volunteered as a lay minister.
FSRA revoked the licence of Donald Newton Mason, a life insurance and accident and sickness insurance agent since 2012 in Ajax, Ont., according to the regulator’s database. In a media release issued Monday, FSRA said he “persuaded two vulnerable consumers to provide him with funds, allegedly for investment and failed to repay or account for the money they loaned him. This conduct affords reasonable grounds to believe that Mason is not suitable to be licensed.”
FSRA issued the licence revocation order without a hearing, because Mason didn’t request one and had failed to respond to the regulator’s multiple queries following allegations of funds misappropriation reported by his contracted insurer and a complaint from a member of the public.
A notice of proposal to revoke licence, dated Oct. 23, alleges Mason “misused his position as a lay minister” to misappropriate funds from two parishioners at a church in nearby Pickering, Ont. The two church members gave Mason $307,000 and $400,000, respectively, to invest, the notice says.
One of them was a senior who had limited financial literacy and was in the early stages of dementia, the notice says. The parishioner sold her home in late 2021 with the help of Mason and his wife, who is a realtor, it says.
Mason’s wife has no discipline history or conditions on her registration, according to the registration database of the Real Estate Council of Ontario, the regulatory body for real estate agents and brokerages in the province.
The vulnerable parishioner bought a condo and obtained a mortgage with Mason’s help, the notice says. During the process of selling the home, Mason pressured the parishioner to invest some of the sale proceeds in an “investment opportunity,” it alleges. The parishioner signed an investor agreement with Mason’s numbered company in early 2022.
However, Mason failed to make expected ongoing monthly payments to the parishioner, and her daughter “has been forced to pay her mother’s mortgage and related expenses,” the notice states.
The second parishioner was also a senior with limited financial literacy. A widower, she sold her home in 2022 and used Mason’s spouse as a realtor, the notice says. Mason subsequently pressured her to invest with him, it alleges. As with the first parishioner, Mason failed to provide ongoing monthly payments.
Mason also failed to respond to the two parishioners when they attempted to contact him, the notice alleges.
Court records indicate the second parishioner filed a claim against Mason in June for $400,000.
In outlining the grounds for revocation, FSRA said in the notice that Mason’s failure to respond to multiple inquiries from the regulator “demonstrated he will not follow rules and is ungovernable.”
Also, “Mason is guilty of a fraudulent act or practice,” the regulator alleged. “He used his trusted position as a lay minister at his church to defraud two vulnerable parishioners.”
Mason also demonstrated untrustworthiness, the regulator said. “He abused his position of trust in the church for personal gain over a two-year period and caused harm to two vulnerable parishioners,” the notice states. “A clear message must be sent to Mason, the insurance sector and consumers that such conduct will not be tolerated.”
In May, FSRA warned consumers not to do mortgage business with Mason, because he’s not licensed to conduct such business.
Mason didn’t respond to a request for comment made via voicemail at a phone number the regulator says may be associated with him. The Pickering church didn’t respond to a query about whether Mason is still a volunteer minister.
When FSRA was asked about the wife’s involvement as realtor, the regulator said in an email that it would be inappropriate to comment on specific instances of supervisory communication with other regulators.
“Speaking generally and not in relation to any specific case, when FSRA uncovers concerning information or behaviour involving a professional that is not licensed by FSRA, we will work collaboratively with other regulators and/or law enforcement, and share information as appropriate,” the regulator’s email said.
Rules related to position of influence
The Canadian Securities Administrators’ registration database indicates Mason was a mutual fund dealing representative with Quadrus Investment Services Ltd. in Pickering from 2012 to 2023. Within this period, Mason was the subject of an Ontario Securities Commission (OSC) matter related to conflicts.
In 2017 — the year Mason became a lay minister at the Pickering church — the OSC prohibited him from acting as a mutual fund dealing rep for church members, because of his “position of potential influence” over prospective clients.
Mason subsequently requested a stay of the decision. The OSC dismissed the request pending a hearing and review, which Mason requested. Prior to the hearing and review, the matter was settled, with the restrictions on Mason modified.
Specifically, Mason agreed not to deal with anyone he visited in hospitals, jails and prisons pursuant to his Christian Worker’s licence. However, Mason wasn’t restricted from dealing with church members generally, “given his non-leadership role at the church and that he would only deliver messages to the church infrequently and at the direction of the pastor,” the OSC says in its summary report for fiscal 2018–19 in a section outlining cases of interest.
In an email, OSC spokesperson Andy McNair-West said the decision was based on the specific circumstances of the case and the regulatory framework that existed at the time.
“Terms and conditions were imposed to control [Mason’s] position of influence and mitigate potential conflicts of interest, and were later modified [in the settlement] to more specifically define his acknowledged area of influence,” McNair-West wrote.
“An analysis today would consider the relevant legislation now in force,” McNair-West wrote — a reference to the client-focused reforms (CFRs), which came fully into effect in 2022.
The CFRs’ conflicts-related rules “prohibit anyone in a position of influence from dealing with investors who might be susceptible to that influence, or their families,” McNair-West wrote. “The legislation also prohibits firms from permitting individuals to engage in dealing or advising in scenarios deemed to be a position of influence.”
See section 13.4.3 of National Instrument 31-103.
In 2023 after a review of firms’ conflict-of-interest practices under the CFRs, the OSC issued a notice outlining deficiencies.
Conflict disclosure fell short at 53% of the firms reviewed, and 34% failed to recognize one or more material conflicts.
On Wednesday, regulators released another review of CFR compliance, finding know-your-client, know-your-product and suitability failings.