A $1.6-million home in Kelowna on Mission Ridge Road and a $524,000 condo at Big White Ski Resort are alleged to have been bought with money from a stock fraud scheme that garnered nearly $220 million.
In a lawsuit filed in B.C. Supreme Court, the B.C. Civil Forfeiture Office claims the properties are “proceeds and instruments of unlawful activity” and should be forfeited.
Benjamin Thomas Kirk, Kayley Tyne Johnson and Carlos Gomez Brana are alleged to have set up the company that owns the properties – Cuatro Cienagas Inversiones Ltd., or CCIL – to receive and distribute funds from a stock fraud scheme.
The last known residence of Kirk and Johnson was the Mission Ridge property, while Brana is thought to be in Mexico, according to the document.
The civil forfeiture office accuses the trio of violations of the U.S. Securities Act and B.C. Securities Act, possession of the proceeds of crime, fraud over $5,000, money laundering, tax fraud, and stock fraud.
The U.S. Securities and Exchange Commission determined the scheme generated $165 million USD in illegal sales of shares of at least 50 micro-cap companies (valued between $50 million and $300 million) between June 2015 and September 2018.
The commission claims the scheme was set up by Roger Knox of the United Kingdom, who operated a Swiss asset manager called Wintercap SA.
Michael Gastauer of Germany helped Knox establish several companies and unregistered virtual financial firms located in the U.S. for Wintercap SA to disburse the money, the lawsuit claims.
Some or all of the proceeds were then transferred to CCIL and one or more of Kirk, Johnson, and Brana.
CCIL, incorporated in Hong Kong and registered as extraprovincial in B.C., then allegedly used that money to buy the Mission Ridge Road home and the Big White Ski Resort condo.
The documents allege the following transactions occurred through bank accounts set up by Gastauer:
- March 22, 2017: CCIL sent $101,000 to Norwich Real Estate Services in Kelowna
- May 10 and 11, 2017: Another $1.529 million was sent to an unnamed Kelowna law firm
- May 18, 2017: the Mission Ridge property was purchased for $1.6 million in cash
- May 30, 2017 to Oct. 23, 2017: CCIL sent three installments of $250,500 to its Kelowna-based BMO account
- Jan. 10, 2018: CCIL bought the Big White condo for $524,000 in cash
The unnamed law firm represented CCIL in all property purchases, according to the documents.
In 2013, Kirk was charged with violations of the U.S. Securities Act. In 2015, he admitted to breaches of the Alberta Securities Act and agreed to pay a $100,000 fine.
None of the allegations has been proven in court and none of the defendants has filed a statement of defence.