The head of a Ponzi scheme that ensnared investors across B.C. has been ordered by the B.C. Securities Commission to pay penalties totalling $21.8 million for defrauding more than 120 people out of millions of dollars.
But there's little hope any of those victims will get back the rest of their money, which mostly ended up overseas and beyond the reach of regulators.
Surrey resident Thomas Arthur Williams ran Global Wealth Creation Opportunities Inc. and used a group of finders to recruit investors who ultimately put up $11.7 million between 2007 and 2010.
He promised them returns of at least two per cent interest per month and potential for much more.
Eventually, the pyramid scheme collapsed, investigators moved in and some investors lost their life savings.
Simon Cumming lives across a quiet Cloverdale street from Williams and has been watching with concern since he lost $10,000 in an earlier Williams-led venture and others in the neighbourhood fell into the same trap.
"I was pissed off but it wasn't going to break me," Cumming said. "But some people lost everything. I don't think they'll see a penny."
He heard from an older senior in the B.C. Interior earlier this year soon after the securities commission made a finding of fraud in the case.
"He was absolutely beside himself, he didn't know what to do," Cumming said. "He actually cashed in a bunch of RRSPs and gave Tom in excess of $200,000 and lost it all. That was his retirement fund. He was sobbing on the phone when I was talking to him."
No assets to repay victims
The penalties against Williams include a $6.8-million "disgorgement" penalty – equivalent to the amount of investors' net loss after interest payments that could in theory be paid back to them.
But there are no assets currently frozen that could fund a payout, said Peter Brady, the B.C. Securities Commission's director of enforcement.
"Most of the money was sent offshore years ago. It simply doesn't exist," he said.
While a few new Ponzi schemes surface every year in B.C., the BCSC ruling rates the Williams scam as among the worst, featuring "sham" companies that did no real business.
"The amount of money raised from investors and the extent of the deceit visited on investors was extremely significant," it said. "Williams was the central figure in a multi-million-dollar Ponzi scheme. In magnitude and scope, his misconduct was at the very upper end of seriousness."
Williams, who personally collected more than $440,000, is banned for life from trading securities or acting in any capacity in the securities market.
Four of his finders also face administrative penalties and trading bans.
A phone call to Williams' home was not returned.
RCMP had 'bigger fish to fry'
Cumming hoped the BCSC finding in January of this year of fraud under the Securities Act would be followed by criminal charges from the RCMP, which had been investigating Williams since 2011.
But Cumming was then told by an RCMP investigator the Mounties had stopped pursuing Williams because they had "bigger fish to fry" and had limited resources.
"I was very disappointed," Cumming said. "I don't know how $11.7 million and 123 investors isn't big enough to pursue. He's shown a propensity for ripping off people left right and centre."
He said it's in sharp contrast to several cases this year in which B.C. residents or accounting professionals have been sentenced to jail time for tax fraud.
"It appears that if you rip the government off they'll come after you. But if you're just ripping off little old ladies in the neighbourhood, it's not big enough."
Brady referred questions about the potential for criminal fraud charges to the RCMP.
RCMP spokesperson Cpl. Janelle Shoihet said the force doesn't divulge whether investigations are ongoing unless charges are laid, public information is being sought or a public safety risk has been identified.
Ponzi scheme victims are typically out of luck because the investment money is usually gone by the time investigators are alerted.
"What usually happens with a Ponzi scheme is the perpetrators are careful to tell everybody to keep it quiet," Brady said. "Usually we don't hear anything until it's starting to fall apart and they can't make the payments any more."
It's a red flag for fraud, he added, when an investment dealer cautions clients not to talk to regulators.
"If investors have concerns about an investment and they think there might be some kind of misconduct they need to tell us early," Brady said. "If they don't tell us early, there's very little opportunity for us to freeze bank accounts or put a lien on property."