Everybody appears to desire a piece of Fred Sharp, the self-styled non-public banker from West Vancouver who constructed an enormous community of offshore corporations that facilitated, in response to U.S. courtroom findings, a billion-dollar sequence of pump-and-dump inventory frauds.
The Canada Income Company has been wanting into him since 2013, the U.S. Securities and Alternate Fee obtained a $68-million civil-fraud judgment final yr, he is needed on U.S. prison fees in Massachusetts, and the B.C. Securities Fee had him barred from the province’s inventory market in February.
Now, after six years of authorized squabbling over jurisdiction, Quebec’s inventory market regulator can have its crack at Sharp, too, the Supreme Court docket of Canada dominated this morning.
A 7-1 majority of the judges declared that Canada’s Structure offers the province’s Monetary Markets Administrative Tribunal (FMAT) the facility to punish folks even once they do not reside in Quebec, the corporate in query is not primarily based there, and the corporate’s inventory does not commerce on a market there.
“The allegations that the appellants used Quebec because the ‘face’ of their securities manipulation and injured Quebec buyers set up such a connection to present the FMAT jurisdiction over the appellants,” says the ruling, written by Chief Justice Richard Wagner and Justice Mahmud Jamal.
The choice means the provincial regulator, the Autorité des marchés financiers (AMF), can pursue its allegations — initially delivered to the tribunal in 2017 — in opposition to Sharp and three others from exterior Quebec. The AMF alleged the boys funnelled cash into an organization referred to as Solo Worldwide in order that its Quebec subsidiary might purchase mining claims, after which engaged in a type of inventory market manipulation referred to as a pump-and-dump scheme to inflate the worth of the corporate’s shares.
Solo was included in Nevada and traded on the U.S. over-the-counter inventory market, however its then-CEO lived in Quebec and a few of its different buyers lived there.
The tribunal initially dominated in 2017 that it did have jurisdiction. That was upheld on evaluate by Quebec’s Superior Court docket and Court docket of Attraction.
At stake within the case was the flexibility of Canada’s provincial inventory market regulators to go after alleged breaches dedicated past their province’s borders, however nonetheless having some connection.
In its argument, the AMF requested the Supreme Court docket to uphold a “versatile strategy” to figuring out jurisdiction, on condition that trendy expertise can enable perpetrators like Sharp to “incorporate an organization in Bahamas, open a checking account in Switzerland and a buying and selling account in Hong Kong” after which commerce within the shares of a Canadian firm on U.S. markets, all from a smartphone whereas sitting on an airplane.
Sharp and the opposite defendants had challenged FMAT’s jurisdiction to listen to the case in opposition to them, saying the Quebec Civil Code’s guidelines round non-public property and civil rights preclude it.Sharp and his legal professionals didn’t reply to questions despatched by electronic mail earlier this week. Apart from a brief, written rant about privateness and journalists in 2016, Sharp has not responded to requests for remark over time for CBC’s reporting on him.
In a press release in French, the AMF’s govt director of enforcement welcomed Friday’s choice. “The Supreme Court docket has upheld an necessary a part of FMAT’s powers,” Éric Jacob stated. “It is a massive victory.”
The AMF’s preliminary 2017 grievance had been searching for to superb Sharp $2 million, ban him for all times from securities buying and selling within the province and ban him for 5 years from serving as an officer or director of a public firm or as a dealer or fund supervisor.
‘Shadow financial institution’ for rich Canadians
The AMF is simply the newest regulatory company to have proceedings in opposition to Sharp, 71, a former lawyer who turned the Canadian agent within the mid-Nineties for Panamanian legal professionals at Mossack Fonseca — the now-disbanded agency whose paperwork have been leaked and shaped the Panama Papers.
Data within the leak confirmed Sharp helped register greater than 1,100 offshore entities for shoppers. A CBC investigation discovered his enterprise, Company Home, was often known as the “go to” funding agency for rich Canadians wanting privateness, and minimal tax, for his or her belongings.
In 2013, Sharp got here onto the CRA’s radar when it was auditing one in all his shoppers. An inner CRA report on the time stated “the Company Home group of corporations … have facilitated monetary preparations and deceptions.”
One other inner, confidential CRA draft report from 2018 stated an evaluation of financial institution data confirmed that greater than $338 million flowed via the Company Home group’s financial institution accounts between 2010 and 2016 alone, a lot of it coming from accounts within the Caribbean and Switzerland, as a part of a Vancouver-based “shadow financial institution” that permit rich shoppers purchase properties, trip properties, automobiles and airplane tickets with funds stashed in tax havens.
“Company Home is structured in such a method to disguise true possession, masks its actions and confuse these making an attempt to know the relationships,” the CRA draft report stated.
The tax company has been making an attempt to audit Sharp and various his associates since a minimum of 2016, however they launched greater than 80 authorized challenges to stymie the CRA’s makes an attempt to gather monetary data. After the Federal Court docket of Attraction lastly dominated in opposition to Sharp and the opposite events final yr, he withdrew his motion in opposition to the CRA.
U.S. prison fees
However essentially the most devastating allegations in opposition to the onetime movie actor and producer have come from south of the border.
In 2021, following a yearslong investigation, the U.S. Securities and Alternate Fee charged Sharp with civil inventory fraud for being the “mastermind” behind a community of shell corporations and stock-trading accounts that he rented out to shoppers to make use of in a sequence of pump-and-dump scams.
The SEC stated the scams grossed greater than $1 billion US and operated from 2010 to 2019. It stated Sharp’s shoppers have been in a position to disguise their possession and manipulation of penny shares by way of the anonymity of the offshore firms he arrange and managed, and thru the usage of encrypted communication units and code names. Sharp’s purported code title was “Bond,” after the British spy.
Concurrently, the U.S. Division of Justice charged him criminally with securities fraud and conspiracy to commit securities fraud. These fees are nonetheless pending and there seems to have been no try and extradite Sharp from B.C.
A U.S. decide stated in September that his “whereabouts appear to be unknown.”
Sharp didn’t contest the SEC fees (he has since stated he wasn’t correctly notified of them) and the courtroom entered judgment in opposition to him final yr, accepting all of the factual allegations in opposition to him. He was ordered to pay the equal of $68 million Cdn in penalties, disgorgement and curiosity, and the SEC is combating him in B.C. courtroom to grab his belongings.
The SEC has gone on to degree civil inventory fraud accusations in opposition to a dozen different Canadians linked to Sharp and his community, and separate prison counts are pending in opposition to six of these folks.
In February, the B.C. Securities Fee banned him for all times from the province’s funding markets, primarily based on the findings within the SEC case.
