Vancouver real estate developer, James Schow, found guilty of fraud
Sam Cooper
The Province
A B.C. Securities Commission hearing has found a formerly high-flying Vancouver real estate developer committed fraud.
In a notice of hearing that was issued in 2015, the commission alleged Brendan James Schouw solicited $1 million from an investor for the Artemisia project at Hornby and Helmcken, promising to use the money to advance the development, but using little of it for that purpose.
The fraud allegations against Schouw, who has developed high profile projects in Vancouver, came after his downtown project hit rocky times during the post-recession real estate bust in 2009.
In its 2015 notice of hearing allegations, the Securities Commission said Schouw issued an investment certificate in November of 2009 promising that the $1 million would be used to pay for building permits, demolition and construction costs while earning the investor 18-per-cent interest.
Instead, the commission alleged that Schouw transferred about $750,000 into an account associated with a previous development and into a personal account, and by Dec. 31, 2009 had spent $453,155 on expenses not related to Artemisia, including a payout of another legal judgment, payments to other investors, and mortgage payments for his own residence.
However, the commission hearing panel ultimately dismissed allegations that about “$440,000 of the investor’s funds were improperly diverted,” a Feb. 2, 2017 statement says.
“The panel found that after depositing the investor’s money into (Schouw’s development company’s) bank account, Schouw redirected certain of the funds to his own account,” the statement says. “Schouw spent approximately $75,000 of the investor’s money on his personal mortgage payments and on his separate property management business, despite representing to the investor that all of his investment would be used for the development of a Vancouver real estate project.”
The hearing panel found that Schouw and Hornby Residences Ltd. perpetrated the fraud, and as Hornby’s sole director and officer, Schouw “permitted or acquiesced to Hornby’s misconduct and is thus liable for Hornby’s fraud.”
The panel directed the parties to make submissions on sanctions.
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