Accountant and Family Settle Class Action Lawsuit for $1.75 Million after BC Securities Commission AllegationsAccountant and Family Settle Class Action Lawsuit for $1.75 Million after BC Securities Commission Allegations West Vancouver accountant Anthony Kevin Jackson and his family members have agreed to pay $1.75 million to settle a class action claim following allegations of an illegal consulting scheme by the BC Securities Commission (BCSC). Jackson previously admitted to participating in the scheme, which the BCSC described as “abusive to the capital markets.” He now faces temporary capital markets bans, including an eight-year ban on acting as a director of a listed company. The settlement agreement excludes Jackson and his family members from the scope of a class action lawsuit filed by investors against others alleged to have participated in the scheme. In addition to the $1.75 million payment, Jackson has agreed to be interviewed by attorneys for the investors, providing information about the allegations against those still subject to the class action lawsuit. The settlement agreement stipulates that the defendants have agreed to cooperate with the plaintiffs regarding outstanding claims against non-settling defendants in the lawsuits. The alleged scheme involved consultants purchasing $50.9 million worth of shares of penny stock companies while simultaneously receiving $43 million in consulting contracts in 2018. The consultants then allegedly sold the shares on the secondary market to retail investors. The scheme is estimated to have generated $23.9 million in profits for the individuals originally named in the class action lawsuit. The $1.75 million settlement amount represents approximately half of the estimated total profit for Jackson and his family members. Jackson reportedly lives in a $15.88 million waterfront mansion purchased in 2018. However, the source of the funds used to acquire the property is unclear. The class action lawsuit against other alleged participants in the scheme was approved on July 2. The investors have also reached settlements with two of the companies involved.
Accountant Anthony Kevin Jackson and family members agree to pay $1.75 million to settle class action claim following BC Securities Commission allegations of illegal consulting scheme
West Vancouver resident and accountant Anthony Kevin Jackson and his family members have reached a $1.75 million settlement agreement with a group of investors.
The agreement comes months after Jackson admitted to participating in a scheme described by the BC Securities Commission as “abusive to the capital markets.”
Jackson is subject to a series of temporary capital markets bans, including an eight-year ban on acting as a director of a listed company, after paying a $100,000 administrative fine to the commission.
The settlement agreement therefore excludes Jackson and his family members from the scope of a recently approved class action lawsuit filed by investors against dozens of other alleged participants in the scheme.
In addition to the $1.75 million payment, Jackson has also agreed to an interview with the investor’s attorneys at Bennett Montour LLP, who will provide information about the allegations against those still subject to the class action lawsuit, which alleges an unlawful conspiracy against investors.
Jackson, who headed investment firm BridgeMark Financial Corp. and accounting firm Jackson and Company, specifically agreed to an interview at a location of his choosing and for no longer than six hours, according to the terms of the agreement filed in court on May 30.
‘Provide reasonable cooperation’
The settlement agreement stated that all defendants have agreed to “reasonably cooperate with plaintiffs… with respect to all outstanding claims against non-settling defendants in the lawsuits,” including preserving all relevant documents in their possession.
In addition to Jackson and his companies, the other “settlement defendants” specifically include Jackson’s brother-in-law Ryan Peter Venier, father-in-law Albert Kenneth Tollstam, sister Tara Haddad, and brother-in-law Abeir Haddad — and all of their respective companies.
The family members were named as respondents in the commission’s original November 2018 hearing notice. However, the commission removed them and many others in an amended hearing notice.
The defendants negotiated and entered into the agreement “to avoid further expense, inconvenience and burden of the actions…despite their belief that they have good, reasonable and complete defenses,” according to the settlement order filed with British Columbia Supreme Court Justice Sandra Wilkinson.
Jackson and his companies agreed to pay $1.65 million specifically, while the family members agreed to pay $100,000.
The alleged scheme involved the alleged consultants purchasing $50.9 million worth of newly issued shares of penny stock companies listed on the Canadian Securities Exchange, while simultaneously receiving $43 million in consulting contracts in 2018.
The alleged advisors then sold the shares on the secondary market to retail investors, reportedly performing “little to no advisory work.”
Mansion on the water
Attorney Mark Montour stated in his affidavit that he estimates the scheme generated a total of $23.9 million in profits for the individuals originally named in the class action lawsuit (based on only $39 million in consulting contracts).
Montour said the total disclosed consulting fees paid to Jackson and family members were $5.49 million. As such, the $1.75 million is about half of the estimated total profit for Jackson and family members, Montour said.
The settlement amount, Montour said, is “a reasonable level of restitution for the alleged wrongful gain in the context of vigorously defended claims with all the associated litigation risks.”
Montour noted that he understood Jackson paid part of the settlement through an insurance claim through Kootenay Zinc Inc., the company he previously headed. The exact amount, however, is unclear.
Montour also noted that Jackson lives in a home on Bellevue Avenue. The waterfront mansion was purchased by Tollstam and Jackson’s wife Lisa Jackson in November 2018 for $15.88 million and without any mortgage financing.
However, Montour argued that the claimants had no evidence as to the source of the funds, including whether profits generated from the scheme were used to acquire the scheme.
Meanwhile, on July 2, the class action lawsuit was approved by the British Columbia Supreme Court against the other alleged participants in the scheme.
“Assuming that all the facts pleaded are true, it is not self-evident and obvious that the claim for conspiracy by unlawful means is doomed to fail,” said Judge Wilkinson.
The court’s ruling noted that “a number of named defendants have entered into settlement agreements that have been approved or are pending approval.”
Jackson and the family members are therefore no longer named in the class action, nor is Justin Liu, a West Vancouver resident, who agreed to pay a $950,000 administrative fine to the commission and a 10-year ban from the capital markets.
However, no settlement in a class action lawsuit against Liu has yet been filed in court.
‘Primary architects’
Liu’s settlement with the commission said he bought $5.6 million worth of stock in three private placements of two penny stock companies. Liu also received $4.5 million in advisory fees from nine companies.
In addition to acquiring shares in a private placement in their own names, Liu and his companies also paid $12.4 million to other entities to purchase shares as part of the scheme, the settlement said.
The commission alleged that Jackson and Liu were the two “chief architects” of the plan.
However, Montour states in his sworn statement that “the significant difference in the amounts of administrative penalties imposed on Jackson and Justin Liu in their respective settlement agreements with the BC Securities Commission indicated that Jackson’s role and culpability in the scheme were not as significant as we believed.”
The investors representing the plaintiffs in the class action lawsuit are: Michael Tietz, Duane Lowen, Robin Lee, Mike Dotto, Grant Greenwood, Malcom Runkee, Americo Morlani, Greg Lomnes and Stacey Dionne.
The plaintiffs in the class action lawsuit also reached settlements with Beleave Inc., for $2.4 million, and PreveCeutical Medical Inc., for $350,000.
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