Last December, Aquablue president Dan Villeneuve told CBC News that the company was in the process of looking for financing needed to convert the factory to a bottled water plant and reopen it by June. (CBC)

The bottled-water company slated to take over the former Hershey chocolate factory in Smiths Falls, Ont., has had its assets frozen.

Aquablue International and its chief executive Manuel Da Silva are currently prohibited from touching their accounts and assets or trying to raise money, Sylvain Théberge, a spokesman for Quebec's securities regulator, L'Autorité des marchés financiers, said Wednesday.

"Everything is frozen, so it gives us time to put in place a large investigation," he said.

Much of Aquablue's money was raised in Quebec, and Théberge said complaints from investors prompted the regulator to take action.

In a statement, the regulator alleges: "Manuel Da Silva made representations to potential investors about projects to sell bottled water in China, the acquisition of a bottling plant in Smith Falls, Ontario, and an exchange listing of the shares sold to investors, whereas it was highly unlikely that the projects would be carried out."

The statement also alleges that Da Silva took hundreds of thousands of dollars from people who thought they were investing in Aquablue and transferred the funds into his personal account.

Plant supposed to open in June

Last December, Aquablue president Dan Villeneuve told CBC News that the company was in the process of looking for financing needed to convert the factory to a bottled water plant and reopen it by June. At the time, Villeneuve confirmed the company had not yet completed a lease-to-own agreement with Hershey.

As of late Wednesday afternoon, no one at the Hershey head office in Pennsylvania had returned calls from CBC News. Nor could Smiths Falls Mayor Dennis Staples be reached for comment.

The Hershey chocolate factory once employed around 500 people in Smiths Falls, and the adjoining Chocolate Shoppe drew hundreds of thousands of visitors each year. The company announced in February 2007 that the plant would start shutting down later that year.

Aquablue International announced in June 2009 that it was taking over the plant and planned to create 200 high-paying jobs by 2011 by converting the factory into a water-bottling facility. It initially announced it would open the plant with 60 full-time employees in January 2010.