U.S. authorities freeze assets, charge British Columbians in 'long-running fraudulent scheme'
Major Canadian player in Panama Papers scandal, former B.C. lawyer Fred Sharp, is charged by SEC, FBI
Five years after he was named as a major Canadian player in the "Panama Papers" offshore finance scandal, a former West Vancouver lawyer is now facing prosecution in the United States and has had his financial assets frozen by the U.S. Securities and Exchange Commission.
Fred Sharp, who nicknamed himself "Bond" after the film spy, according to court filings, is one of six British Columbians charged by the regulator with "violating anti-fraud provisions" of the U.S. Securities Act.
Sharp and two of his fellow B.C. defendants are also facing conspiracy and securities fraud charges by the U.S. Justice Department.
"Sharp masterminded ... long-running fraudulent schemes that collectively generated hundreds of millions of dollars from unlawful stock sales" between 2011 and 2018, the SEC said on Aug. 12.
Also facing SEC charges are six of Sharp's alleged "associates": Zhiying Gasarch of Richmond, B.C.; Surrey resident Courtney Kelln; North Vancouver's Mike Veldhuis; Jackson Friesen of Delta; Paul Sexton of Anmore, B.C.; and Avtar Singh Dhillon, a Canadian living in California.
The U.S. stock market regulator alleges the co-accused "frequently collaborated with Sharp to dump huge stock positions while hiding their control positions."
The SEC's move comes after the U.S. Justice Department criminally charged Sharp with securities fraud and conspiracy on Aug. 5 — charges also faced by fellow British Columbians Veldhuis and Kelln.
None of the criminal or securities charges have been proven in court.
"Sharp and his co-conspirators are accused of executing a sophisticated, global con that allegedly bilked unsuspecting investors out of tens of millions of dollars," said Joseph Bonavolonta, the FBI Boston's special agent in charge, who helped lead the criminal investigation. "We will do everything we can to hold accountable those who steal from American investors."
Sharp and his co-conspirators are accused of executing a sophisticated, global con that allegedly bilked unsuspecting investors out of tens of millions of dollars.- Joseph Bonavolonta, FBI Boston special agent in charge
In 2016, CBC News was one of only two news outlets in Canada with complete access to all of the financial documents leaked from the Panama-based law firm Mossack Fonseca, part of a massive international investigative journalism collaboration known as the "Panama Papers."
Sharp's company, Corporate House, was known as the go-to investment firm for wealthy Canadians who wanted to keep assets private and use offshore tax havens to minimize their tax burden, according to sources in the wealth management industry, CBC News learned.
He created more than 1,200 corporate entities linked to Canada, making him the most significant Canadian player in the Panama Papers trove. According to documents obtained by CBC News at the time, the Sharp-associated companies were instructed not to send any account statements or invoices by mail, email or fax, but to destroy them.
"Printed invoices or statement of accts [sic] should be destroyed," the instructions stated.
At the time of the Panama Papers release, Sharp told CBC News in an email, "Tax planning is a global reality that results from international competition and inefficient governmental regulation ... and is legal."
A "pump-and-dump" investment scheme is one in which companies' stock prices are artificially inflated, allowing some shareholders to sell their stock at artificially high prices to other investors, according to the FBI.
Sharp "used the code name 'Bond' (styling himself after the fictional character James Bond)," the Securities and Exchange Commission said in court documents, and "was the mastermind and leader" of a company whose clients included "individuals seeking fraudulently to sell stock in the markets to retail investors — and with various offshore trading platforms."
Another James Bond connection appeared in Sharp's company accounting system, which the SEC said he named after fictional senior spy "Q" in the Bond franchise. The role of "Q," according to the court filings, was "to conceal and obscure the actual ownership and control of the stock they were surreptitiously selling."
Sharp is a former Vancouver lawyer who was suspended in 1995 by the Law Society of British Columbia, which ruled he "knowingly took instructions from a person who was ... disqualified from acting as an officer or director of a public company because of a criminal record for fraud," and for delivering a client's nearly $500,000 cheque "knowing that [the client] had no funds in its bank account available."
In one Sharp correspondence quoted in the SEC's court documents, his company's services were "not limited to trading" but also included payments, loans and "keeping clients out of jail."
If convicted of securities fraud, Sharp could face up to 20 years in prison, plus five years for the conspiracy charges, according to the U.S. Justice Department.
With files from Natalie Clancy and Yvette Brend