Investors allegedly bilked of millions by Vince Mullee Financial still wondering where the money went

The family of man allegedly bilked of $250,000 by his financial adviser wants answers from the industry about what happened, and who will be held accountable.

Family of affected investor says more industry oversight needed

Bryan Hnatiw wants answers. (CBC)

It seemed like a great investment. Ted Hnatiw bit hard.

The 82-year-old had met with his long-time financial adviser Vince Mullee, who pitched him on a 25-year bond from Cameco with an annual yield of 6.5 per cent. Hnatiw had recently sold some farmland, so he wrote Mullee a cheque for $250,000.

Mullee worked as an independent financial adviser under contract with WealthCo Inc. in Calgary.

Then, this June, Hnatiw found out there was a catch. The Cameco bonds did not exist.

He then learned that WealthCo had terminated Mullee's contract and closed the Saskatoon office. The Financial and Consumer Affairs Authority of Saskatchewan ordered that Mullee cease selling securities. It alleged that Mullee had stolen $2.1 million from more than a dozen investors.

Since then, Hnatiw's family have spent more than a month trying to find out what happened to their father's $250,000 and who would be held accountable.

They've been in contact with WealthCo, the province and police. They said it has been a disillusioning experience.

"It seems to be haphazard and not structured. I would expect more, as the industry has millions or billions worth of investments in this province by various financial advisers besides WealthCo," said Ted's son, Bryan Hnatiw.

"There should be a transparent process about what happens if an investment that someone made was never made and there was fraud conducted. How do we protect the citizens that are supporting this industry?"

A relationship on the rocks

Sophie Blais, chief operations officer for WealthCo, said the company is limited in what it can say because the matter is now under investigation, but that it was WealthCo that notified Saskatchewan regulators about Mullee's possible misappropriation of funds.

How do we protect the citizens that are supporting this industry?- Bryan Hnatiw

Blais said in an email to CBC that the company learned of the possible fraud on June 21 and then terminated Mullee's contract on June 25.

WealthCo chief operations officer Sophie Blais (BPW Calgary)

She said the company had a limited relationship with Mullee.

"He was an independent broker with us and, as such, had different relationships with different organizations. Independent advisers are those that sell product from a variety of different companies and effectively act under their own banner," Blais said in an interview.

"The investments that Vince Mullee Financial did with these affected individuals had nothing to do with our office, so we don't know where they stand in relation to that."

Blais said that WealthCo had sponsored Mullee so that he could sell securities in Saskatchewan. She said that, in the time frame of the alleged fraud, Mullee also "submitted legitimate and compliant business" so no red flags came up initially.

She said it appeared Mullee used the company's branding and identity to allegedly convince clients to buy the fake investments. But because the cheques were written directly to Mullee's personal company, Blais said WealthCo was not aware of the money.   

This characterization is disputed by Bryan Hnatiw. 

"So the relationship was a lot stronger than a "you sold one of my products along with many other products" and we were just one of the proxies sold. The relationship was entirely different, he was their representative and for all intents and purposes from what I felt, he was basically the branch manager of WealthCo," he said.

"You've got a person who's got the capabilities to cause a lot of damage if not monitored. And that's what he did."

The province weighs in

Provincial regulators cannot speak directly to the Mullee case because it's an open file with investigators.

Public documents show the Financial and Consumer Affairs Authority (FCAA) issued a temporary order on June 26 banning Vincent Mullee from trading in securities and derivatives.

It alleges that he sold non-existent bonds and took $2.1 million from 13 investors.

Dean Murrison, director of Saskatchewan's securities commission. (CBC)

Dean Murrison, director of the securities division in the FCAA, said that in general there is a system of checks and balances in place. But the bottom line is that it's very difficult to deal with a broker who has gone rogue.

"It's a difficult situation if somebody has just plain stole your money," he said in an interview. "If somebody decides to be a rogue and steal money, it's a very difficult situation to monitor."

Murrison said that individuals who sell securities in Saskatchewan must first be sponsored by a company before they can open for business.

"Every individual has to be sponsored by a firm. These firms are then expected to take responsibility for ensuring compliance with the securities legislation in Saskatchewan as it applies to the firm itself, and to all of their registered representatives," he said.

"And then that registered firm takes on some responsibility in supervising these individuals."

The firm monitors the transactions done by the dealer and, should a client have concerns about their portfolio, the firm should be able to give an update on the status.

The problems begin when a dealer convinces a client to make cheques payable to someone other than the sponsoring firm. The firm cannot monitor money that it doesn't know is in the system.

"Investment cheques or money should only be provided directly to the firm, the registered firm and never to the individual broker himself," Murrison said.

CBC contacted Vincent Mullee. He declined to comment.

About the Author

Dan Zakreski is a reporter for CBC Saskatoon.