March 5, 2017 – By James Schouw


Although I don’t enjoy dwelling on the British Columbia Securities Commission (BCSC), it’s very important for me to share these matters, regarding a battle that I’ve been having with BCSC since 2015:

In 2015 BCSC publicly alleged that in 2009 I’d defrauded an investor of about $453,000. That allegation, with which I unequivocally disagreed and was unwilling to settle under any circumstances, was based substantially on the following:

  1. BCSC alleged that the majority of the investor’s funds were paid to other entities controlled by me.
  1. BCSC alleged that $150,000 was spent on a personal legal judgement.
  1. BCSC alleged that there wasn’t sufficient investment capital in place to complete the pertinent real estate project construction.
  1. BCSC alleged that I’d sold all interest in the development project.

Then, in 2016 the following evidence was presented to BCSC’s own panel, on record, regarding the preceding four points:

  1. The payments were made to the other entities because it was their design, management and administrative staff – not least me – who were designing and developing the project. Relevant payroll, contract and overhead cost records were provided to BCSC, as well as a project budget review (to help BCSC understand the scope and value of such work).
  1. A BCSC investigator admitted that the alleged $150,000 personal judgement never actually existed.
  1. It’s normal and routine for major project construction to be funded by mortgage-secured debt financing once all necessary presales and permits are in place, so the allegation that there wasn’t enough investment capital for construction was irrelevant.
  1. The allegation that I’d sold all interest in the development project was categorically untrue and evidently based upon a statement made to a BCSC investigator by another party (who’d potentially benefit from my misfortune). Contrary to this allegation, I provided to BCSC joint-venture and consulting documentation that addressed construction and related financing requirements (under which the project was ultimately completed).

Then, in January 2017 BCSC dismissed all but about $75,000 of its original allegation – and then publicized a narrative with more attention to its original allegation than any explanation of why the majority of that allegation had been incorrect.

I hold very strong opinions on this matter that I probably ought to keep to myself for now, so the preceding information is purely factual and on record. However, I’ve a few comments:

First, although I’m withholding speculation, not least regarding BCSC’s rationale for not dismissing its entire allegation, I certainly wouldn’t want to be in a bias-defying position of evaluating whether or not my own organization had erred in making a reputation-wounding allegation, after my own organization had already publicized that allegation.

Second, I’ve no doubt that the publicization of BCSC’s original incorrect allegation has been detrimental to the interests of the investor in question.

Third, the investor is a good person who quietly prioritizes the wellbeing of loved ones and, regardless of that, whose interests I’m steadfastly committed to.


BCSC is not a judicial body, which seems to be a common misperception. BCSC is an administrative agency that evaluates its own investigations via administrative hearings – based generally upon civil standards – which do not include authority regarding concepts such as guilt or innocence.

I respect BCSC’s support for investors, however I also emphatically note the lack of separation between the different BCSC divisions and possible interests.

Although I fail to understand BCSC’s reasons for not dismissing the $75K on the same fundamental basis as the rest of its allegation, I’ll wait until the matter is concluded before I comment in detail.

Once BCSC has concluded its own process, I’ll carefully evaluate its findings and consider what further actions to take, if any. Respondents, of which I am one, are free to apply to court for dismissal of the matter if they disagree with BCSC’s findings.