May 8, 2017 – By James Schouw


I’ve written previously about my experience with BCSC, an administrative agency with a broad scope of purview, including – as I discovered – personally guaranteed promissory notes. This time I’m writing a less politically “filtered” perspective.

In 2015 BCSC publicly alleged that in 2009 I’d defrauded an investor of about $453,000 – an ill-founded allegation, at best.

I speculate that BCSC was hoping to induce other investors to join its allegation. Instead of that happening, however, other investors and business associates contacted me, many with heartwarming expressions of support for me and disbelief of BCSC’s allegation. Several of them had been contacted by BCSC, and some expressed unsavoury existing views of BCSC.

In 2017 BCSC dismissed its $453,000 allegation and instead claimed that I’d defrauded the investor of about $75,000, which was also unfounded.

Not only had I not defrauded the investor; I’d personally guaranteed his investment, such that his principle would take legal priority over my own finances in the event of distress. I did so as a matter of principle; not because he asked me to.

I’m not so confident in the principles of one or more BCSC investigators.

BCSC’s allegation was substantially based upon a $150,000 personal judgement – a judgement that proved to be a fabrication by BCSC staff. The judgement never existed.

Notwithstanding my suspicion, I’ve no way of knowing whether BCSC’s false judgement allegation was a lie or merely an error. Either way, God help any target of a BCSC investigation who’d make such a serious false statement. Furthermore, BCSC did not correct the destructive public record once its false representation had been exposed.

BCSC’s allegation was also based on a false assertion that I’d sold all interest in a particular development site. BCSC effectively took the word of one person – who had commercial motivation to discredit me – over that of contractual documents provided to BCSC for review. In representing BCSC’s allegation, its staff effectively buried those contractual documents among volumes of other documentation while relying upon the contradictory (and provably false) word of the other party.

Other bases for the allegation may have resulted from BCSC’s possible misunderstanding of conventional real estate development project financing, budget and management structures.

If pressed to speculate on how BCSC’s allegation developed: I suspect that it began with assumption, followed by confirmation bias, and finally false evidence – not least the BCSC-fabricated judgement – when the true facts didn’t support the allegation. It seemed apparent to me that BCSC was determined to make an example of a “high-profile” developer, and possibly to maximize collection of fines.

That said, I don’t wish to cast all BCSC employees negatively. I always found BCSC’s Counsel for the Executive Director to be respectful and professional, and I don’t presume that she’s alone in this regard. Also, I doubt that it would be easy for any administrative agency to retrospectively declare – internally or externally – that it may have made publicly damning allegations in error.

Ironically, I believe that BCSC’s efforts have been counterproductive to the interests of the investor, whom I fondly respect and remain resolutely committed to – along with the interests of other investors.

I’ve prepared formal notice to court to have BCSC’s findings dismissed.

I understand that my comments may be unpopular with BCSC, but so be it – even if it provokes further reaction. I think it’s inappropriate to remain silent about publicly destructive questionable allegations, and I stand by my every word. Nonetheless, I respect the importance of securities regulation, and this challenge has certainly reinforced the necessity of extreme caution regarding such matters. I’m doing whatever I can to spread the word about BCSC’s scope of authority and the importance of understanding compliance requirements. This should be of concern even to businesspeople whose primary field isn’t in the financial industry – coffee merchants, engineers or whomever – many unknowingly subject to possible securities regulatory scrutiny.

Regarding another matter – related to a similar historical timeframe but not to BCSC – I’ve been ordered to pay a fine related to a GST obligation that arose from two strata-lot title transfers that I executed in early 2009. Although the transfers were both legitimate, the court found that I ought to have known that the GST obligation triggered by the transfer documents would almost certainly remain unsatisfied.

Although I agree with my civil tax obligation arising from this matter, I disagree with the findings that led to imposition of the fine, and have accordingly filed notice of appeal. I emphasize that even if the imposed fine had been only a dollar, I’d nonetheless have filed notice as an important matter of principle. I also emphasize that my appeal is not a denunciation of CRA investigators or the related legal process. I consistently found all involved parties to be respectful and professional – not least the presiding judge, whose evident care and competence was always reassuring.

Regarding this tax-related case, although the court “did not find that [I] was involved in a fraudulent scheme”, I understand that this particular case may have been considered important by the government with respect to case law that could reinforce legal leverage over GST registrants.

If you’d like any further perspective or particulars on this or related matters, please let me know.

Best regards,



A longtime friend has suggested that I could better explain why the BCSC’s $75K claim is groundless. Although I truly appreciate my friend’s advice, my omission of a detailed explanation wasn’t accidental.

I believe strongly in the general principle that an accusation should not be trusted unless proven, and I believe that an unproven accusation should therefore not be dignified by any implied onus to disprove it. That’s why I didn’t originally distribute a comprehensive explanation.

Although I still don’t intend to go into detail, here are some additional cursory comments for the benefit of anyone who is interested enough to be reading this account:

Firstly, BCSC’s findings are groundless. Not just 99% groundless. 100% groundless.

Secondly, those findings are apparently based on BCSC’s failure to identify that I provided any services – let alone that I was the most prolific and valuable project designer and development manager involved in the relevant matters.

Thirdly, the portion of the $75K confirmed as having been earned or used for my personal benefit was only about $5K – a tiny fraction of the value of my legitimate contributions.

Lastly, I suggest that any particular individual should not be presumed ethical by mere virtue of employment by BCSC or any other administrative agency.