David Singh, seen here on March 2, 2020, arrived late for the start of his trial on Monday, without a lawyer, carting his legal documents in a paper shopping bag.Yader Guzman/The Globe and Mail
The founder of what was once one of Canada’s largest financial planning companies used investor funds for personal expenses such as private school tuition for his children and a sports car, and to pay back investors in "prior schemes,” the Ontario Court of Justice heard on Monday.
David Singh, once a high-flying executive whose Fortune Financial Management looked after an estimated $7-billion in assets in the mid-1990s, arrived late for the start of his trial on Monday, without a lawyer, carting his legal documents in a paper shopping bag.
The Ontario Securities Commission is prosecuting Mr. Singh for three offences under the Ontario Securities Act – including fraud – in relation to two mortgage investment corporations (MICs) that he founded after he sold Fortune Financial.
The OSC took the case to the Ontario Court of Justice under a provision of the act that can result in penalties that are harsher than the sanctions an administrative panel can issue, and can even include jail time.
Shares in the companies – Rockfort MIC and Greenview Capital MIC – were touted to investors as risk-free investments in short-term mortgages with guaranteed returns between 8 per cent and 10 per cent, the OSC has alleged. Together, the companies raised more than $5.6-million from 77 investors between 2014 and 2018, the court heard.
OSC prosecutor Rachel Young told the court in her opening statement on Monday that Rockfort and Greenview Capital “did not in fact have an underlying portfolio of mortgages.”
Ms. Young told the court a witness will testify that Mr. Singh diverted investor funds to pay for his personal expenses – including his children’s private school tuition and the lease on his Jaguar. She also said documents will show that he used investor funds to repay “investors on prior schemes.”
Mr. Singh has not yet presented arguments or called witnesses. Asked outside the courtroom whether he wished to make a comment, he replied: “Not interested. Not interested.”
Thirty years ago, Mr. Singh was much more willing to tell his story. When Fortune Financial Management was at its apex and employed more than 550 financial advisers, he published an autobiography, The Making of Fortune, that described his journey from poor Guyanese immigrant to wealthy businessman. His LinkedIn page describes him as the author of six other books, including Learn How to Get Rich and Do Good For Others.
In the late 1990s, the OSC launched an investigation into Fortune’s star salesman, Paul Tindall. After Mr. Tindall was accused of selling unsuitable investments to clients and misrepresenting the risks, the OSC pursued Mr. Singh for not appropriately supervising his employee. Both men reached a settlement with the commission and received temporary trading bans.
Mr. Singh sold Fortune to Dundee Wealth Management in 1999 – for a price tag, Mr. Singh’s LinkedIn page states, of $88-million.
As for how Mr. Singh once again fell on the regulator’s radar, court heard on Monday that it received a complaint from George Brown, the former chief financial officer for Rockfort. Lori Toledano, a senior OSC forensic accountant, testified on Monday that Mr. Brown told the commission Rockfort was “operating like a Ponzi scheme” – a fraud in which the underlying investment doesn’t make any money, and previous investors are paid out with the money from new investors.
Conducting the case in court means investigators were unable to use the OSC’s powers to compel evidence, a tool they have at their disposal when they take action against someone before an OSC administrative panel. Instead, they executed a search warrant on Mr. Singh’s office in Markham, Ont.
Ms. Young, the OSC prosecutor, told the court she plans to call seven investors as witnesses, including two women who handed their entire pensions to Mr. Singh’s companies. “A majority of these witnesses will testify that they lost most or all of the money that they invested,” Ms. Young said.
The trial is scheduled to continue this week, then break and resume in late March.