Daniel St-Jean, who has never been licensed to sell securities, was ordered on Aug. 9 to stop trading until at least March, 2025.Supplied
A realtor who raised more than $25-million in promissory notes from small investors for a series of stalled real estate projects has been ordered by Ontario’s Capital Markets Tribunal, a division of the Ontario Securities Commission, to stop all trading in securities for his companies.
Daniel St-Jean, a sales representative with EXP Realty, is under investigation by the OSC for allegedly violating securities law by “trading securities without registration” between 2020 and 2023. Mr. St-Jean, who has never been licensed to sell securities, was ordered on Aug. 9 to stop trading until at least March, 2025, as the OSC completes an investigation into three companies connected to him: 7120671 Canada Inc., 8795436 Canada Inc., and AETOS Green Energy DSJ Inc.
In addition to being unlicensed, the OSC’s application alleges Mr. St-Jean “used the proceeds of its distributions in a manner contrary to representations made to investors” and that “during the course of the investigation, the Commission found evidence that: DSJ … may have engaged in conduct that perpetrates a fraud.”
According to an affidavit from Andrew Gordon, forensic accountant in the enforcement division of the Ontario Securities Commission, the OSC interviewed more than 70 investors and found that in one case Mr. St-Jean raised at least $12-million by selling 139 promissory notes (which are treated as securities, like a stock or a bond in Canadian law). In another case the AETOS company and Mr. St-Jean raised $13.5-million from 109 investors for a stalled housing project in Hantsport, N.S.
Monica Van Berlo, who runs a property management business in Timmins, Ont., and began investing in real estate through Mr. St-Jean in 2021, said in an interview with The Globe and Mail. “We had lent him $40,000 for a six-month period, everything went well and we got our money back, so we lent $120,000. He started acting a little weird in late 2022.”
According to Ms. Van Berlo the second loan, structured as a promissory note, was not repaid after it’s maturation date and Mr. St-Jean stopped paying interest in 2023, but he did begin sending a lot of messages.
“We have been getting bi-weekly or weekly e-mails from Daniel with some really random updates,” she said. “One excuse after another and for over a year now … the last one was almost threatening.”
The Globe and Mail obtained a copy of a July 16 e-mail allegedly sent by Mr. St-Jean to investors, warning that any attempts to take him to court for unpaid debts would be a “bad move.”
“The four houses they could put a lien on as per the agreement are all underwater,” he said in the e-mail, meaning they were heavily indebted. He concluded by saying: “The only winners in those court battles are the lawyers.”
Many of the investors who spoke with The Globe heard about Mr. St-Jean through The REITE Club, an organization he co-founded in the Hamilton area where so-called experts in real estate investment could network and share ideas. Members say former mortgage broker Claire Drage – who raised more than $130-million in private mortgages and promissory notes for the insolvent real estate business of former child actor Robby Clark – was also a frequent attendee at REITE events.
The evidence gathered by the OSC alleges that Mr. St-Jean admitted to using new investor money to make interest payments to early lenders. The underlying business of real estate developments appears never to have made any money, a fact Mr. St-Jean laments in some e-mails submitted by the OSC.
“So in 14 months, I’ve sold the Hantsport deal to 125 people … and I’ve collected $10,719,700 with most of it going to you one way or another,” Mr. St-Jean wrote in a March, 22, 2023 e-mail to a business partner named Peter Tsakanikas. “What can I show new investors that was achieved with 10 million bucks? Nothing much really.”
In another e-mail to Mr. Tsakanikas’s accountant, Mr. St-Jean attached a “keep track” document showing how $749,000 in funds borrowed from 14 investors was used to pay interest on other loans. In one case, a $100,000 payment received in July, 2022, was dissipated by October through payments to dozens of individuals in amounts ranging between $195 to $2,675 a month.
In partial transcripts of interviews between the OSC and Mr. St-Jean he acknowledged the practice of paying old debts with new ones happened “as often as we needed the money to cover payment of the interest.” In the case of the Hantsport project “We did that practice probably early on in the Phase 1,” of what became five phases (or rounds) of investing according to Mr. St-Jean.
None of the allegations made against Mr. St. Jean have been proven in court.
Mr. St-Jean didn’t agree to answer any questions about the investigation but responded to requests for comment in an e-mail: “I’m paying big bucks for a top OSC lawyer who tells me NO COMMENT while the OSC is investigating me.”