BULLETIN: 2 Men With Hyped Credentials At Helm Of $51 Million Ponzi Scheme, Alberta Securities Commission Alleges; May Appearance Date Set For Dale Joseph Edgar St. Jean, Gregory Dennis Tindall; Defendants Also Linked To Alleged U.S. Fraud Scheme That Triggered Hedge-Fund Collapses

BULLETIN: Two men, including one who’d filed for bankruptcy when a previous “sales training” venture collapsed, were at the helm of a Ponzi scheme that gathered $51.6 million and left investors with nothing, the Alberta Securities Commission said.

Appearance dates for Dale Joseph Edgar St. Jean and Gregory Dennis Tindall have been set for May 9 in Calgary. The men presided over TransCap Corp. and Strata-Trade Corp., both of Calgary, ASC said.

Both men were charged by the SEC in a 2010 case that alleged they were managing members of a $34 million offering fraud based in Florida that led to the collapse of two hedge funds known as Arcanum Equity Fund LLC and Vestium Equity Fund LLC and subsequent bankruptcy filings.

The 2010 SEC filing also references TransCap, one of the Canadian entities named in the ASC action.

“[I]nstead of investing the investor funds as stated in the Offering Memorandum and contractual documents, St. Jean and Tindall used the investors’ money to orchestrate a Ponzi scheme that ultimately collapsed in November 2009,” ASC alleged.

Meanwhile, “St. Jean, Tindall and Strata-Trade falsely certified that an offering memorandum did not contain a misrepresentation and failed to file an offering memorandum and any reports of exempt distribution as required,” ASC alleged, further claiming that “Tindall made false and misleading statements to ASC investigators.”

In total, the scheme raised about $51.6 million between March 2005 and December 2009, with “at least $25.03 million” coming from  “at least 133 Alberta investors,” ASC alleged.

A “sales-training franchise” St. Jean once owned and operated collapsed and caused St. Jean to file for bankruptcy, ASC alleged, further asserting that investors in the Ponzi scheme were not provided accurate information about St. Jean’s track record in business.

Among other jobs, St. Jean had sold mutual funds and worked in construction, retail, computer sales and the jewelry business, ASC said.

Tindall had “no training in securities or investments and no professional designations,” ASC alleged, asserting he lied to investigators about not getting paid from TransCap, a purported bond-trading business with an arm in bridge financing.

“During the times material to these proceedings, Tindall was paid a monthly draw of between $5,000 and $25,000 per month,” ASC alleged. “In 2008, his draw was $300,000.”

“As of about April 29, 2010, TransCap and Strata were indebted to investors in the approximate amount of $51.6 million, and had no funds left to pay investors any principal or returns,” ASC said.

Despite offering materials that asserted otherwise, “TransCap’s business was not primarily related to bond trading or bridge financing,” the agency alleged. “Rather, investor’s funds were used to administer a [P]onzi scheme wherein money was taken from later investors and used to pay returns to earlier investors.”

Investors were lured into the scheme by a “promise of low risk and high returns of 18% to 22%,” ASC said.

 

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