Redistribute $1.8M of fraudster's frozen funds to his victims, securities commission asks court

The Alberta Securities Commission is asking a Calgary judge to appoint a receiver to distribute almost $1.8 million to victims of an investment scam.

• He helped bilk 1,200 investors of $20M — but likely won't spend a day behind bars

At a hearing last June, Saileshwar Rao Narayan admitted to the commission's panel that he defrauded and lied to investors and illegally traded in securities through two companies — Prospera Mortgage Investment Corporation (PMIC) and Prosperity Development Group Ltd. (PDGL).

Narayan, who raised over $5.8 million from the public for mortgage investments, was ordered to hand over almost $1.28 million and is permanently banned from trading in the market again.

"Given Narayan's dishonesty in raising and spending investors' money … we are of the opinion that he has little, if any, regard for truth when it comes to separating people from their money," the panel said in its ruling.

"There is nothing more fundamental to the protection of the investor public than telling the truth when raising funds."

Narayan and his two companies admitted to making misleading or untrue statements to investors, and perpetrating a fraud on investors.

"Narayan admitted that at least $800,000 of investor money was improperly diverted to his personal use," the decision states.

Money paid for lavish lifestyle 

The commission discovered that the Edmonton man used some of the money to pay for numerous trips — including to Las Vegas, Paris, London and Italy — and to buy luxury vehicles.

Many of the people who invested their money with Narayan's companies were not in a position to lose it, the commission said.

One investor testified about $41,500 invested by her husband in Prospera Mortgage came from his pulp and paper workers' pension, and he was investing the funds at a time when he was gravely ill waiting for a kidney transplant, the ruling said.

"Another investor submitted a witness impact statement that indicated that he had to work an additional fourteen months to make up the losses to his retirement fund."

While its investigation was still ongoing, the commission froze accounts belonging to PDGL and Narayan holding almost $1.8 million.

The ASC is now asking the Court of Queen's Bench to appoint a receiver to distribute those frozen funds to the defrauded investors.

The panel ordered Narayan to pay back $880,951 obtained as a result of his non-compliance with Alberta securities laws, plus an administrative penalty of $300,000 and administrative costs of $95,000.

He is also permanently prohibited from trading in or purchasing securities or derivatives under Alberta securities laws.

And PMIC and PDGL are permanently prohibited from trading in or purchasing securities or derivatives under Alberta securities laws.

"We conclude that a permanent ban, subject to a limited relaxation to allow for personal investment, is necessary to prevent Narayan from repeating his behaviour," the panel wrote in its decision.

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