U.S. SEC pursues over $50M from BC residents in stock fraud case

The U.S. Securities and Exchange Commission filed a civil claim in B.C. Supreme Court on June 10 against six British Columbia residents, seeking to recover more than US$50.9 million (CAD$72.1 million) in illicit profits from a $1 billion stock fraud scheme operated out of Vancouver between 2011 and 2019.

The commission is seeking approval to recognize and enforce U.S. federal court judgments via the Foreign Money Claims Act. The case centres on Fred Sharp, a 73-year-old West Vancouver man the SEC alleged in 2019 to be the scheme's "mastermind."

Sharp was found liable for fraud in civil proceedings on May 12, 2022, after declining to mount a defence. He was ordered to pay US$28.9 million, including US$7.2 million in pre-judgment interest. He has since filed for leave to appeal to the Supreme Court of Canada, with a decision pending. Sharp continues to face unproven criminal fraud charges in the United States, though extradition proceedings have not commenced.

Now the SEC is pursuing five of Sharp's associates. The commission is seeking US$17.4 million from Paul Sexton of Lake Country; US$13.3 million from Mike K. Veldhuis of Vancouver; US$11.9 million from Jackson Friesen of Delta; US$4.3 million from Graham Taylor; CAD$2.5 million from Zhiying Yvonne Gasarch of Vancouver; and CAD$1.6 million from Courteney Kelln of Surrey.

Graham Taylor is the only one of the six to have settled without admitting or denying fraud and has paid back US$425,965. Sexton, Veldhuis, and Kelln admitted liability; Friesen and Gasarch denied liability but were found guilty by a jury in a Boston trial in October 2024.

According to the SEC, Sharp concealed beneficial stock ownership through offshore shell companies and Swiss trading platforms, allowing client groups to sell shares to retail investors at inflated prices after surreptitious promotion.