Vancouver: A British Columbia Securities Commission (BCSC) panel has found that a Vancouver Island man perpetrated a fraud on hundreds of people, many of them seniors.

The panel found that David Michael Michaels, a former mutual fund salesperson, illegally and fraudulently advised 484 clients to purchase over $65 million of exempt market securities between June 2007 and December 2010. Exempt market securities are securities sold under exemptions from prospectus requirements.

In its decision, the panel found that Michaels acted as an adviser without being registered as required.

The decision states that Michaels conducted weekly infomercials on CFAX 1070 radio in Victoria (“Creating Wealth with David Michaels”). Michaels testified that he used the C-FAX program to draw the public to investment seminars that he hosted in Victoria and Vancouver, and to appointments in his office. According to Michaels, the C-FAX programs drew 20,000 listeners a week. The panel found that Michaels advised his clients to sell their stocks, bonds and mutual funds and purchase high-risk exempt market securities instead. He also advised his clients to borrow against their homes to purchase these risky investments. The panel found that in giving this advice, Michaels made misrepresentations to his clients, deceived them, and betrayed their trust.

Michaels was paid $5.8 million in fees and commissions for his sales of the exempt market securities.

Michaels said repeatedly on his C-FAX program that he loved helping seniors make money. He testified that the average age of his clients was 72. The panel found that at least $40 million of the $65 million his clients invested is lost, and most of the rest remains at risk.

“Michaels preyed on clients by frightening them and misleading them into leaving the comparative safety of traditional capital markets for the far riskier part of the exempt market,” the panel said. “As a consequence, his clients have suffered grievous deprivation, and he was greatly enriched.”