High-Risk, Illiquid Securities Peddler Targets Seniors, Others With Home Refinance Pitch To Fuel Sales Of Dubious Investments

In Victoria, British Columbia, the Times Colonist reports:

• Last week, I reported that David Michaels, principal of Michaels Wealth Management in Victoria, has been selling highrisk, illiquid securities to his clients, many of whom are quite elderly. He has been promoting these investments through hour-long infomercials on CFAX Radio, and through "lunch and-learn" seminars at his office.

***

• In some cases, Michaels arranged for investors - some of them seniors - to borrow against their homes to finance these investments. "My mother, a retired widow, went to see David Michaels after hearing his radio show on CFAX where he claims that he loves making seniors money," Heidi Dubas told me in an email.



• "She made it clear that she was on a fixed income and was not interested in any high-risk investments. Michaels convinced her that borrowing $100,000 against her mortgage would net her 12 per cent monthly interest on her investment, which would be low risk, as well as getting her involved with Focus Money Solutions Inc. To date, she is out over $150,000 as well as having to pay interest monthly on her loan."



• I spoke to several other investors who told me that, at Michaels' prompting, they also borrowed against their home. One was 70-year-old Robert Davey of Ladysmith, who borrowed $150,000 to invest in Focused Money Solutions, plus two other deals that Michaels was recommending.



• Another elderly woman - who wouldn't tell me her age, but I would guess to be in her 70s or 80s - told me that, on Michaels' recommendation, she borrowed $200,000 against her house and invested $75,000 in Focused Money Solutions and $100,000 in Bethel.



• That money is gone. The loan is not.



• To my surprise, most of these people didn't blame Michaels for these losses. In the case of Focused Money Solutions, they blamed promoter Victor DeLaet, or they blamed the Alberta Securities Commission for issuing the cease-trade order, or they blamed themselves for making such a risky investment.

***

• Last Saturday, Michaels was on CFAX Radio's Talk to the Experts infomercial program, promoting foreclosure properties in Arizona. CFAX general manager Jim Blundell has since advised that Michaels will no longer appear on the program, but that won't necessarily stop him.



• Meanwhile, more of Michaels' investment deals are turning sour. One client told me that in March 2010, she invested RRSP money - how much, she didn't say - in Treadwell Energy Inc., through Michaels.

For the story, see Investment deals devastate seniors (B.C. Securities Act exemption allows Victoria agent to sell high-risk, illiquid securities without a licence).

In related stories, see:

• Victoria woman, 90, is now out $550,000,
• B.C. Securities Commission says it will review rules for sale of exempt securities.