$3M to be paid to 'investor victims' of SkyCity execs' former company

The $3-million settlement money paid to the Ontario Securities Commission by two executives behind Winnipeg's proposed SkyCity condo tower will be repaid to "investor victims" of their former companies.

Earlier this month, an Ontario court ordered forfeiture of the settlement money paid by Jawad Rathore and Vince Petrozza when they were directors of companies called Phoenix Credit Risk Management Consulting Inc. and Phoenix Capital Resources Inc. The court order will allow the cash to be repaid to investors.

"Mr. Rathore and Mr. Petrozza are very pleased that the Phoenix settlement funds will be distributed to purchasers and will certainly provide any assistance that may be required to facilitate the distribution," wrote Fortress spokesperson Jenni Byrne of Toronto-based Bayfield Strategy.

Rathoreand Petrozzahead up Fortress Real Developments, the company that wants to buildSkyCity, which istoutedasthe tallest tower between Toronto and Calgary.

In 2011,Rathore,Petrozzaand Phoenix entered into a settlement with the Ontario Securities Commission in which theyadmittedtheycontravenedOntario securities law by trading in securities without registration and by giving undertakings as to the future value of securities. They also admitted to have engaged in"conduct contrary tothe public interest."

They were ordered to pay more than $3 million to the securities commission,including administrative penalties.

Lawyer Konstantina Chantzis of the OntarioCivil Remedies for Illicit Activities Officesubmitted an application for the forfeiture of$2,955,212 in order to distribute the fundsto the "investor victims" under the Civil Remedies Act. The application was filedin the Ontario Superior Court of Justice in August and the forfeiture wasordered on Oct. 5.

The application notes the nearly $3 million "constitutes proceeds of unlawful activity," and will beused to compensate "victims of unlawful activity."

According to the forfeitureapplication, the Phoenix companies "participated in an investment referral scheme involving the sale of shares in Great Pacific International Inc. and/or OSE Corp."

The agreed facts from the2011 settlement statedPhoenix investorswere, in many cases, toldthefuture value of the shareswould increase.Phoenix clients invested approximately $16.5 million in the shares, according to the settlement document.

"Approximately $3 million in compensation was paid to Phoenix [and its affiliated companies]for the sale of GPI and OSE shares to the Phoenix investors," according to the settlement, which also stated investors were not toldthat Phoenixreceived compensation.

When asked about the settlement by CBC News in May 2013, Rathore said "There was no findings of guilt or wrongdoing or anything else like that, so we are happy to have made a settlement on that non-related business."

The 2011 settlement banned Rathore and Petrozzafrom trading in securitiesfor the next 15 years, but itsettlement allowed them to continue trading in mortgages.Rathore was also banned from selling mutual funds in 2005.

Fortress's spokesperson underlined the fact the OSC settlement involved Rathore and Petrozza's previousventures.

"It's important to be clear that the order and the Ontario Securities Commission settlement it relates to have nothing whatsoever to do with Fortress Real Developments, SkyCity or any other projects Fortress is involved with."