The Alberta Securities Commission (ASC) announced on June 5 that it has found that Brian Arthur Kitts and Vesta Capcorp Inc. breached Alberta securities laws
The respondents raised approximately $4.3 million and US$850,000 from approximately 38 investors between February 2014 and June 2015, says the regulator.
Misappropriation of funds for personal use
An ASC panel determined that the respondents engaged in prohibited acts, including: falsely misrepresenting to prospective Vesta investors that invested funds would be used to provide short-term financing to real estate industry participants; diverting invested funds to business ventures that were not identified or otherwise within the reasonable expectation of Vesta investors; misappropriating investor funds to the personal use of Kitts and his spouse; and using investors' capital to repay principal and to pay imaginary profits to investors.
The panel stated, "Kitts (and through him, Vesta) operated an unsophisticated Ponzi scheme, while diverting investors' capital for personal and other unauthorized uses."
The ASC says the proceeding will now move into a second phase to determine if any orders for sanctions and costs ought to be made against Kitts and Vesta.