The Mutual Fund Dealers Association of Canada (MFDA) has come down hard on an advisor who took money from a number of elderly and vulnerable clients. One of the alleged victims is his own grandmother.
In reasons published on Feb. 2, the MFDA ordered Conrad Eagan, formerly an advisor with Worldsource Financial, to pay a fine of $5,000,000 – the largest it can impose. The regulator says he took more than $3.7 million from a number of elderly people and other clients, misappropriating funds from a variety of sources including estates for which he was acting as an executor.
When the beneficiaries of one estate began to ask questions, Eagan assured them that the funds had been invested and would earn a guaranteed annual return of around 3%. “In fact, the Respondent had invested all or substantially all of the estate’s monies that he had transferred to his personal TD Waterhouse account in the shares of a thinly traded gold mining company with a mine property in the early stages of development in South America,” says the regulator. “As of the date of this Notice of Hearing, the shares of the mining company trade at less than $1 Canadian on the Toronto Venture Exchange.”
In another case, Eagan took advantage of a client who was unable to work and whose home required renovations to accommodate her permanent, debilitating illness. He arranged for a $200,000 mortgage on the client's house, telling her that it would be invested and used to generate a $1,000 monthly income. In fact, none of the mortgage proceeds were ever deposited into her investment account. Eagan took all of it, says the regulator.
Fraud and the intent to defraud
In April last year, having been tipped off by both Worldsource and former clients, Ottawa Police Services charged Eagan with both fraud and the intent to defraud. While it is not mentioned in the MFDA documents, news reports from the ongoing criminal trial note that one of the alleged victims was Eagan’s own grandmother.
“The evidence shows that Conrad Eagan is a thief. He stole approximately $3,500,000. In all but one case he stole from people who had put their trust in him as their financial advisor,” reads the MFDA panel’s decision. “Sometimes there is little purpose to be served by imposing a fine when it is obvious that it is unlikely to be paid. This case, however, is so egregious that it seems to us that the requirement of general deterrence calls for the imposition of a substantial fine. If there is ever a case for a maximum fine, it is this one.”
Eagan’s criminal case is still before the courts.